Category Archives: Business and economics

Water, water everywhere, but not enough below

Business, Business and economics, State government

By Steve Brawner
© 2014 by Steve Brawner Communications, Inc.

It makes up about 71 percent of the earth’s surface and about 60 percent of the adult human body. All our lives, it’s been available in abundance, particularly in Arkansas, and it still is, but we’ll have to change the way we obtain it. And it won’t be cheap to make that change.

I’m talking, of course, about water. Arkansas consumes about 11 billion gallons a day – enough, over a year’s time, to cover every inch of the state 4.2 inches deep.

Eighty percent of that amount is used for agricultural irrigation, according to a draft of the Arkansas Water Plan 2014 Update. Updates are completed every couple of decades by the Arkansas Natural Resources Commission.

The report ranks thermoelectric power second in water use, at 11 percent. Drinking water makes up only 3.5 percent. According to Ed Swaim, the commission’s water resources division manager, almost as much water is used for flooding fields for duck hunting (a yearly average of 259.2 million gallons a day) as is used in all manufacturing (291 million gallons a day, and dropping).

About 71 percent of Arkansas’ water comes from underground, and that’s a problem, because we’re using up groundwater far faster than the water cycle can replenish it. Currently, about 8.7 million acre-feet per year are being pumped, but the water can only be replenished at a rate of 1.9 million acre-feet a year, Swaim says.

That means water tables are falling, fast, and have been for a long time. Farmers are drilling their wells deeper and deeper to get the same water.

Unlike some states, Arkansas can solve this problem fairly easily. Conservation measures will help some. More importantly, the state is covered with rivers, lakes and streams. We have so much surface water that, according to the Water Plan, the state can meet its needs by simply diverting surface water for crop irrigation. The Water Plan says we have enough to do this without detracting from water-bound transportation or harming fish and wildlife – an assertion with which not everyone will agree. Arkansas can meet its needs without even touching the mighty Mississippi River, which would be a headache because that river borders other states.

The Water Plan estimates it would cost between $3.4 billion and $7.8 billion to do this, which would come from a variety of government funding sources and user fees. In other words, the farmers would pay for part of it, and then pass on the costs to consumers. Arkansas’ annual agricultural production is valued at $9.7 billion, according to the plan. Without water, it would be a lot less.

In his book “The Seven Lamps of Architecture,” the English critic John Ruskin wrote, “Therefore, when we build, let us think that we build for ever. Let it not be for present delight, nor for present use alone; let it be such work as our descendants will thank us for, and let us think, as we lay stone on stone, that a time is to come when those stones will be held sacred because our hands have touched them, and that men will say as they look upon the labor and wrought substance of them, ‘See! this our fathers did for us.’”

The quote is displayed on a placard on the second floor of the Arkansas State Capitol – a building still as sturdy as when it was completed a century ago.

Not to be too negative here, but we don’t talk much about building for forever these days. Today’s thinking is more about making the monthly payment on the 15-year and 30-year bank note. On a larger scale, problems aren’t solved so much as patched temporarily. Much of our political system, and indeed our economy, is based on buying time – until the next election or the next harvest or the next quarterly report.

In this case, Arkansas has a growing threat to its economy and way of life – current and especially future. For a while, farmers can keep just drilling deeper. But at some point, the wells will go dry.

So we’ve got a problem, and we’ve got a solution – an expensive one. But what choice is there? There’s plenty of water around us, and not enough beneath us.

“That girl” makes good money as a welder

Business, Business and economics, Education, State government

By Steve Brawner
© 2014 by Steve Brawner Communications, Inc.

If you were asked to describe a welder, it probably wouldn’t be much like Tori Huggins.

The 29-year-old graduated Hendrix College in 2007 an All-American in basketball with a degree in theatre and kinesiology – and $40,000 in debt she couldn’t repay.

“I was that girl that went back to my parents’ house, living in the basement,” she said.

Many years earlier, Huggins had been singed by a spark while her dad was welding and refused to go anywhere near the activity again. But during college summer breaks, she’d done some basic welding in a boat factory in her hometown of Clinton, and she continued working there after college.

After a tornado destroyed the factory, she decided to get serious about welding and discovered she loved it. Soon she was traveling the country working in nuclear power plants and earning enough to pay off her debt in three years. She bought a car and a house in Conway.

Today, she teaches welding at the Plumbers and Pipefitters Joint Apprenticeship Center in Little Rock, a state-funded program where 12 students learn a skill that in 18 weeks will take many of them from minimum wage backgrounds to $18 an hour. She tries to encourage more women to follow her example. Classes are free and also available in Fort Smith and El Dorado. The school’s phone number is 501-562-4482.

