Overview of Midwest Workforce

Bill Testa

Federal Reserve Bank of Chicago

November 21, 2002

Workforce features

Marginally high income/high wage region A “blue-collar” region; manufacturing

concentration”

Region of manufacturing

Manufacturing share of total employment

10

15

20

25

30

35

1978 1982 1986 1990 1994 1998 2002

per

cen

t

Midw est

United States

Region of manufacturing

Mfg share of total employment

10

15

20

25

30

35

1978 1982 1986 1990 1994 1998 2002

pe

rce

nt

IL IN MI WI IA

Workforce features

Education attainment--higher HS and HS-plus; lower at “college/college-plus”

Educational attainment 1990

< H.S. H.S. Grad Somecollege

College Adv.Degree

U.S. 24.8 30.0 24.9 13.1 7.2Illinois 23.8 30.0 25.2 13.6 7.5Indiana 24.4 38.2 21.9 9.2 6.4Iowa 19.9 38.5 24.7 11.7 5.2Michigan 23.2 32.3 27.1 10.9 6.4Wisconsin 21.4 37.1 23.8 12.1 5.6

Workforce features

Out-migration led by younger and more educated.

Domestic in-migration rates lower (often negative); immigration rates positive but lower

Foreign Born Population in MW Metro areas

Figure 31 - Foreign born as a share of total popluation in Metro Areas

0 2 4 6 8 10 12 14 16 18 20

Chicago, IL

Cincinnati, OH-KY-IN

Cleveland-Lorain-Elyria, OH

Detroit, MI

Indianapolis, IN

Milwaukee-Waukesha, WI

Minneapolis-St. Paul, MN-WI

Pittsburgh, PA

St. Louis, MO-IL

percent1990 2000

1317

Source: U.S. Census Bureau, data is for PMSA's.

Workforce features

Urban/rural split similar to U.S. Large cities among most segregated

Seventh District: Currentunemployment rates

Sioux City

Des Moines

Cedar Falls/Waterloo

Cedar Rapids

Iowa City

Peoria

Dubuque

Davenport/ Moline

Springfield

Rockford

Janesville

Madison

Kankakee

Oshkosh

Sheboygan

Green Bay

Wausau

Bloomington/ Normal

Decatur

Champaign/Urbana

Gary

KenoshaRacine

Chicago

Benton Harbor

Milwaukee

Lafayette

TerreHaute

Bloomington

SouthBend

Elkhart

Kalamazoo

Kokomo

Muncie

Grand Rapids

Lansing

Saginaw

Indianapolis

Fort Wayne

Jackson

Ann Arbor

Flint

Detroit

September 2002

Unemployment Rates (SA)

Over 5.5%

4.5 to 5.5

3.5 to 4.5

Under 3.5

Workforce features

Ag-related employment close to U.S. average; many rural towns struggling

Manufacturing decentralizing to rural towns, but income gains are paltry

Age profile similar on average--older in rural areas, younger in large urban areas

Historic perspective

Region became high-income during late 19th and early 20th century through agriculture, manufacturing & urbanization

Sources of high wealth and sustainability? --Natural resources: transport, energy, land --Agglomeration --Market structure? (union, oligopoly, dis-equilibrium)

Fall and rise (and fall?)

Per capita income Midwest share of nation’s manufacturing Employment growth

Per capita income vs. U.S.

Per capita personal income, MW vs. US

94

96

98

100

102

104

106

1978 80 82 84 86 88 90 92 94 96 98 00

US

av

g =

10

0

MW manufacturing job share of the U.S

Midwest share of US manufacturing jobs

15

16

17

18

19

20

1978 1982 1986 1990 1994 1998 2002

per

cen

t

Employment growth

Total employment growth

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

1979 1982 1985 1988 1991 1994 1997 2000

% c

han

ge

fro

m p

rio

r ye

ar

USMidw est

Midwest recovery: Transitory?

Restructuring fundamentals --New technologies --Firm re-structuring/industry shifts Idiosycratic factors --S & L crisis --Defense build-down/base closings --Falling dollar --Low energy prices

Recovery: Participation not wages (employ/population)

Employment to population ratios

5254565860

62646668

1978 80 82 84 86 88 90 92 94 96 98 00

% o

f w

ork

ing

ag

e p

op

.

Midw est

US

Recovery: Earnings/worker vs.income per capita

Earnings/tot empl, per capita personal income

90

95

100

105

110

1979 81 83 85 87 89 91 93 95 97 99 "01"

ind

ex

restUS 7-G 7-G pi

The “participation recovery:” To be repeated? (unemployment)

Unemployment rates

0

2

4

6

8

10

12

14

1978 1982 1986 1990 1994 1998 2002

per

cen

t

Midw est

US

Implications and (other) issues

How much will MW economic growth be regained/sustained?

High average incomes? Welfare-to-work population re-employed? Work force “shortages” and growth impediments?

Implications and (other issues)

How productive the Midwest workforce? Can MW “Development” be accomplished? --High tech/creative class occupations and firms.

Policies/priorities for the Midwest?

Training: where to focus? (jobs to match?) Job market efficiency (spatial and

otherwise) Immigration & assimilation Facilitating an older/diverse work force Rural economic transition Prison released population issues