Alamogordo Town News Special Report: Prosperity Post Covid - Get Out of the Way and Let Business Grow!

The economy within Alamogordo, Otero County and New Mexico was damaged by the COVID-19 crisis in 2020 and into the beginning months of 2021. Productivity plunged, new business development, licensing, and recruitment all but stopped and unemployment spiked. Mandated shutdowns, social distancing, and altered consumption patterns has resulted in many businesses adjusting work hours, some closing permanently and several laying off workers, modifying working conditions to include more automation and less need for employees.

Do not blame the governor and those outside of Alamogordo the issue of the thousands of square feet of vacant and not rented retail space began in Alamogordo long before Covid-19. Self-reflection and holding local political leaders accountable are where solutions begin. We can blame the Democrats; Democrats blame the Republicans, but the fact is the ownership of local jobs and education issues and the solutions to each can only come from within Alamogordo and Otero County. Help in the form of Federal Grants and State Grants can assist but first the local political and business machine must own up to creating a roadmap, accept responsibility for past sins, quit blaming others and remedy the issue with a collaborative, solutions driven resolution towards jobs growth and long-term economic prosperity. Call center recruitment is a 20th
Century solution that is a failed path to jobs growth. Tourism, specialty retail, arts, culture and fitness that takes advantage of the local features of nature are the key to local prosperity.

Just look at the expanded self-check checkout lines at Lowes Grocery Store, Albertsons, Walmart, and McDonalds. Jobs are not being lost locally due to immigrants taking low wage jobs, jobs are being lost due to automation, a business community that is not adapting to changing retail trends and political leadership that must collaborate with small business owners via incentives, tax rebates, and state and federal block grants.

For Alamogordo and Southern New Mexico to move forward and replace lost jobs and incomes, the region needs small business entrepreneurs to fill the void with business startups of businesses that can capitalize on the local resources, tourism, fitness, arts and culture.

During the economic downturn a decade ago, the business startup rate fell and never fully recovered, which contributed to a slow recovery. Alamogordo had its business peak during the 70’s and has had a slow drain and a lack of consensus among the political leadership and the business community to end the economic drain.

The business community also suffers in recruiting due to the downward spiral of the public school system in rankings. In the 1960’s Alamogordo ranked in the top 10 school systems in the US in achievement pay and rankings. Today Alamogordo High ranks in the bottom 1/3 of US High Schools, no longer offers most vocational educational training programs of the 60’s and 70’s and the poverty rate among students is at a record high. The high school is feeling additional pressure and a loss of students and community support due to the proliferation of religious based private educational institutions that pull students from the public system, offer inconsistent curriculums and compete thus lowering even more the pull of funds available to the public education system and further depressing jobs recruitment of large corporate jobs into the area.

The startup rate of small business growth has trended downward since the 1980s. That is troubling because startups play crucial roles in the local economy and the sales tax base that funds local services. Small business entrepreneurs create the most net new jobs in most communities and Alamogordo would not be unique. They are a key source of innovation because new products and services offerings are often pioneered by new companies. And they challenge dominant firms, which helps to restrain prices and expand consumer choices as witnessed locally by the growth of Walmart and the closure of so many small businesses to include more recently several at the local mall such as Penny’s etc.

This Alamogordo Town News spotlight suggests that state and local policymakers should slash regulatory barriers to startup businesses. The state of New Mexico State should repeal certificate of need requirements, liberalize occupational licensing and restaurant alcohol licensing, liberalize licensing requirements of ex-felons and quick start the business licensing of legalized marijuana and hemp businesses.

The Alamogordo city and county government should collaborate on reducing small business owner property tax rates and provide sales tax holidays to small business owners to encourage business growth, sales, and entrepreneurship. The city should implement online permitting and licensing application for new businesses and make a commitment to turn licenses within 5 business days of application. The cities of Southern New Mexico should also liberalize zoning rules for home‐​based businesses and encourage their growth and that of food trucks and locally crafted arts, crafts, and food items.

US trends that are trickling into New Mexico, Ortero County and Alamogordo.

In recent years in the United States, entrepreneurship and business growth and adaptability have trended downward. An indicator of this is the decline in the startup rate for employer businesses, as calculated from the Census Bureau’s “business dynamics” data.

During the economic downturn that began in 2008 and we clawed out of by 2010, the startup rate for new businesses fell below the shutdown rate for several years. Alamogordo was not immune to that trends and the bounce back has never materialized in Alamogordo’s retail sector as witnessed by the many empty retail storefronts on 10th Street, the New York Avenue District and on the White Sands inner city corridor.

