www.mybaycity.com May 10, 2012
Business Article 6997
Sponsored by Bay Area Chamber of Commerce

Jobs That Went South Returning, Think Tank Study Says

Auto Bailout, University Research, Specialization Credited for Shift

May 10, 2012
By: Dave Rogers

The Midwest had the fastest manufacturing job gains over the last two years

A new Brookings' Institute study brings industrial sunshine to the once cloudy North and Midwest United States.

This is good news for the Saginaw Valley and the Detroit metropolitan area which saw about a 40 percent decline in manufacturing jobs over the last few decades.

"The long-term shift of manufacturing jobs toward the South came to a halt in the first decade of the 21st century, while the Midwest had the fastest manufacturing job gains over the last two years," said the study, released May 9.

"Some of that's from the auto bailout, but also clusters of companies, colleges, and governments in the Midwest supporting sectors like plastics," says Bruce Katz of Brookings' on Dan Bobkoff's Marketplace radio program, adding:

"And, increasingly, different regions are becoming more specialized: The South is now a hub for chemicals, for instance."

The study was released Wednesday at a forum in Columbus, Ohio, on globalization. Greg Hack of the Kansas City Star summarized the study's national findings:

  • Manufacturing wages vary greatly across metro areas. The average in San Jose, Calif., for example, was $145,000, but in McAllen, Texas, was $35,000.

  • The shift of manufacturing to the South ended in the decade studied, and the Midwest had the fastest manufacturing job growth in the past two years.

  • Most metro areas fall into one of six broad categories: computers and electronics; transportation equipment; chemicals; machinery; food production; and low-wage manufacturing industries.

  • Rather than striving to diversify their manufacturing, regions would do better to build on their strengths, the study said.

  • Investments in research and development, high-tech infrastructure, and education and training are needed to encourage what the study calls 'high-road' manufacturing, which has good-paying jobs that require high-level skills and can lead to innovative products and processes.

    Read more here: http://www.kansascity.com/2012/05/09/3603242/study-encourages-policies-that.html#storylink=cpy

    Between 1980 and 2000, the Northeast and Midwest both lost manufacturing jobs, while the South and West gained them, the study's authors state, continuing:

    "This trend represented a shift of manufacturing jobs toward regions where right-to-work laws are more common, and, in the case of the South, toward a lower-wage region where generous industrial recruitment subsidies have long been an important economic development policy tool."

    The reasons for this re-ordering of the industrial geographical landscape are addressed:

    "Yet in the last decade these dynamics have changed. Since 2000, the long-term shift of manufacturing jobs away from the Northeast and Midwest was partially reversed, suggesting that recruitment of manufacturers on the basis of low labor costs and locational subsidies may no longer be an effective regional policy for attracting manufacturing jobs, if it ever was.

    "In the first decade of the century, when all regions of the country lost manufacturing jobs, but the Midwest and South both lost those jobs at about the national rate of 34 percent.

    "During the last two years the Midwest was the nation's largest gainer of manufacturing jobs. Between the first quarter of 2010 and the last quarter of 2011, the Midwest gained those jobs much more rapidly than the nation as a whole (with an increase of 5.2 percent, compared with a gain of about 2.7 percent nationwide). Nearly half of all manufacturing jobs gained during this period were gained in the Midwest. At the same time, the South saw manufacturing job growth of 2.2 percent.

    "Traditional Midwestern manufacturing centers figured strongly in recent manufacturing job gains. Two large Midwestern metropolitan areas, Youngstown and Detroit, had double-digit percentage growth in manufacturing jobs during this period. The number of manufacturing jobs in Youngstown rose by nearly 11.7 percent between the first quarter of 2010 and the fourth quarter of 2011, while the corresponding gain for Detroit was nearly 12.1 percent.

    "An even larger number of Midwestern metropolitan areas accounted for disproportionate shares of the nation's overall manufacturing job growth during this time. In addition to Detroit and Youngstown, Cincinnati, Elkhart (IN), Grand Rapids, Holland (MI), Kansas City, Milwaukee, Peoria (IL), St. Louis, and Toledo each accounted for more than 1 percent of national manufacturing job growth but accounted for a smaller percentage of manufacturing employment.

    "In the Midwest, the trends of the early 21st century were not strong enough to outweigh those of the 1980s and 1990s. The Midwest had 32.7 percent fewer jobs in the fourth quarter of 2011 than in 1980.

    "Meanwhile, the Northeast continued to lose manufacturing jobs in the 21st century. That region, which suffered the most severe manufacturing job losses in the late 20th century, continued to shed manufacturing jobs faster than the national average during the first decade of the 21st century and, unlike other regions, continued to lose manufacturing jobs during the past two years.

    "The Northeast had 59.3 percent fewer manufacturing jobs in the last quarter of 2011 than in 1980, the largest longterm decline of any region."

    States that recruit industries using tax and other incentives are not pursuing sustainable policies, the study states.

    "The continuing use of general business attraction incentives by state and local governments reduces the revenue that states and localities have available to fund investments in training and technology?the kinds of investments that are essential to a high-road approach.

    "The continued decentralization and de-metropolitanization of manufacturing is due, in part, to such geographic low-road policies. In addition to paving the high road, public policy should block the low road by eliminating or scaling back policies of this type." ###

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