Economy of Memphis, Tennessee facts for kids
Located on the Mississippi River, the metropolitan area of Memphis is one of the largest in the Southeastern United States, ranking 42nd in the United States according to the 2010 census. The city has historically been one of the largest shipping hubs in the Mid-South, dating back to the Civil War, when the port was one of the largest on the Mississippi River and served as a shipping hub for the Confederacy.
As transportation methods developed, Memphis has continued to hold significance as a transportation hub. Now the city is home to the second largest cargo airport in the world, Memphis International Airport, and the world’s busiest domestic airport with 3.9 million metric tonnes. Memphis International Airport and Memphis has had huge significance in the railroad industry. The city has the 3rd largest rail center in the U.S. behind Chicago and St. Louis. It is also one of only four U.S. cities with five Class 1 railroads.
Because Memphis has been such an important city for transportation and shipping, it is attractive to businesses, especially those producing goods shipped nationwide. Three Fortune 500 companies, FedEx, AutoZone and International Paper Co. call Memphis home. These significant businesses have brought a large manufacturing industry. Of the 607,900 jobs in Memphis in July 2014, 209,900 are in the Manufacturing and Transportation industries, around 34.5 percent.
Over the years, the city has become less dependent on its manufacturing and transportation sectors and has diversified its economy especially in services. The Gross Domestic Product of the private sector good-producing industries have grown from $8,309 million to $11,459 million from 2003 to 2013. Over that same time period, the private sector service industries grew from $39,354 million to $48,641 million.
Model for economic development and forecast
Memphis has been one of the slowest cities to recover from the Great Recession that lasted from December 2007 to June 2009 according to Brookings Metro Monitor, and as a result, the city is currently recovering from it slowly and surely. A high unemployment rate just under 9 percent ranking 339 out of 372, in the city.
At the Memphis City Council meeting in June, Mayor A.C. Wharton outlined a budget for the upcoming 2014-2015 fiscal year that was aimed at reducing the cities’ huge pension deficit without raising taxes. The budget predicted several economic trends, including: little growth in population and jobs, the outward migration of people and jobs, low cost of living and housing, and low taxes and no earned income tax.
The city ranks fourth in the country in unfunded Actuarial Accrued Liability. This means the city had the fourth highest amount of future retiree benefits that the municipality is unable to pay. The city cannot pay the insurance premiums because there are so many retiring and not enough taxes to cover those benefits. Essentially, the city is paying off the Other Post Employment Benefits with money it does not have and has not raised through taxes. Because this plan significantly impacted the city workers’ insurance plans, it was received with criticism in the council meetings. The council has assured constituents that they will search to find the money to keep the former insurance plan in place.