Overview of Midwest Workforce Bill Testa Federal Reserve Bank of Chicago November 21, 2002

Workforce features n Marginally high income/high wage region n A “blue-collar” region; manufacturing concentration”

Region of manufacturing

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

Educational attainment 1990

Workforce features n Out-migration led by younger and more educated. n Domestic in-migration rates lower (often negative); immigration rates positive but lower

Foreign Born Population in MW Metro areas

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

Seventh District: Current unemployment rates

Workforce features n Ag-related employment close to U.S. average; many rural towns struggling n Manufacturing decentralizing to rural towns, but income gains are paltry n Age profile similar on average--older in rural areas, younger in large urban areas

Historic perspective n Region became high-income during late 19th and early 20th century through agriculture, manufacturing & urbanization n Sources of high wealth and sustainability? --Natural resources: transport, energy, land --Agglomeration --Market structure? (union, oligopoly, dis-equilibrium)

Fall and rise (and fall?) n Per capita income n Midwest share of nation’s manufacturing n Employment growth

Per capita income vs. U.S.

MW manufacturing job share of the U.S

Employment growth

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

Recovery: Participation not wages (employ/population)

Recovery: Earnings/worker vs. income per capita

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

Implications and (other) issues n How much will MW economic growth be regained/sustained? n High average incomes? n Welfare-to-work population re-employed? n Work force “shortages” and growth impediments?

Implications and (other issues) n How productive the Midwest workforce? n Can MW “Development” be accomplished? --High tech/creative class occupations and firms.

Policies/priorities for the Midwest? n Training: where to focus? (jobs to match?) n Job market efficiency (spatial and otherwise) n Immigration & assimilation n Facilitating an older/diverse work force n Rural economic transition n Prison released population issues