Friday, July 20th, 2012
This article is part of the State of Chicago.
In comments to previous installments, some folks have highlighted recent positive news for Chicago – job announcements, the decline in unemployment rate, some indications of a housing market uptick, and improved hotel occupancy – as evidence that perhaps I spoke too soon or was wrong about Chicago.
Well, if I’m wrong, I’d happily take that. If Chicago starts back up on a 90s-like upward trajectory, that would clearly be something to celebrate.
On the other hand, there are risks that come with recovery. Few cities go straight down – not even Detroit did that. The national economy has been in the dumps for quite a while. It probably won’t stay there forever. Recoveries in the national economy will no doubt lift Chicago.
The risk is that, if things improve, leaders in Chicago will simply say, “Whew! Glad we made it through that.” And go back to business as usual. It’s not like Chicago was in an absolute sense ever going down the tubes anyway. But what happened is that it was increasingly falling behind other big cities. This is what could easily happen here. A return to a modest upwards trajectory that means things are better than they used to be locally, but on a comparative basis the city is actually falling behind.
As for the recent uptick, I think you can attribute a lot of it to the view I advance that Chicago is not primarily a global city, but instead Capital of the Midwest. Its performance is heavily linked to the performance of the Midwest and the manufacturing industry overall.
And how is the region doing? Pretty well right now. Last year (May over May, seasonally adjusted) Michigan added 47,500 jobs. Ohio added 75,700. Indiana added 61,300. Only Wisconsin lost jobs in the region. Even extremely troubled metros like Detroit managed to add jobs last year (May over May, not adjusted). Detroit added 33,800 jobs or nearly 2% – pretty strong growth. Between 2010 and 2011, metro Detroit grew manufacturing employment by 7.8% – by far the highest of any large city in America. Unemployment rates have dropped sharply in the region. There has also been an energy boom in places like North Dakota and Western Pennsylvania that are sort of in the fringe areas of Chicago’s primary zone of influence.
With the Midwest rebounding thanks to a manufacturing resurgence, and possibly a bit of the energy boom, Chicago is benefiting. It benefits because of the services it provides to manufacturing and other industries in the region (what’s good for Detroit is good for Chicago). It also benefits in other ways such as tourism. The 92% hotel occupancy in June was attributed to more aggressive marketing in the Midwest. That’s no doubt part of it, but also more of those Midwesterners have jobs now that allow them to indulge a visit to Chicago.
So part of the question is: Is the Midwest comeback sustainable? It’s hard to say. Manufacturing is pro-cyclical, so often leads into and out of recessions. Previous strong manufacturing comebacks have been illusory. Some analysts like Richard Longworth suggest that we shouldn’t celebrate too soon. I personally don’t think we’re in for an era of strong and sustained manufacturing growth at good wages in the Heartland, though the energy boom would appear to be the real deal. This should especially help Chicago as the Ohio shale fields come on line.
In any event, as Rahm himself understands, a crisis is a terrible thing to waste. If Chicago doesn’t take this chance to reform now, in the way that governors and mayors or pushing reform across America, it would be a shame.
So my overall view would be this: let’s celebrate successes and good news along the way, but not let that devolve into just using them to develop a marketing spin story about how fantastic things are in Chicago. And above all, don’t take the foot off the gas on reform and the changes that need to be made.
This concludes my discussion of current conditions. Next I’ll turn to addressing a couple of my unique analytical frames that have generated controversy, namely having a diverse economy vs. a specialized one, and the degree to which Chicago is a global city.