Is legalized casino gambling, with its associated state and local tax revenue, really a silver bullet to solve our state's economic woes?
When I wrote about poverty in Perry County, Alabama a while back I was intrigued by this figure from the U.S. Census Bureau. It appears that poverty in Mississippi — land of gambling tax revenues — is even worse than here in Alabama. And in fact it is. How can that be?
Casino gambling was legalized in Mississippi back in 1990 and the first casino opened in August, 1992. If gambling is such a great economic driver, shouldn't they be doing better than we are by now?
Let's take a closer look at this, starting with the situation in Mississippi before gambling was legalized. Since 1989 figures are readily available, we'll start then, just before gambling was legalized. According to U.S. Census data, 13.1% of Americans lived in poverty in 1989. That figure was 24.1% for Mississippi residents and 17.7% for Alabama.
In 1989, 80 of 82 Mississippi counties (97.6%) exceeded the national average for residents living in poverty. The poverty rate topped 40% in 14 Mississippi counties, with a whopping 56.8% of residents in Tunica County living below the poverty line. The median household income (see this page for median income tables) was $20,136, just 67% of the national average.
At the same time, 64 of 67 Alabama counties (95.6%) exceeded the national average for poverty with 3 counties over 40%, the highest was Greene County at 45.6%. The median household income was $23,597 or 78.5% of the national average.
Fast forward to 2008. How have the two states fared, one with casino gambling (Mississippi now has 29 casinos) and one more or less without? Bear in mind that Mississippi has done gambling right; their casinos are tourist destinations, not just gambling parlors dedicated to harvesting money from local residents. The US Census data says 13.2% of Americans lived in poverty in 2008. That figure was 20.8% for Mississippi residents and 15.9% for Alabama.
Still, 80 of 82 Mississippi counties (97.6%) exceeded the national average for residents living in poverty. The poverty rate topped out at 48.1% in Issaquena County and exceeded 30% in 15 others. The median household income was $37,790 or 72.6% of the national average.
In 2008, 57 of 67 Alabama counties (85%) exceeded the national average for poverty with 6 counties over 30% (none over 40%) the highest is Bullock County at 33.6%. The median household income was $42,666 or 82% of the national average. It may have seemed like Alabama was standing still, but we've made real progress since 1989.
Different approaches to economic development.
While the state of Mississippi opened casinos and built riverboats, Alabama built automobile plants – Mercedes, Honda, Hyundai, the Toyota engine plant – a rocket plant in Decatur, aviation and aircraft maintenance in South Alabama, not to mention catfish farms throughout the Black Belt and biotechnology in North Alabama. Those industries create things, they employ people for good wages and they come with a network of smaller support businesses that also employ people. To put it in old fashioned terms, they grow the local economy.
After construction, except for the tourism component, casinos don’t grow the local economy. They harvest dollars that are already available in the system. Most of the jobs created are service jobs, with relatively low wages. The economic impact is localized, not spread around in a network of suppliers.
Alabama started off in a stronger economic position than Mississippi in 1989 and has at least kept pace with Mississippi’s progress since then, even without casino gambling. There’s a lot to be said for good, old-fashioned economic investment to create jobs and improve lives. It isn’t as sexy as casinos, but Alabama should be thankful for the industrial recruitment of Governors like Jim Folsom, Jr. and Don Siegelman and the increased prosperity their vision has brought to our state.
Now, what's the next step to keep us ahead of Mississippi? Is it widespread casino gambling or high tech/green tech/smart tech industries?