BY ROBERT STEWART | STAFF WRITER
PUBLISHED JAN 21, 2022 AT 3:33 PM | UPDATED JAN 21, 2022 AT 8:14 PM
Optimism isn’t in scarce supply for Louisiana’s economy in 2022, but qualified workers, available homes and effective supply chains might be, state economic leaders said Friday.
During the 2022 Louisiana Economic Outlook Summit, experts from a variety of sectors said Louisiana’s projections for growth hinge on several factors, most notably the need for skilled workers to fill labor needs.
“That’s going to continue to be a pressure, this competition for talent across the U.S. and the globe,” said Don Pierson, secretary of Louisiana Economic Development.
The discussion was moderated by Judi Terzotis, president and publisher of The Advocate, The Times-Picayune and The Acadiana Advocate, and Peter Kovacs, editor of the three newspapers. It was sponsored by Entergy .
Panelists noted the Pelican State continues to fight its neighbors for talent, particularly Texas. Jobs are available, but a cumbersome tax code, lagging infrastructure and quality-of-life factors are driving people away.
Companies are still investing in Louisiana, Pierson said. Capital expenditure commitments of more than $20 billion poured in last year despite the ongoing impacts of COVID-19 and severe weather.
Louisiana needs to upgrade its digital tools to match available workers to open jobs for those projects, and it must strengthen its educational system to grow them at home, Pierson said. Investing in broadband access to allow people to work remotely when needed is key.
Federal dollars are still flowing through the state. Pierson highlighted two Build Back Better awards the state secured in December to establish a health sciences corridor and a “green hydrogen energy cluster” to decarbonize south Louisiana’s industrial sector.
“We want to continue this great momentum that we established in 2021, which is really quite remarkable,” Pierson said. “And I don’t say remarkable lightly.”
The effects of COVID-19 will continue to linger. The state’s powerful industrial sector has weathered the pandemic well so far, said Greg Bowser, president and CEO of the Louisiana Chemical Association. However, the contagious nature of the omicron variant is concerning.
Bowser said maintenance contractors are struggling to keep workers and the ongoing supply chain crisis could hamstring the industrial projects, particularly shipping costs that have skyrocketed to three or four times beyond their pre-pandemic levels.
Bowser called for fixing the state’s traffic woes and simplifying its tax code. He said Gov. John Bel Edwards’ move to add local input to the Industrial Tax Exemption Program was fine, but “we just have to figure out a way to put more certainty in the process.”
Without offering specifics, LSU President William Tate also called for “a long conversation about our tax structure in this state.”
He said LSU graduates continue to move to places like Houston and Dallas, where an “entrepreneurial spirit” thrives and where state income taxes are nonexistent.
Convincing graduates to stay also involves investing in higher education research, which Tate said can lead to new technologies or businesses.
He said higher education research leads to a roughly $600 billion impact on the U.S. gross domestic product annually. LSU’s GPD output is about $6 billion each year.
LSU is falling behind Southeastern Conference peers such as the University of Georgia and University of Kentucky in reaping the benefits of investing in research, Tate said.
Tate highlighted five areas of focus for research investment: agriculture and biotechnology, cyber security, ocean and coastal science, carbon capture technology and cancer research.
Funding those five areas “would really change what is happening here and really keep more people in this state to work,” he said.
Tate said lower barriers to entry — namely, a declining emphasis on standardized test scores — has led to an increase in applicants to higher education institutions.
“When we provide greater access, these students not only add value from an economic perspective, they’re actually more inclined to engage in democratic practices as citizens,” he said.
Should more workers pick Louisiana, they’ll need a place to live. But homes may not be so easy to find, said Lacey Conway, president and CEO of Latter and Blum Inc., a New Orleans-based real estate giant with offices across the state.
Driven by low mortgage interest rates, home sales are at their highest level nationally in 15 years, Conway said. Realtors have seen similar trends in Louisiana.
Conway said the market has likely reached “peak velocity,” though homebuyers are still keen on making a move thanks to the low interest rates.
But where people will buy or build hasn’t been answered.
Home builders are working through staffing shortages and cost increases, which could prevent new houses from coming online. Quality-of-life factors are also at play, particularly rising homicide rates in Baton Rouge and New Orleans, Conway said.
“If people don’t feel safe, nobody wants to buy a house here,” she said.
Any economic momentum could be blunted by severe storms. Major weather events over the last two years — led by Hurricanes Ida and Laura — have inflicted roughly $4.5 billion worth of damage in the state, said Phillip May, president and CEO of Entergy Louisiana.
“We believe the frequency and the intensity of such events are likely to increase over time,” May said. “Our view of how we need to upgrade our grid … needs to be moved at a faster pace.”
However, hardening the power grid will take time because of the high costs associated with repairs and replacements. Entergy has 35,000 miles of distribution lines and 6,000 miles of transmission lines alone.
May said Entergy will continue to lobby Congress for additional federal aid to help defray those costs so customers won’t see higher rates. The utility titan will also apply for federal funds from the Building Resilient Infrastructure and Communities program, or BRIC.
Renewable energy and reduced emissions are also crucial for economic growth. May said greater sources of renewable energy are around the corner.
“Solar is the path forward for that right now,” he said. “Wind will be the path forward for the end of this decade and beyond.”