Huggins this past Tuesday shared her story during a panel discussion at Jobs Now, a summit sponsored by the Arkansas State Chamber of Commerce. Before an audience of 500, she wore a smart business suit and spoke confidently alongside her fellow big shots on stage.

The conference’s purpose was to consider ways to match unemployed and underemployed Arkansas workers, like Huggins once was, with the tens of thousands of skilled trade jobs that are remaining unfilled and those that will be available as older workers retire. Steve Williams, CEO of Maverick Transportation, said he had parked 100 18-wheelers because he couldn’t find reliable drivers. That job starts at $52,000.

Two common mentalities clearly need to go by the wayside.

One is that learning a trade is somehow inferior to going to college. Too often, young people are encouraged to make good grades so they can get a scholarship – and if they don’t go to college, well, maybe they can get a job in construction or something. Skilled tradesmen often earn higher salaries than college graduates, and their jobs require no less brainwork.

“We don’t put in nuclear powerhouses by being a bunch of idiots,” Huggins told me. “You’ve got to know offsets, you’ve got to do fractions and multiplication and all this stuff, and at times even a little bit of calculus here and there.”

The other outdated attitude is that “getting an education” means leaving home for four years after high school. Colleges and universities should be oriented toward nimbly moving students of all ages to employability in an ever-shifting economy. Moreover, as Dr. Glen Fenter, president of Mid-South Community College, said during the panel discussion with Huggins, all students should graduate high school with a job skill, not just a diploma.

Some of this is already happening – the state-funded Plumbers and Pipefitters Joint Apprenticeship Center being an example. At Northwest Arkansas Community College in Bentonville, some students, instead of earning credit hours, obtain certificates that move them straight into jobs with Walmart and its suppliers. Many high school students take concurrent credit classes that shorten their college careers. At Maumelle High School, students declare a “pathway” and leave school with a marketable skill.

How do we get more of this? Joe Quinn, Walmart’s senior director of pubic affairs and government relations, said in the panel discussion that the next governor should make workforce development a signature issue.

Both Asa Hutchinson and Mike Ross have shared ideas on the campaign trail. Hutchinson favors economic development plans tying together high schools and two-year-colleges based on regional opportunities. Ross has called for sending reports home with eighth and 11th grade students projecting common careers and salaries when they enter the workforce. “Too many people today are going to college and getting degrees in what makes them feel good rather than where the jobs are,” Ross told school board members this summer.

That’s sort of what happened to Huggins, but in a good way. She got a degree that made her feel good, and now she has a career that makes her feel good.

A drugstore quits cigarettes

Business and economics, Health care

By Steve Brawner
© 2014 by Steve Brawner Communications, Inc.

CVS Pharmacy, a national drugstore chain, stopped selling cigarettes last week. This was big news because it was so unusual. And if anyone is wondering why the United States is spending far too much money paying for health care that isn’t making Americans healthier – those first two sentences should help explain it.

The chain is rebranding itself as “CVS Health” as it empties its shelves of the tobacco products that contribute to one in five American deaths, according to the Centers for Disease Control and Prevention (CDC). The company did not have a sudden epiphany that tobacco is bad for us. It’s trying to find a market niche as a health care provider. Like other pharmaceutical retailers, it also is offering basic medical services such as flu vaccines and blood pressure tests.

This is a welcome change because drugstores – which supposedly sell us products to make us well – are among the unhealthiest retailers in the country. The national chain in my area – I won’t use the name, but it’s new slogan contains the word “healthy” – sells cigarettes, candy and colas behind or near the cashier, who is located only feet from the doorway. Rows upon rows of candy, in fact, are sold in that store, along with chips and other salty snacks. It does sell cereal, and there’s a small refrigerated section that contains juice and milk, along with frozen pizza and ice cream. The gas station that changes my oil sells bananas, oranges and apples. Not so this drugstore, where virtually every grocery item is a processed food. The drugstore does sell bottled water, which, though a waste of money, is at least good for you.

You can’t really blame the drugstores for this. I guess they have every right to sell us what we have every right to buy, and Americans in general and Arkansans in particular buy a lot of tobacco, candy and processed foods. According to the CDC, an estimated 41.1 million Americans, or 18.1 percent of us, smoke cigarettes. In Arkansas, it’s 27 percent, ranking the state 49th, and not in a good way. More than one-third of Americans are obese.

The United States spends about 18 percent of its gross domestic product on health care – far more than other industrial countries. Some say it has the “best health care system in the world,” and if you judge it by one metric – the ability to treat certain serous diseases, that’s true. But it’s burdening us and future generations with unsustainable debt, and was doing so long before Obamacare was created.

The health care system itself is partly to blame. Among its biggest problems is that it rewards all the wrong behaviors. It pays medical providers far more money for treating diseases than it does for curing them and pays them almost nothing for prevention. A pharmacy selling us cigarettes and then selling us drugs (and charging the government for them) to treat the effects of those cigarettes? That’s the American way.

