One of the under-reported stories of the recession is the emergence of the Great Plains during the recovery. The central time zone largely avoided the highs of the housing bubble, and they've blissfully missed the lows, as well. But that's not the only thing buoying Oklahoma.
This afternoon I spoke with Oklahoma City Mayor Cornett and Oklahoma Department of Commerce Secretary Natalie Shirley about why Oklahoma has fared so well during the recovery. Unemployment in Oklahoma City is 6.7 percent, three percentage points below the national average. It has the fourth most resilient housing market in the country, according the Brookings Institution.
Avoiding the swelling and crashing of the housing tsunami has been a primary cause of Oklahoma City's success. How did they miss the wave? Shirley said the answer goes back to 1982, and Penn Square Bank. Penn Square was a small, risky commercial bank that exploded in the late 1970s and imploded in the 1982 just as falling energy consumption hurt oil prices and slammed the Oklahoma economy. The Savings and Loans Crisis followed, but it was Penn Square took down the energy industry and the banking industry.
"Over 100 banks closed," she said. "The state ground to a halt. And the bankers today remember the crisis. They've developed very safe, very conservative banking practices since that catastrophic event in the early 1980s."
Built on the dependable pillars of local government spending, military (Tinker Air Force Base is the top employer), health care and education, the city is poised for strong and steady growth in the next few years. I asked the Shirley and the mayor what they thought might be the next engine of the Oklahoma economy.
"We don't really care," she responded. "What we're looking at is a balanced economy. We learned from the 1980s that having a one-trick pony just wasn't going to do it. We're looking at creating a more firm foundation."
That's when the mayor offered an fascinating re-casting of the new economy: "The 20th century perspective was that people went where the jobs were," he said. "Today the jobs are going to go where the people are. Highly talented young people are coming to us because of the low cost of living. People want to work here."
The bust revealed a scary truth: we can't afford what very recently passed for the American dream. We cannot run up debt equal to 122 percent of our yearly earnings, as we did during the late aughts. That means Americans will seek out cheaper places to live, where high quality of life goes for a bargain. Today, the cities that can offer that aren't the LAs and NYCs but rather the San Antonios and Oklahoma Cities.
Put another way: In an economy where people follow quality of living, and jobs follow people, cities with low cost-of-living will be the early winners in the recovery.
Indeed, they already are. Eighteen of Brookings' 20 "strongest cities" (all except Washington and VA Beach) have average or below average cost-of-living, according to a new Wall Street Journal story. At a time when Washington can't seem to get employers and employees together, employment has been sticky where wages and living have been cheap.
What's more, Oklahoma has the highest entrepreneur levels of any state, according to a recent report from the Kauffman Foundation. Mayor Cornett says it's easy to see why. "College graduates are moving to the metro area in high numbers because they see how far their money goes in housing and living," he said. "You're raising a generation of people who can't afford their own house. The American dream is alive and well in Oklahoma City."
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