"It's home to about four million people. It has beautiful lakes and rolling, green hills. The people there have a passion for horses. Faith plays an important role as well. People take pride in their heritage and history. The place is also famous for its whiskey. There are some big high-tech companies there, and government leaders are trying to recruit many more. Odds are they'll be successful, because the workforce is young, adaptive and well-trained.
Kentucky?
No, Ireland.
Earlier this year, the University of Kentucky's Center for Business and Economic Research was asked by the state to examine the incentives and programs the state uses to create jobs in and attract businesses to the commonwealth. The center's report raised a few eyebrows in Frankfort and everywhere else. To paraphrase, and add a bit of artistic license, the report essentially said this:
Tax incentives? They work a little, but most states have similar incentives, and most businesses that take advantage of them were coming here anyway. We're spending about $60,000 in tax cuts for every job "created." No guarantees the job will pay that much.
Workforce training? Now THERE is an idea. Provide skills workers need to get a job right now. Help them learn how to get more skills to get a job in the future. Get them used to lifelong learning. We're spending about $3,000 in workforce training for every job "created." It's pretty much a lock those jobs pay more than three grand a year.
Yet the state continues to place considerably more emphasis on tax incentives than workforce training.
To gauge our progress, Kentucky's leaders constantly compare the commonwealth with smaller states decidedly lacking any reputation as an economic powerhouse — places like West Virginia or Alabama. After all, it's just not fair to compare Kentucky to Ohio or Virginia — states with a much larger population base to build an economy.
Meanwhile, the Celtic Tiger roars. While Ireland certainly has made a commitment to a stable and favorable tax environment, Ireland truly sets itself apart by investing considerably more in its workforce than other countries do in theirs. Irish investment in knowledge has increased by an annual rate of 10 percent over the last decade, compared to a three percent rate common in other industrialized countries. They built stronger links between industry and academia. They strengthened the science and technology curriculum from grade school to graduate school. They even established a policy in which the Irish government now covers the costs of two years of college for any Irish worker who wants to attend. Today, roughly half of Ireland's population has a college-level education. The unemployment rate holds steady at 4.5 percent.
These initiatives and investments have placed the Irish workforce in high demand. The IMD Global Competitiveness Center — a Swiss-based institution that evaluates workforces in over 60 countries — ranks Ireland ahead of the United States and many other countries in a number of key workforce indicators. Ireland's workers best the United States — a country with more than 70 times the population — in productivity, in terms of Gross Domestic Product per person employed per hour. Ireland's workers are considered more motivated than U.S. workers. Irish workers are more flexible and adaptable when presented with challenges. The number of science and engineering graduates per 1,000 students in Ireland is twice that of the United States. Global businesses pay close attention to IMD's evaluations and invest accordingly.
These investments are translating into enormous opportunities for the workers of Ireland. The Irish Development Agency reports over 1,000 overseas companies have established operations there. Recent victories include Intel, which will establish a Digital Health Research Center in Dublin. Cisco Systems is building its Global Research and Development Center in Galway. Other companies making significant investments in Ireland include Microsoft, IBM, Dell and Pfizer.
It may not be fair to compare the four million people of Kentucky with the four million people of Ireland. Yet there is no reason why Kentucky's workforce can't be just as skilled or productive, if our leaders are committed to make the necessary investments. Tax incentives may help a bit, but no tax incentive in the world will work if a company can't find people with the skills necessary to fill the jobs they create. Ireland's experience shows us that Kentucky's economy will only go as far as its workforce will take it.
David Wescott is a Lexington-based senior associate for APCO Worldwide, a global public affairs firm headquartered in Washington, D.C.