The troubling corporate shift away from communities

August 27, 2013

The economic success of a region hinges on the businesses located there, but fewer and fewer businesses are calling America’s communities home.

From 1992 to 2012, the number of businesses for every 1,000 people nationwide shrank from 20 to 18.3, according to an analysis of Census data. Just six states — Louisiana, Maine, Montana, New York, Utah and Wyoming — showed increases in the number of businesses per capita. The remaining 44 reported declines. Whatever the cause —globalization, technology, or a shift in priorities — the trend is a painful one for some communities struggling through the economic recovery.

In a front-page story in Tuesday’s Washington Post, Jia Lynn Yang documented how a corporate shift toward maximizing shareholder value has hurt communities such as Endicott, N.Y., the birthplace of IBM. At its peak, the company employed 10,000 people there. Now there are only 700 IBM employees.

“It used to be a given that the interests of corporations and communities such as Endicott were closely aligned,” Yang wrote. “But no more. Across the United States, as companies continue posting record profits, workers face high unemployment and stagnant wages.”

IBM is emblematic of a broad shift in corporate values that some say is contributing to what has become a largely jobless recovery. Over the weekend, Pittsburgh Tribune-Review owner Dick Scaife lamented a local example of that shift: Bank of New York Mellon, on whose board Scaife once sat, will soon have just one Pittsburgh branch, down from the nine the bank had in the area several years ago.

“[Corporate] loyalty and financial interests are no longer tied to a community, a region, or even our nation,” Scaife wrote. “Instead, they are concerned with a few directors or key investors — and with profit, first and foremost.”

Whatever the reason, the shift away from communities is reflected in the data. Of the majority of states that saw the number of businesses per capita shrink over the past two decades, 16 lost two or more firms for every 1,000 residents. The hardest hit among those — Nevada, Arizona and Tennessee — each lost about 3.5 businesses for every 1,000 people. Only one state, Montana, gained more than two firms per 1,000 people.


The number of businesses per 1,000 people has declined over the past two decades in 44 states. The six states with no shading saw an increase in businesses per capita. Those with the darkest shading had the biggest declines. (Source: Census firm and population data.)
Niraj Chokshi reports for GovBeat, The Post's state and local policy blog.
Comments
Show Comments
Most Read Politics
Next Story
Reid Wilson · August 27, 2013