Economy

Lawmakers: Make small business priority in economic policy

March 28, 2023

Ray Carter

Oklahoma’s business-recruitment and economic-development strategies in recent years may have been flawed by focusing too much on giant projects rather than smaller companies and in-state growth, according to several senators serving on a special legislative committee.

“I think a lot of times we chase headlines,” said state Sen. Adam Pugh, R-Edmond . “Volkswagen sounds nice. Panasonic sounds nice. Tesla sounds nice. But 99.9 percent of all businesses in the United States are small—less than 500 employees. In the last 25 years, two-thirds of all economic activity generated in the United States economy has been from small businesses. They are our job creators. But that is generally not who we focus on. We build large, multi-hundred-million-dollar incentive packages to lure the big fish when there are thousands of small businesses around our communities that could benefit from tiny little microgrants to go from five employees to 10, which would transform that company and transform those communities.”

Following Oklahoma’s failure to lure massive Volkswagen and Panasonic projects, despite offering around $700 million in incentives to each company, Senate President Pro Tempore Greg Treat, R-Oklahoma City, created the Senate Select Committee on Business Retention and Economic Development to review the state’s economic-development efforts.

The group held its first meeting on Tuesday, and several lawmakers indicated that they believe the state would be better off to instead focus on smaller businesses.

“Everything does not have to be a home run,” said state Sen. John Haste, R-Broken Arrow. “Doubles and triples are important too.”

He said a company that provides 1,000 jobs may be more feasible for some Oklahoma communities than one that would employ 3,500 due to issues such as the availability of housing and other infrastructure such as water and roads.

“The vast majority of new jobs are going to be created by existing small businesses or start-ups,” said state Sen. Micheal Bergstrom, R-Adair.

He also noted that a college degree may be losing its value and impact on economic growth.

“The reality is 60 to 65 percent of the jobs of the future are only going to require six-to-24 month certification, not a college degree,” said Bergstrom, a longtime public-school teacher.

State Sen. John Michael Montgomery, R-Lawton, said he was “curious” what prompted state officials to pursue automotive companies in recent years.

“We’ve had this experience in the past in this state,” Montgomery said. “We previously had a GM plant right here in this city (Oklahoma City). Why are we going back down that road? I want to be careful as well that we not fight yesterday’s wars in this process.”

Pugh said incentive offers should be on the “back end” of any economic-development strategy.

“My concern is if we just turn this into an incentives race, we will always lose,” Pugh said. “If it’s just ‘which company can get the most money to relocate somewhere,’ that’s not a competition I think we’re primed to win.”

Several lawmakers said they want state officials to obtain some form of post-decision evaluation from companies that reject Oklahoma’s incentive packages to learn what caused the state to be passed over.

“In looking into what we could have done differently, were there requests or demands that we simply weren’t able to meet or that we didn’t want to meet?” said state Sen. Kay Floyd, D-Oklahoma City. “We need to ask a lot of questions, and we need to be okay with the fact that some of the answers we’re going to get back are not necessarily what we want to hear.”

Treat noted that the large projects Oklahoma has pursued in recent years do not typically end in success for most states.

“When you’re going after $5 billion investments or $4 billion investments, there’s going to be a lot more losers around the country and there’s going to be one that gets it,” Treat said. “And so we don’t expect to have 100 percent hitting.”

One Democratic lawmaker suggested that Oklahoma’s social conservatism may play a role in deterring companies from making multi-billion-dollar investments here, and touted “inclusion” as a solution. That term is part of the “diversity, equity, and inclusion” (DEI) jargon now used to support many left-wing causes.

“I definitely think inclusion and maximizing the potential of all Oklahomans is incredibly important,” said state Sen. Julia Kirt, D-Oklahoma City. “If we drive people off, if we don’t allow people to participate in the workforce fully, we are diminishing not only the skills and abilities of people across the state, but we’re also devaluing them and they’re more likely to leave.”

Democratic lawmakers have argued that Oklahoma laws, such as those prohibiting the practice of giving cross-sex hormones and puberty blockers to children or limiting school bathroom access based on sex, are generally incentivizing people to leave the state.

But recent population trends have shown Oklahoma is attracting more new residents than it is losing.

A recent report by the National Association of Realtors (NAR), based on United States Postal Service change-of-address data, showed that more people moved to Oklahoma in 2022 than all but nine other states.

That continued a trend previously noted in U.S. Census Bureau data that showed population growth in Oklahoma outpaced most of the nation from July 2020 to July 2021, driven primarily by an influx of people moving to Oklahoma from other states.

That population growth has occurred even as lawmakers advanced the policies criticized by Democrats, a fact that did not go unnoticed by Republican members of the committee.

“Our policies have helped us gain some wins from a number of companies that said, ‘You know, we want to get away from the craziness and be in a place that has good policies in regard to business, good policies in regard to other areas,’” Bergstrom said.

“Many states are having mass exoduses right now because of the policies they have,” said state Sen. Jerry Alvord, R-Wilson. “We are not one of those states. This state has been drawing people to it because of the policies we have.”