But just as it’s very hard for schools to educate students without parental support, it’s difficult for the health care system to treat patients when we don’t treat ourselves. Americans see “health care” largely as the act of taking a pill, right now, to make us feel better, right now. It’s no wonder drugstores sell cigarettes and candy. They’re drugs. One produces a nicotine high, and one produces a sugar rush.

So while we’re talking about state and national policies, we also have to talk about personal responsibility. In fact, the conversation must start there, even if it’s a little uncomfortable, just as writing this column has been. (Most are.) As Arkansas Surgeon General Dr. Joe Thompson said recently as we discussed various forms of health care reform, “If we don’t get control over our obesity and of our hypertension and our tobacco use, it doesn’t matter how much money we’re spending. We’re going to sink the boat.”

Will a drugstore clearing its shelves of America’s most harmful drug keep that boat afloat? No, but it certainly can’t hurt. It made its choice based on free market principles. Let’s hope the market rewards it, and that others freely follow its lead.

The minimum wage: Make it about work, not fairness

Business and economics, Elections

By Steve Brawner
© 2014 by Steve Brawner Communications, Inc.

Arkansans in November will vote on whether or not to raise the minimum wage incrementally from its current $6.25 an hour to $8.50 by the beginning of 2017. There is no organized opposition, the State Commerce of Commerce doesn’t have an opinion, and polls have shown it is likely to pass.

For perspective on this Arkansas-based issue, let’s check with a self-described “zillionaire” from Seattle.

Nick Hanauer earned his billions starting and helping start more than 30 companies and was an early investor in Amazon.com. He’s written a widely shared piece for Politico magazine, “The Pitchforks Are Coming … For Us Plutocrats.” A plutocrat is a powerful, wealthy person.

Hanauer says the shrinking middle class is bad for everyone. The top 1 percent earn about 20 percent of the nation’s income while the bottom half earn just 12 percent – a gap that is widening. He points out that capitalist societies don’t survive long without a healthy middle class – the economy’s real job creator. As the middle class shrinks, consumers have less money to spend at businesses owned by rich people. Eventually, he writes, the common people get restless, and then you have problems – historically, either a revolution or a police state. As Hanauer jokingly told radio host Tavis Smiley, the super-rich have the most to gain or lose “because we’re the ones that go to the guillotine.”

Hanauer’s only specific prescription in his piece is raising the minimum wage. In Seattle, the economy has boomed even as the minimum wage has increased to $15 an hour – which would be too high for Arkansas.

Arkansas is one of only four states whose minimum wage falls below the federal level of $7.25 per hour. According to the Bureau of Labor Statistics, in 2012 there were 50,000 employees here above the age of 16 earning at or below the federal minimum wage. That’s about 6.9 percent of all workers here who, if they work 40 hours a week and never take a vacation, earn $13,000 a year before taxes.

You might say that’s not fair. If you do, Hanauer would say you’re using the wrong language. He says supporters of raising the minimum wage should stop talking about fairness and instead focus on the economic benefits that occur when work pays. People who earn a livable wage have money to spend at local businesses and don’t require government assistance, as do many fast-food and other low-wage workers now. “The fundamental law of capitalism is, when workers have more money, businesses have more customers,” Hanauer told Smiley.

The same argument is being made – and should be made more aggressively – by supporters of the private option. That’s the state program that uses Medicaid dollars to buy private insurance for low-income Arkansans. It had enrolled 163,480 people as of July 31.

One of the arguments opponents make is that it’s an expansion of government, and they are right, in one way. But remember that the private option is a benefit for “low-income Arkansans,” not “no-income Arkansans.” Recipients are engaged in some form of employment that had made them ineligible for free government health care through Medicaid. They’ve made choices to try to be self-sufficient. If the private option is repealed, the practical result will be that they will get free health care anyway because they won’t be able to afford it on their own. Moreover, the message sent to recipients will be that they are better off not working and instead should depend on the government like some of the people they know.

The wealth gap must be addressed. Without a strong middle class, both democracy and capitalism are corrupted. There’s a reason why the Wall Streeters who nearly wrecked the economy were bailed out: They make the rules. And without a strong middle class, the economy enters a death spiral where not enough people spend not enough money to support not enough businesses, which then hire not enough people.

But how we talk about the wealth gap is as important as what is done about it. Please, no more political movements encouraging us to see ourselves as victims. Hanauer is right: As society debates issues like raising the minimum wage, the focus should be on self-sufficiency, not fairness. There are many things about which Americans can’t agree, including what’s “fair,” but most of us believe this: It’s better for people to earn a real paycheck than to accept a government handout.

Here’s Hanauer’s Politico article.

Here’s Hanauer’s interview with Tavis Smiley.