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Chapter 4. Central Cities and Metropolitan Areas: Manufacturing and Nonmanufacturing Employment as Drivers of Growth
- University of Pennsylvania Press
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C H A P T E R 4 Central Cities and Metropolitan Areas: Manufacturing and Nonmanufacturing Employment as Drivers of Growth Steven Cochrane, Sophia Koropeckyj, Aaron Smith, and Sean Ellis Over the past forty years, metropolitan areas have grown in both population and employment (see Figure 4.1), with suburban growth within metros outpacing that of central cities. This chapter examines trends in employment and population growth in cities and suburbs of the nation’s metro areas, in particular focusing on the historical deindustrialization and the loss of manufacturing jobs in cities. To analyze these population and employment shifts for the four decades since 1970, we use county-level data from the one hundred largest metropolitan areas. In each metro area, we use the central county containing the largest principal city as a proxy for the central city, with the rest of the counties serving as a proxy for the suburbs. With this approach, we are able to compare population growth, manufacturing employment, nonmanufacturing employment, and wages across central cities and suburbs at a national and regional level, dividing the nation into its four census regions. It is clear that, historically, manufacturing was concentrated in cities and deindustrialization has occurred primarily in the Rust Belt cities of the Northeast and Midwest. In 1970, nearly 63 percent of metro-area manufacturing employment was located in central cities; in 2011, the share was 53 percent. Manufacturing employment fell in central cities by 48 percent between 1970 and 2011; the suburban decline was 23 percent. 66 Cochrane, Koropeckyj, Smith, Ellis We find that the decline of manufacturing and the exodus from central cities has slowed and, in some cases, reversed with the onset of the Great Recession. We also note a reversal in population and nonmanufacturing employment growth rates in central cities versus suburbs and conclude with these data and their regional components. The Decline of Manufacturing The industrial structure of the U.S. economy has been undergoing a shift for decades: Manufacturing output and employment in absolute numbers and as a share of total output and employment have been declining since the late 1970s, while service employment has grown steadily. Manufacturing employment is now about 40 percent lower than it was at its peak in 1979, while service employment has nearly doubled. As a result, manufacturing now employs only 9 percent of the workforce, down from 22 percent in 1979, while the service share has grown from 54 to 69 percent (see Figure 4.2). This shift has presented a tremendous challenge to the cities, where manufacturing was historically concentrated. The timing of the decline has not been steady but rather has accelerated during recessions. In the aftermath of the recession of the early 1980s, man80 81 82 83 84 85 86 87 70 74 78 82 86 90 94 98 02 06 10 Population Employment Figure 4.1. Population and employment in metropolitan areas, percent of U.S. total, 1970–2010. Bureau of Labor Statistics, U.S. Census Bureau, Moody’s Analytics. 35.171.22.220] Project MUSE (2024-03-28 13:00 GMT) Manufacturing and Nonmanufacturing Employment 67 ufacturing failed to recover completely for the first time in post-World War II history. Similarly, only partial recovery characterized the rebound from the early 1990s recession. Following the recession of 2001, no rebound occurred . Rather, manufacturers continued to shed jobs throughout the economicexpansionthatfollowed .Duringthe2000s,manufacturingemployment declined by one-third—a loss of 5.9 million jobs. This represents nearly threequarters of the jobs lost since the late 1970s peak. Manufacturing employment bottomed out in early 2010 and has increased by only about half a million jobs since. One important reason for this significant loss of manufacturing jobs is implementation of labor-saving technologies and equipment (Rowthorn and Ramaswamy 1997: 20–24). Investments and improvements in capital equipment, particularly computer and information technology advancements, as well as more efficient processes, have enabled manufacturers to raise their output and keep pace with increasing demand without a corresponding increase in the number of workers that they employ. Gains in productivity for service industries have been much slower, and the need for workers has not fallen as much. Of course, the role of labor-saving technology in job loss depends on the degree to which capital can substitute for labor and on the availability of a skilled labor force. Germany has been able to maintain manufacturing employment at about 20 percent because it was able to develop a skilled manufacturing labor force. Figure 4.2...