Southwest Michigan Prosperity Region Region 8: Thoughts from an interested outsider

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1 Southwest Michigan Prosperity Region Region 8: Thoughts from an interested outsider George A. Erickcek W.E. Upjohn Institute for Employment Research September 24, 2014

2 So what is behind the Regional Prosperity Initiative? Too many regions and boundaries Some make sense MPOs and watershed Others: not so much Administrative boundaries are different from economic boundaries Is it important for service agencies to have common boundaries? Are the service boundaries prepared by the Governor s office the right ones does it matter? What is stopping silos from being constructed? 1

3 Clear regions: U.P. Lansing Grand Traverse Grand Rapids Pressure points: Jackson and Ann Arbor and Monroe St. Clair County What about Region 8? 2

4 What defines a region? Common resources I-94 is the economic backbone for the region Central place For example Lansing, Grand Rapids, and Traverse City For us: not really Shared identity Not Detroit? Shared economic base Manufacturing and agriculture 3

6 The region clearly has three employment centers County of residence Berrien Branch Calhoun Cass Kalamazoo St. Joseph Van Buren Berrien Branch Calhoun Cass Kalamazoo St. Joseph Van Buren Note: Areas highlighted in dark blue are central counties (core) employing greater than 50 percent of their residents. Commuting counties where greater than 5 percent of residents commute into a core county are highlighted in medium blue. Source: Census On the Map, 2011 Primary Jobs. 5

7 Mission statement Southwest Michigan is recognized as a region where successful, thriving, and innovative people, businesses, and communities prosper through sustainable practices and collaborative development. 6

8 Goals Improve the livability of our region s communities to attract and retain talented workers Promote talent development and retention Encourage expansion and improvement of regional infrastructure Advance regional communication and collaboration 7

9 Revising an old model: A vertical flow model approach to economic development Attracting more activities Standard Economic development practices Success is measured vertically Econ. Activity Econ. Assets Building a more attractive environment Environmental nurturing 8

10 Common challenges While it can be debated whether Region 8 is a region, the area shares common challenges Aging work force Education attainment A broadening economic base A large number of working poor 9

11 More retirees, 30-somethings, and tots 18,000 Population Profile of Region 8 16,000 Number of persons 14,000 12,000 10,000 8,000 6,000 4, , Age 10

12 The area s manufacturers may be facing a real labor problem within the next 10 years Percent of occupation group Age Profile of Occupations 48,439 Jobs 54,451 Jobs 370,112 Jobs Production Health Other occupations Source: IPUMS USA

13 Education attainment appears to be an issue Education requirements of 50% of postings are unknown. Education requirements of postings % Education attainment of employed % 7% 36% 16% 28% 37% 12% 11% 28% Dropout High school Post. Sec. Source: IPUMS USA 2012; BurningGlass Assoc. Bach. Grad. Note: Job postings contain an unknown mix of certifications and associate s degrees. 12

14 What is with the 20- to 34-year-olds? Percent of age group Age and Education and older Associate's Bachelor's Graduate 13 Source: IPUMS USA 2012.

15 Education matters for employment Percent of employment status Educational Profile of the Labor Force Less than HS High school Some college Unemployed Associate's Bachelor's Graduate Employed Source: IPUMS USA

16 Employment growth is expected in services outside of health and tourism 600 Employment Forecast Thousands of year-round jobs Manufacturing Other services Health Leisure and hospitality 0 Government

17 All of them grow out of the traditional regional export-base economic model Export activity Non-export activity Indirect and induced Manufacturing goods Tourism Hospitals Regional shopping malls Retirees amenities--social Security Convenience retail Outpatient medical Personal services Coffee shops 16

18 We ship out a lot of manufactured goods AND services, as well 200,000 Estimated Base Employment in Region 8 180,000 Employment 160, , , ,000 80,000 60,000 40,000 20,000 - Other Services Other services Manufacturing Manufacturing Healthcare Finance Finance

