Stuck in Neutral: Nebraska used to be a leader in creating jobs and spurring growth. Not anymore.

Audio By Carbonatix

Not long ago, Nebraska’s growth was quite literally a national cover story.

Nebraska Gov. Pete Ricketts soared through the air wearing skis and goggles on the Olympic-themed March 2018 cover of Site Selection, an economic development industry magazine.

The cartoon image illustrated Nebraska’s high-flying, three-year run as winner of the “Governor’s Cup,” awarded to the state landing the most economic development projects per capita in the nation.

But when Site Selection last month named the top development states for 2025, Nebraska was nowhere to be found. It didn’t crack the magazine’s top 10 at all, the second straight year it missed the list.

It’s the latest indicator that formerly front-running Nebraska has lost its edge when it comes to competing for jobs and economic growth, creating what state business leaders see as an urgent challenge and cloud darkening the state’s future.

A Flatwater Free Press analysis comparing Nebraska job growth to that of six neighboring states illustrates the state’s diminished economic competitiveness — and suggests it has cost Nebraska 70,000 jobs in recent years.

Those vanishing jobs mean fewer families, less prosperity and lower tax collections to support education and other vital services, said Dana Bradford, an Omaha businessman who has worked on the state’s employment challenges as past chairman of the Greater Omaha Chamber and Aksarben Foundation.

“It’s a silent killer,” Bradford told the Flatwater Free Press. “Somewhere along the line, companies just decided, ‘We are going somewhere else.’”

Economists, business leaders, economic developers and others cite a variety of complex challenges behind Nebraska’s slip in growing jobs, including the state’s worker shortage, a lack of affordable housing and child care, a lack of growth in high-paying jobs and the longtime “brain drain” of young college graduates to other states.

But some also cite a far simpler reason: State leaders have not made growth a priority.

A statewide economic development strategy produced in 2019 by a blue-ribbon panel of Nebraskans was largely shelved. State policymakers did enact some of Blueprint Nebraska’s tax recommendations — in a way that burdened state finances with a deepening structural deficit.

Tens of millions of dollars have been sliced from economic development programs as Gov. Jim Pillen and the Legislature work to balance the budget.

The Pillen administration, through cuts and attrition, has slashed staffing inside the Nebraska Department of Economic Development by 27% in the past nine months alone.

State lawmakers have capped tax incentive payments, creating uncertainty in the programs. Last year, they passed a Pillen-championed anti-China bill that made many of the nation’s biggest corporations ineligible to receive tax incentives, a move they’re now seeking to fix.

Nebraska has “stepped back” from its focus on economic development at the same time that competing states are stepping up efforts, the Greater Omaha Chamber said in a recent report.

“I just don’t think we’ve really had a commitment to growth in the state,” said Eric Thompson, a University of Nebraska-Lincoln economist. “I just think we’ve been focused on other priorities — and that’s OK. But this is one of the things that happens.”

There are recent signs the state has begun to turn new attention to growing jobs.

A Pillen-sponsored tax bill enhancing state tax incentives passed the Legislature this year, as did measures to expand child care support and spur housing construction.

The Nebraska Chamber of Commerce and Industry is preparing to dust off Blueprint Nebraska and give it new life. The chamber earlier this year quietly launched a growth-focused initiative it’s now preparing to roll out statewide.

Matt Williams, the state chamber’s interim president, is hopeful numbers like those in the Flatwater analysis spotlight the urgent need to respond now.

“We have to use new thoughts and new energies and new directions to step up and solve these problems,” he said. “The trajectory we are on right now is not going to be healthy for us in the long term.”

But it won’t be easy. He and other business leaders say it will take a concerted statewide effort — over a number of years — to alter the state’s current course.

(asterisk)(asterisk)(asterisk)(asterisk)

In 1987, the economic anxiety across Nebraska was palpable.

Omaha was reeling from the departure of an energy company — the not-yet-infamous Enron — to Houston. Food giant ConAgra was threatening to leave, too. The deepest agricultural depression in a half-century threatened the entire state. There was a sinking feeling Nebraska was being left behind.

“The sky could be falling,” recalled John Cederberg, a business accountant long active in state policy. “I don’t think it was psychological. It was real.”

In response, the Legislature for the first time enacted major business incentives, providing tax cuts for businesses that invest and create jobs in the state.

The program known by its LB 775 bill number was blasted as costly “corporate welfare.” But the results were hard to argue.

In the decade prior to LB 775, Nebraska’s private sector job growth trailed the average for the other states in the north-central Great Plains — Iowa, Kansas, Missouri, South Dakota, North Dakota and Minnesota.

After, it began easily topping the region average, typically leading all the states but the Dakotas in average annual growth. A Flatwater analysis shows that by 2000, Nebraska had 90,000 more jobs than it would have had it continued to trail the region’s growth as before.

