Flickr user Antoine Jamin (CC)
How does high unemployment affect our cities and our landscapes? This abandoned factory is one example.
This post is the final in a series of three. Read the first two.
Employment is a key factor in a region’s growth. A strong labor market means more well-paying jobs are available, making a region a more attractive place for people to move. Growth in the regional economy also generates all sorts of beneficial repercussions, like more business activity, more people to cover the cost of providing public services and healthier, more vibrant neighborhoods.
Similar to other Midwest industrial economies, the steady decline of manufacturing in the U.S. hit Chicago hard. But unlike Detroit or Cleveland, the Chicago region has been able to mitigate some of that decline by growing its business and professional services sectors. And it has location on its side: As the crossroads of America, the region is a transportation and logistics hub.
So how does the Chicago region’s economy stack up nationally? Not very well. While it has the third largest economy in the country, The Chicago region scores low on Brookings Metro Monitor, ranking 72nd out of the top 100 most populated regions in economic performance during and since the recession. In fact, Brookings considers the region as one of the 40 percent of those yet to recover from the recession, still down from its 2008 peak job level.
U.S. Bureau of Labor Statistics pre- and post-recession data show the region’s unemployment rate has been higher than the nation’s every year for the past 10 (mouse over any chart for more info):
Comparing our region to the 20 most populated across the country shows a similar story. Of the top 10 most populated, both Chicago and Los Angeles have had the unfortunate title of worst employment rate in the nation, with Chicago at the bottom for six years out of the last 10 and tying Los Angeles in 2008.
And to round out the top 20, over the past decade, only the Detroit and Riverside, Calif. regions have had a higher unemployment rate than Chicago.
But does this data paint the whole picture? Let’s take age as an example. How old someone is can be a big factor in unemployment. Of all neighboring and peer states, Illinois has the highest rate of unemployment among 55- to 64-year-olds, except for California. How many of these 5.5 percent of unemployed workers aged 55 to 64 have given up and now simply rely on dwindling savings or their children until they start to receive Social Security or Medicare benefits?
While the unemployment rate gets lots of press, you can’t get at the meat of the data without answering questions like the one above. Heidi Shierholz of the Economic Policy Institute notes that, “With more than three unemployed workers for every available job, the economic outlook is bleaker than a slight drop, or even a rise, in the unemployment rate really shows.”
In fact, according to the federal Bureau of Labor Statistics, nationally almost 3 million people, a third of those unemployed, have now been out of work for 27 weeks or longer—which the Bureau classifies as “long-term unemployed.” To gain a clearer picture of what’s going on, it’s best to pair unemployment numbers with the employment to population ratio, which shows how many working-age people are employed
Prior to the recession, in 2006, the percent of working-age people in the Chicago region who were employed stood at 61 percent. Chicago wasn’t doing as well as Minneapolis, Washington, D.C., Boston or Seattle, but wasn’t too far off from other peer regions. Throughout the recession, Chicago stays pretty much in line with those regions.
Still, Chicagoland’s economy has been sluggish in its recovery. Chicago’s bread and butter industries—business services, transportation and logistics, distribution—aren’t growing as fast as the national average. The Federal Reserve Bank of Chicago recently reported that employment growth in Chicago’s top sectors and even the growing education sector underperformed the U.S. average between 1998 and 2009.
And the Chicago region’s population growth has lagged peer metros over the past few years. The latest Census data shows the Chicago metropolitan area gained an estimated 9,802 residents, less than 0.1 percent, in the 12 months that ended June 30, 2014. Of the top 20 most populated metropolitan regions, Chicago ranked 19th in population growth last year, just ahead of Detroit. New York added 91,000 people last year, for a growth rate of .45 percent; Los Angeles, 86,371, or .65 percent; and Minneapolis 33,742 or 1 percent. Is there a direct link to employment, possibly?
Chicago is clinging to the title of third most populous U.S. region.
While Chicago still clings to the title of third most populated region in the U.S., it’s doing just that—clinging. Houston, Minneapolis, Washington, D.C. and other peer cities continue to grow at several times the rate of the Chicago region. This could, for example, result in corporate headquarters and businesses locating elsewhere where they have a larger (and more quickly expanding) pool of employees.
One reason that Minneapolis’ population has grown faster than Chicago’s is because they have a strong economy—one of the best in the country. That and their high quality of life keeps people in the region, resulting in more homegrown Minneapolis businesses that hire more people. So, what can Chicago do to bring its growth rate back in line with the national average?
Chicagoland’s labor market has been slow, but this region has many assets to build on. The region has a $550 billion economy (the 23rd largest in the world), is headquarters to 62 of the top Fortune 1,000 firms, is home to a global stock exchange and 83 consulates and consul generals and has a growing export base. It recently ranked seventh on the A.T. Kearney Global Cities Index and ninth on The Economist’s list of cities that will be the most economically powerful in the world by 2025.
To build on those strengths and overcome fiscal and pension challenges, the region must work together on a coordinated plan for growth.
One key aspect of this is workforce. Manufacturing jobs remain unfilled because of a lack of workers with specific skill sets. The Chicago Metropolitan Agency for Planning reports that as of 2014, there were 28,000 unemployed people in the region looking for work in the manufacturing sector. At the same time, “…manufacturing companies claim[ed] they were having trouble finding skilled workers to fill open positions in the region.”
In response, last year the City of Chicago and Cook County streamlined workforce efforts, combining two agencies into one to eliminate redundancies and be more efficient with investments. In partnership with local manufacturers, World Business Chicago and City Colleges of Chicago, the City launched 1,000 Jobs for Chicagoland Manufacturing to identify skill gaps and provide training for workers. The $200,000 City of Chicago investment, combined with more than $750,000 in funds and in-kind support from the manufacturing industry, is estimated to have the ability to grow the economy by $400 million. These types of initiatives and others, such as UI Labs, are key to attracting and retaining a strong labor pool and growing employment.
Another, equally important aspect is amenities that people want in the places they live. Roads and transit systems that function seamlessly, an abundance of outdoor amenities, a flourishing lakefront and riverfront, a bustling downtown and vibrant communities, plenty of bike infrastructure and a feeling of security and safety—all of these things contribute to a place where people want to live and raise families. It’s key to our region’s future to capitalize on our strengths and improve on our weaknesses.
The Chicago region isn’t a shrinking violet. I’ve mentioned just a few of its assets and how to capitalize on them for economic gain. To get back on the economic track, the region must collaboratively work on these kinds of initiatives and more to create an asset-based plan to grow the labor market, population and economy.
Read the other two posts in the series: