The Economy of Columbia, South Carolina

Overview of Columbia’s Economy

Columbia is the capital and second largest city in South Carolina, with a population of over 133,000 residents. The city serves as a major economic hub for the state and the broader Midlands region.

Some key facts about Columbia’s economy:

• The city’s central location makes it a transportation, distribution, and commercial center. Major interstates I-20, I-26 and I-77 converge in Columbia.
• The metro area has a gross domestic product (GDP) of over $35 billion as of 2021. Key industries include state and local government, healthcare, education, manufacturing, and professional services.
• Major employers headquartered in Columbia include the University of South Carolina, BlueCross BlueShield of South Carolina, Colonial Life & Accident Insurance Company, the South Carolina State Government, Richland School District One, Palmetto Health, and Fort Jackson.

In the following sections, we’ll take a deeper look at the composition of Columbia’s economy and some of the factors that drive economic growth in the city.

Breakdown of Industries and Sectors

Columbia has a diverse economic base spanning both public and private sector industries:

Government

As the state capital and a center of local government, the public sector drives a significant component of Columbia’s economy. Key government employers include:

• State of South Carolina government agencies and departments
• Richland County public school districts
• City of Columbia government
• Federal agencies with regional offices located in Columbia

Government jobs account for over 20% of total nonfarm employment in the Columbia area.

Healthcare

Healthcare is a major employer in Columbia and the surrounding region:

• Local healthcare providers include Prisma Health, Providence Health, Lexington Medical Center, and Palmetto Health hospitals
• The University of South Carolina School of Medicine and other allied health professional programs support medical jobs
• Headquarters for insurance providers like BlueCross BlueShield of South Carolina

Over 10% of employees in the metro work in the healthcare and social assistance industry.

Education

In addition to being a center for state government, Columbia is also hub for higher education and advanced research in South Carolina:

• The University of South Carolina’s main campus is located in Columbia along with satellite campuses
• Multiple technical colleges, seminaries, and allied health education programs
• Public and private K-12 schools employ teachers and administrative staff

Manufacturing

Although manufacturing has declined as a share of Columbia’s economy, it remains an important source of employment. Major manufacturing industries include:

• Transportation equipment manufacturing
• Food and beverage production
• Machinery and fabricated metal manufacturing
• Paper, plastic, and chemical products

Toyota, International Paper, Nephron Pharmaceuticals, Sonoco Products company, and Westrock Coffee are some of the largest manufacturing employers in the region. Proximity to transportation networks and raw materials supports manufacturing activity.

Professional and Business Services

White collar professional and technical services account for over 15% of jobs in the metro area. Key industries include:

• Legal services
• Accounting and financial services
• Consulting services across various domains
• Scientific and technical consulting related to research at universities and medical centers
• Advertising, marketing, and corporate communications

Major employers include Fortune 500 company SCANA Energy as well as many small and mid-sized professional services firms.

Retail and Hospitality

Retail trade and accommodation and food services makeup about 12% of the total workforce in Columbia. Retail locations serve the needs of local residents while hotels, conference centers, and restaurants cater to political, university, sports tourism year-round.

Analysis of Labor Force and Economic Trends

Several key advantages and recent developments give Columbia a solid foundation to support job growth and economic expansion over the next decade:

Growing Population and Labor Force

• Steady population growth – Columbia metro expected to reach nearly 900,000 residents by 2040
• Increasing number of working age individuals and families attracted by economic opportunities
• Provides growing base of workers, consumers, and taxpayers to support the economy

Low Cost of Living and Real Estate

• Columbia consistently ranks very affordably amongst South Carolina cities for cost of living
• Significantly below average cost of living compared to national averages
• Helps attract new residents and price-sensitive businesses while supporting consumer spending power

Emerging Knowledge Economy

• Research-oriented organizations and talented graduates from local universities
• Potential to develop more technology, biomedical research, engineering, and advanced services industries

Infrastructure and Transportation Improvements

• Recently upgraded interstate highway connections
• Expanding local airport routes for freight and logistics
• Established CSX rail routes with expanding inland port terminals

Government Policies and Programs to Promote Growth

Columbia stands to benefit from several new policy initiatives and economic development programs at the local and state level:

Revitalization and Redevelopment Projects

• Public transit expansion and redevelopment of older urban corridors into walkable, mixed-use neighborhoods
• Sports, entertainment, and hospitality venues expanding Columbia’s tourism draw
• Waterfront enhancements, historical preservation, public parks and trails to improve livability

Reducing Barriers for Businesses

• Tax incentives, infrastructure upgrades, and workforce training initiatives to attract jobs
• Streamlined regulatory review, permitting, and licensing coordinated through the Office of Business Development
• Efforts to nurture small business and entrepreneurship

Higher Education Partnerships

• Tapping research and innovations from the University of South Carolina to incubate local startups through the McNair Center for Entrepreneurism and Innovation
• Collaborations on emerging fields like engineering, biotech, and climate sciences

Overall, Columbia is poised to foster economic opportunities in diverse areas like state and local government, higher education, advanced manufacturing, technology, and professional services over the coming decade.