19 A.L.I.C.E. Asset Limited, Income Constrained, Employed A project to examine what it costs to survive for working people in Michigan Unlike the federal poverty rate, the ALICE budget looks at local conditions including housing, childcare, food, transportation, healthcare, taxes, and miscellaneous expenses to build a household survival budget 18

20 The county s unemployment rate is nearly back to pre-recession levels 16 Unemployment Rate Michigan Source: BLS and Upjohn Institute. Calhoun County 19

21 Calhoun County needs only 760 more jobs to reach pre-recession employment levels. 105 Index of Total Employment (100 = 2000 Average) Michigan Source: BLS and Upjohn Institute. Calhoun County 20

22 Even adjusting for inflation wages have declined in some industries since the end of the Great Recession Industry Employment change, Wage percent change, Calhoun Kalamazoo Calhoun Kalamazoo Agriculture Construction Manufacturing 1,054 1, Wholesale trade Retail trade Transportation Information Finance and insurance Real estate Prof. and tech Management Admin. and waste Educational services Health care Arts, ent., rec Hospitality Other services Source: BLS Quarterly Census of Employment and Wages and BEA Personal Consumption Expenditures. 21

23 Wages locally and statewide have been relatively flat 1,200 Average Weekly Wage (adjusted for inflation) Average weekly wage ($) 1, Michigan Calhoun County Source: BLS Quarterly Census of Employment and Wages and BEA Personal Consumption Expenditures. 22

24 What and who is A.L.I.C.E.? These households are not in poverty Many people earning good wages, $15 to $16 per hour, are at A.L.I.C.E. levels The survival budget includes no money for dining out, saving, or random expenses beyond the 10 percent miscellaneous 23

25 A.L.I.C.E. households are struggling but not living in poverty Household Income Levels Percent of households Below Poverty A.L.I.C.E Above A.L.I.C.E. Calhoun County Kalamazoo County 24

26 A.L.I.C.E. household monthly survival budget Single adult Adult and one childcare Married and two childcare Calhoun Kalamazoo Calhoun Kalamazoo Calhoun Kalamazoo Housing Childcare ,059 1,201 Food Transportation Healthcare Misc. 10% Tax Total 1,393 1,462 2,670 2,804 4,294 4,536 Total hourly

27 What job openings are out there? BurningGlass Labor Insight Scans job websites (monster.com, indeed.com) and company and government websites directly Found 2,758 jobs posted in Calhoun and Kalamazoo Counties in the last 30 days We were able to match wages collected by the Bureau of Labor Statistics for 2,156 of those jobs 26

28 Are available jobs above A.L.I.C.E. thresholds? 75 percent of postings are for jobs that have entry-level wages that are below the household survival budget ($16.17 for Kalamazoo and $15.41 for Calhoun) Between 55 and 60 percent are above the household survival wage at the median Source: Burning Glass Labor Insight and BLS Occupational Employment Survey. 27

29 The top 10 occupations posted in the last 30 days start below A.L.I.C.E. wage levels; many can support a family at the median Occupation Postings Calhoun median wage Kalamazoo median wage Calhoun A.L.I.C.E. Kalamazoo A.L.I.C.E. Heavy truck drivers Above Above Retail salespersons Below Below Customer service reps Below Below Sales representatives, wholesale and manufacturing Above Above Registered nurses Above Above Retail supervisors Above Above Secretaries and admin. assistants Below Below Maintenance and repair Above Below Food prep. and serving, fast food Below Below Medical managers Above Above Source: Burning Glass Labor Insight & BLS Occupational Employment Survey 28

30 Why is this important? A.L.I.C.E. is the first attempt to identify the working poor customized for local conditions A.L.I.C.E. provides evidence of the shrinking middle With wage stagnation we see lagging consumer spending, which is a major driver for the local area 29

31 Thank You and Questions 30

Forecast for Muskegon County was a great year!

Forecast for Muskegon County was a great year! 2014 2015 Forecast for Muskegon County 2013 was a great year! George A. Erickcek Brian Pittelko W.E. Upjohn Institute for Employment Research January 31, 2014 A special thanks to: 1 Outline Most think