The new business startup rate has not fully recovered from the decline, which is one reason why it has taken many years for the unemployment rate to fall to its pre‐​recession low and is now spiked during Covid with questions of its rebound. Political leaders and struggling business recruitment like to point blame for unemployment on liberal unemployment compensation, closures mandated by the governor and deflect responsibility locally for the lack of incentivizing business development and lack of commitment to small business entrepreneurship incubation.

Per the CATO Institute, business permitting, and licensing is a challenge for startups in the restaurant industry, which is the largest industry for new businesses aside from professional services. There are about 650,000 restaurants in the United States and about half are not part of chains. Restaurants employ more than 12 million people. In 2020, the industry was hit hard by the pandemic and government‐​mandated shutdowns. A September 2020 survey found that more than 100,000 restaurants may close permanently.

State fees for alcohol licenses range from about $100 to more than $6,000. But there are 18 states that impose on‐​premises license caps, which limit the number of licenses for each municipality generally based on per capita formulas. Such caps create shortages — often severe shortages — with the result that licenses sell on the secondary market for vastly inflated prices, often hundreds of thousands of dollars. The restrictions on hard alcohol licenses are typically more severe than restrictions for beer and wine licenses. In big cities, full liquor licenses can cost up to $250,000 in California, $750,000 in Florida, $400,000 in Indiana, $320,000 in Montana, and $975,000 in New Mexico. If Alamogordo wants to get serious about catering to tourism and creating real jobs it needs to work with the state assembly and the governor on a process to better procure liquor licenses for Southern New Mexico at a more affordable rate. Further collaboration in efforts begin with the City Commission addressing the concerns of liquor license costs and the few numbers available to Southern New Mexico via the assembly and via the state Liquor Control Board. A resolution of concern is a first step and needs to be taken by the mayor and the city commission.

The complexity of permitting, licensing, and zoning rules, and the discretion it gives to officials, makes it a breeding ground for corruption in many municipalities. Corruption is exacerbated by artificial caps that limit the supply of valuable permits and licenses and by slow bureaucracies that incentivize businesses to bribe officials in order to speed approvals.

Corruption favors incumbent and politically connected and existing businesses at the expense of new and independent businesses. One expert noted on marijuana licenses that “A statewide cap tends to benefit well‐​connected and well‐​capitalized applicants such as large publicly traded companies while excluding smaller entrepreneurs and resulting in less choice and availability in the marketplace.” The lessons from alcohol licensing and the abuse seen needs to be noted as the regulations around marijuana are being debated at the state and local levels.

The 2020 pandemic caused the shutdown of many businesses and threw millions of people out of work nationwide and thousands in southern New Mexico. As the economy rebuilds in 2021, it needs startup new businesses especially in services, tourism, fitness and the arts to create jobs and pursue new post‐​pandemic opportunities.

Startup businesses in the arts, fitness and tourist related realms add value to Alamogordo and Southern New Mexico as well as the state and nation.

To speed economic recovery and support long‐​term growth, governments should remove regulatory barriers to startups.

State and local governments should review all occupational licensing rules and regulations and repeal those that fail cost‐​benefit tests. States should accept licenses issued by other states, explore whether licenses can be replaced by private certification, and reduce the costs and time requirements for needed licenses. States and local governments should repeal most licensing boards as they are detrimental to new business growth. The state and local governments should repeal laws around licensing of ex-felons and encourage them to gain full professional employment rather than punitive long term punishment post incarceration.

Bureaucratic processes should be much faster and more transparent, and most licensing should be done online, automated with status updates available online for transparency reasons. It makes no sense that entrepreneurs burn through cash for months on end waiting for government approvals before they can open their businesses. There is no excuse in small towns and cities in New Mexico nor anywhere in the US that business licenses should take more than two weeks to be executed given the real time data that is in front of everyone via the interconnected web of the internet we live in today.

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Sources:

“Business Dynamics Statistics,” U.S. Census Bureau, www.census.gov/programs-surveys/bds.html
“Federal Policies in Response to Declining Entrepreneurship,” Congressional Budget Office, December 29, 2020. The CBO estimates are based on data from “Business Dynamics Statistics.” The CATO Institute, Elizabeth Weber Handwerker, Peter B. Meyer, Joseph Piacentini, Michael Schultz, and Leo Sveikauskas, “Employment Recovery in the Wake of the COVID-19 Pandemic,” Monthly Labor Review, U.S. Bureau of Labor Statistics, December 2020. And see Opportunity Insights Economic Tracker, https://tracktherecovery.org

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