Growth Projections for Major Industries

Based on recent trends and planned developments, analysts expect robust growth in the following key sectors over the next 5-10 years if current expansion continues:

Industry	Estimated Growth
Healthcare and Social Assistance	+15%
Professional and Technical Services	+25%
Accommodations and Food Service	+20%
Transportation and Warehousing	+30%
Finance and Insurance	+22%
Construction	+31%
Retail Trade	+12%

Driving factors for projected industry growth:

• Ongoing population growth to expand customer base
• Plentiful higher education institutions providing skilled talent
• Quality of life, affordability, tax incentives attracting new firms
• Infrastructure upgrades enabling distribution, manufacturing
• Support for startups and commercialization of research

If these projections hold true, Columbia could see 100,000+ new jobs added over the next decade.

Analysis of Income Levels and Wages

Columbia’s average annual salary is close to the national median:

• The average annual wage in Columbia metro is $48,350 as of May 2021
• This compares to a national average of $56,310

Wages are highest in:

• Utilities industry – average salary of $96,530
• Management occupations – $112,250 average
• Legal services – average wages of $108,190

Lower wage service jobs in sectors like hospitality and food service bring down overall averages. Approximately 15% of families in Columbia live below the poverty rate.

While wages are lower on average than the national level when aggregated across Columbia’s mix of industries, the city remains very affordable for the typical household. Housing costs are roughly 40% below national averages.

With a low cost of living and wages on par with other Southeast US metro areas, Columbia remains an attractive location for growing companies and middle income families.

Recommendations to Improve Economic Prospects

Here are some recommendations for how Columbia can facilitate stronger, sustainable, and more inclusive economic growth over the next 10-15 years:

Cultivate a Skilled Workforce

• Expand vocational training and technical programs tailored to high demand sectors
• Develop pipelines for K-12 students, especially those from disadvantaged backgrounds, into science, technology, engineering, arts, and math (STEAM) careers
• Offer continuing education, career services, and workforce retraining programs through school district and community college partnerships

Support Entrepreneurs and Emerging Technologies

• Create small business incubators with shared workspaces, mentoring, and accelerator programs
• Incentivize private funding mechanisms like angel investing and venture capital firms to finance local startups
• Develop the entrepreneurial ecosystem with networking events, pitch competitions, and app challenges

Upgrade Infrastructure

• Expand public transit accessibility to connect workforce with major employment hubs
• Improve intermodal transportation and complete streets for multimodal commuting options beyond cars
• Deploy smart city infrastructure – high speed fiber Internet, connected vehicle technologies, ubiquitous WiFi, sensors and data analytics platforms

Market the Community

• Launch campaigns to promote Columbia as a hub for the knowledge economy, advanced manufacturing, and an inclusive emerging tech hub of the Southeast
• Highlight cultural, entertainment, and natural amenities to attract and retain talent
• Advertise competitive operational costs, tax incentives, and real estate prices

Conclusion

With its economic foundations rooted in government, education, manufacturing,and healthcare, Columbia has demonstrated promising growth over the past decade across diverse industries. The city’s central location, skilled workforce, research institutions, infrastructure, and overall affordability provide competitive advantages to support business expansion and quality jobs moving forward.

By making forward-thinking investments in emerging technologies, entrepreneurship, vocational training programs, and Smart City upgrades, Columbia can facilitate more sustainable, equitable, and prosperous development.

Marketing the city’s existing strengths while cultivating regional partnerships and talent pipelines will also enable Columbia to attract dynamic companies poised to thrive in the 21st century economy.

If stakeholders collaborate on long-term planning and development goals, Columbia has strong potential to evolve into an even more vibrant economic hub and destination for corporate investment across the Southeast.

The components are in place for robust output, employment, and wage growth over the coming decade. Strategic support for both large anchor employers and promising small enterprises can help diversify Columbia’s economic base.

Overall, the Capital City will continue playing a vital role as a center of government and an intersection of regional infrastructure networks for decades onward. With innovation, Columbia can leverage these advantages to also become a hub for leading research, technologies, and inclusive advancement supporting communities throughout South Carolina.