Nebraska remained a regional job growth leader into this century. But sometime around 2010, the narrative flipped.

Nebraska’s job growth had exceeded the regional average in 14 of 19 years prior to 2010. It has trailed the region in 11 of the 16 years since.

Nebraska’s annual average growth rate was 42% higher than the region’s in the two decades before 2010. If it had kept that pace from 2010 on, the state would boast 70,000 more jobs than it currently does.

Instead, it has trailed the region’s growth by 6% in that time frame.

Nebraska has lost ground to every regional competitor except Iowa, which has recently posted even more dismal job growth.

While Nebraska’s private sector employment was flat over the past two years, Iowa lost 28,000 such jobs. The other five states in the region added a combined 50,000 jobs in that time.

The new analysis follows studies released last fall by the Omaha chamber and Aksarben Foundation that found job growth in Omaha and Lincoln is trailing regional peer cities.

But the Flatwater analysis offers a longer view and reveals the starkly different fortunes before and after 2010. That appears to suggest something fundamental has changed.

Josie Schafer, director of the University of Nebraska at Omaha’s Center for Public Affairs Research, said 2010 is meaningful to her, because that’s right around the time Nebraska and the nation hit a “demographic cliff.”

The oldest Baby Boomers were beginning to enter their retirement years, while the smaller millennial generation was moving into the workforce.

“The Baby Boom generation retiring is such a big deal because … we don’t have a replacement for it,” she said.

The resulting worker shortage changed the game, as states’ attention turned from chasing companies to chasing people. Nebraska, it appears, has not fared well in that competition.

That notion is also supported by data on the “brain drain” — the loss through migration of college-educated people — that Schafer tracks.

In 2010, Nebraska was annually losing a net of about 1,000 people with bachelor’s degrees or higher. By 2020: 4,000 per year. The figure is still over 3,000 annually.

Bryan Slone, former CEO of the state chamber, said 2010 also signaled the dawn of a technology boom marked by the explosion of smartphones and apps.

In 2010, Apple sold fewer than 40 million iPhones. In 2015, it sold 230 million.

Nebraska has a growing tech sector, Slone said, but it’s not growing like other states and has not been viewed as a technology state. That’s making it harder to attract tech jobs and young tech workers.

“It’s very easy in this era to go in a downward spiral … because there’s a chicken and egg,” he said. “You can’t grow your economy without young people, but you can’t attract young people without having a growing economy.“

In 2010, Nebraska and the nation were also emerging from the Great Recession brought on by a housing market collapse. Housing construction in Nebraska dipped sharply amid the recession. It has never recovered.

That has led to a shortage of affordable housing and caused housing prices to spike, putting a single-family home out of the reach of many families. That, too, makes it harder to attract workers and families.

Nebraska could long boast cheap housing as a big selling point, and compared to the coasts, that’s still true. But in the seven-state region, a Flatwater analysis of federal cost-of-living data suggests Nebraska’s housing costs since 2008 have risen from fourth highest to the second highest.

“I do believe housing is a big part of this,” Slone said.

The need to build more housing. Attract young workers. Grow tech. All of those have a familiar ring. In fact, the state nearly seven years ago came out with a “blueprint” for tackling such issues.

(asterisk)(asterisk)(asterisk)(asterisk)

During nearly a decade as CEO of Omaha-based Union Pacific railroad, Lance Fritz saw firsthand how ferociously Nebraska’s neighbors fight for jobs.

He remembers Arkansas’ then-governor had a war room next to his office, where maps on the wall with pins and markers denoted new business targets. Iowa, Kansas and Utah aggressively pursued UP jobs — some even making bids to wrest the entire headquarters out of the city it’s been based in since 1862.

“I would get calls all the time with different packages, seeing if they could make it attractive enough to locate there or relocate there — exit Nebraska entirely,” he said.

Some of the offers were tempting, he said, though never quite enough to justify the pain the company and its employees would endure by picking up and leaving.

Nebraska, Fritz said, needs to worry about that equation all the time.

“Whether we recognize it or not, Nebraska is in a fight for its economic survival, and the fact that we are not growing is very troublesome,” he said. “In my personal opinion, we’re not doing enough to make us look attractive to the vast population that could potentially be here.”

Around 2017, Fritz and other Omaha business leaders expressed concerns to then-Gov. Ricketts about the state’s economic trajectory and their difficulty finding workers.

That helped prompt Ricketts, then-University of Nebraska President Hank Bounds and others to launch Blueprint Nebraska, a statewide effort to produce an economic development strategy.

