Nebraska’s economy is the 3rd most diversified, yet people are still leaving
Ever wonder why Nebraska’s economy doesn’t seem to follow the national trend? For example, the nation experienced one of the worst recessions in modern history in 2008-2009, yet Nebraska was somewhat insulated from the effects. The reason – our state has a diversified economy.
According to The Stacker website, Nebraska ranks 3rd best in the nation for the most diverse economy. The only states surpassing us are Texas and North Dakota.
Using the Herfindahl-Hirschman Index, more commonly referred to as the HHI, we can measure the market concentration and market competitiveness of a state. (Fun Fact – This is what the U.S. Department of Justice uses when evaluating potential mergers between corporations.)
According to the ranking, here is the information for Nebraska:
– Industries over 4% Gross Domestic Product (GDP): 9
– Government and government enterprises: $15.1 billion, 12.7% of state GDP
– Top private industries:
— #1. Manufacturing: $13 billion, 10.9% of state GDP
— #2. Real estate and rental and leasing: $11.7 billion, 9.8%
— #3. Finance and insurance: $11.7 billion, 9.8%
— #4. Professional and business services: $11.2 billion, 9.4%
— #5. Educational services, health care, and social assistance: $9.8 billion, 8.2%
Nebraska is plainly an agricultural state: Beef, pork, corn, and soybeans comprise the state’s main exports. Nebraska, however, also has Omaha—home to Berkshire Hathaway, Mutual of Omaha, TD Ameritrade, Woodmen of the World, Union Pacific, and Gallup. Nebraska is also a major telecommunication, insurance, information technology, and freight center.
So, we need to ask ourselves, if Nebraska has such a diversified economy and is somewhat insulated from national recessions – why are people constantly leaving our state? There are jobs available, but people keep leaving.
According to IRS data, Nebraska is losing wealth and people to Texas, Florida, Arizona, Colorado and Missouri. All these states have better tax climates than Nebraska, yet less diversified economies (except for TX). Maybe since Nebraska already has jobs available for people, instead of focusing on recruiting new industries or businesses to the state, we need to lower our taxes so the firms already here can expand. There is an opportunity cost to every decision government makes, and maybe it’s time that becomes part of the discussion in Lincoln.