Fritz co-chaired the effort with Owen Palm, a major implement dealer in Nebraska’s Panhandle. Its steering committee featured business and community leaders from across the state, and it received input from thousands of Nebraskans.

In 2019, the panel’s report offered myriad ways to grow. They included tax reform, aligning the state education system from pre-K to career, stepped up housing construction and growing key industries, including tech.

But full-scale efforts to make this plan a reality never got off the ground, Slone and others said.

COVID-19 hit, making it harder to move forward and posing its own economic challenges. Slone and Fritz noted progress was made in some areas, including taxes.

A Blueprint follow-up tax study called for cutting income taxes and unpopular property taxes to make the state more competitive while also broadening the state sales tax to assure stable state finances.

The Legislature under governors Ricketts and Pillen moved to significantly cut both income and property taxes, but hasn’t broadened the sales tax.

And after federal COVID relief money vanished, the pain of simply cutting taxes, but not replacing the lost revenue, has become obvious.

Those are big reasons the state over the last two years has been making hundreds of millions of dollars in cuts to state spending — among them tens of millions in cuts to economic development programs intended to help grow the state.

Such cuts have fallen on an internship program aimed at addressing the worker shortage, a national marketing campaign to attract workers, new housing support, business site development funds and a tax credit helping businesses pay for the cost of hiring and relocating out-of-state workers.

“If you look at the facts, you can easily see (economic development) is not a priority,” said Bradford, the former Omaha chamber chair. “Some people are OK with just focusing on property taxes.”

Without a focus on growing the state, he said, Nebraskans’ tax burdens are only going to increase.

An Omaha chamber report in December likewise raised questions about the state’s “posture toward economic development.”

“Economic development efforts statewide have difficulty succeeding,” it read, “when the state is not an integral partner.”

In addition to the tax changes, Blueprint may have contributed to original decisions by the Legislature to boost funding for affordable housing construction.

Fritz also noted that to attract workers, the Blueprint report had recommended Nebraska focus on becoming a more welcoming state. He said that has been undercut by controversial social issues lawmakers have prioritized in recent years.

While the Legislature’s default position for decades was to support tax incentives, Cederberg and others said, in the past decade such programs have faced more pushback. The Legislature at one point struggled to get the votes to reauthorize the state’s main incentive program, now called ImagiNE Nebraska.

Pillen has also been seen by some within the business community as not friendly to incentives. Last year, Pillen said all of Nebraska’s tax credit and relief programs “should be focused on working-class Nebraskans, not Fortune 500 companies.” And the Department of Revenue under his anti-China bill sent letters seeking to retroactively deny businesses incentives they had earned for growing in the state.

But Pillen also introduced and pushed an incentives bill passed by lawmakers in April, one whose main purpose is to lure high-paying jobs in Union Pacific’s proposed merger with Norfolk Southern. It includes other enhancements to the state’s incentives programs and received praise from the Omaha chamber.

The Pillen administration in a statement defended the governor’s record on economic development, saying he has made it a “central priority.”

The statement mentioned numerous Pillen initiatives, including tax cuts, scholarships for high ACT scorers and a new regional economic development strategy launched with the state chamber in 2024.

The administration has acknowledged recent reductions in the Department of Economic Development, defending it as right-sizing the agency after it swelled due to pandemic-era programs.

“Nebraskans are amazing innovators who can outcompete anyone, anywhere,” Pillen said in the statement. “We’re creating a culture that’s primed for long-term economic prosperity by investing in our kids, cutting taxes, boosting value-added agriculture, and giving businesses the freedom to grow.”

Business leaders, though, say there remains much more to be done.

(asterisk)(asterisk)(asterisk)(asterisk)

During a future-focused meeting in La Vista in late February, the Nebraska chamber brought Blueprint leaders Fritz and Palm back to the stage. Fritz’s message to the hundreds gathered was simple.

“Pick up the ball,” he said.

The gathering kicked off what the Nebraska chamber is calling “Go Big Future,” a plan meant to refocus the state on the growth-centered goals and competitive strategies spinning out of the Blueprint report.

“Some of those things, honestly, if they had been done, we would not see the change we’re seeing in the (job growth) data,” said the chamber’s Williams.

Go Big Future, like Blueprint, will focus on workforce and technology. A third prong: Making sure Nebraska has enough energy to grow — an issue that has risen to prominence since Blueprint.

One of the themes at the Go Big Future kickoff was the need to recognize the challenges the state faces and the effort required to address them.

Nebraska starts with a higher quality of life than most states, Slone said, making him optimistic it can reverse recent job growth trends. But it will take a sustained and broad-based effort.

“This has to be tackled by government, business, philanthropy and community leaders,” Slone said. “Everybody.”

___

This story was originally published by Flatwater Free Press and distributed through a partnership with The Associated Press.