A Vital Midwest The path to a new prosperity
John Austin, Nonresident Senior Fellow, Global Midwest, CCGA & Brookings Institution Director Michigan Economic Center
League of Wisconsin Municipalities – Chief Executives Workshop, Fond du Lac, Wisconsin August 19, 2021 There is a unique economic and social development story to the Upper Midwest. As our Northwest Territories they were organized with shared values, governance, political structure…
The Old Northwest Territory Values • Education • Free Labor • Local Governments • Civil Rights • Religious Freedom
Source: Youngstown State University, Center for Urban and Regional Studies, 2005 . Region’s resources and natural features made it target of early development. Rail and water links opened the region “Inspired tinkerers” – innovators, conversion of raw materials and natural bounty built the great industries of America’s 20th century Midwest led US 20th century economic transformation Midwest entrepreneurs created whole new industries: cars, chemicals, planes, cereals, machinery, furniture, appliances, retail sales, pharmaceuticals, and ways to meet the needs and make life better for people.
Industrial cities boomed and a network of large and small factory towns spread across fields and forests of Midwest…
The Great Lakes Economic Region at Night Source: S. Swan, UM CSCAR, 2003
Immigrants came from abroad. The Great Migration of blacks and whites from the South and Appalachia saw millions come North for jobs and a better life… Large employers and a workers’ movement forged America’s social compact: companies and labor created unique American model of employer-based health care, pensions, unemployment insurance…
Union Membership in 1982
Map Source: B. Affolter-Caine: 2006 This is us, the factory economy that gave us jobs, great wealth and great life here in Wisconsin, the Midwest, until….global competition, technological change restructured our industries…wiping out good paying assembly-line jobs…shuttering doors of employers in many company towns… the “Rust Belt” Region is in Transition
From Industrial Powerhouse… To “Tech Belt”
10 A Vital Midwest
The Midwest’s economic transition can and must be accelerated – to spread opportunity & prosperity to more people and places in a changed world.
11 A Highly Integrated & Interdependent Region – Shared Story
12 Midwest’s Sizeable Economic Footprint
Source: U.S. News & World Report, 2019
13 Unrivaled Innovation Infrastructure
14 Outsized Talent Generation
15 Emerging Sectors
• Water solutions, a growing $891 billion market (2017) • Data analytics and IT, a $3.76 trillion market (2019) • Energy solutions, a $1.35 trillion global market (2016) • Food systems, a $5 trillion market (2015) • Transportation and mobility, an $8.1 trillion market (2015) • Health and bioscience, a sector accounting for 17 percent of the economy (healthcare), with life sciences directly contributing 1.2 million jobs and exports of nearly $90 billion (2017) • Advanced manufacturing, with applications across a variety of sectors, from healthcare to aerospace to water-sensing devices to bioengineered human– body replacement parts
16 Spectacular Natural Assets… 10,000 miles of freshwater coastline, 30,000 islands, and inland lakes, forests, and parks…with climate change affecting location and lifestyle decisions, a region with “woods and water” becomes ever more attractive 17 Unique and Concentrated Deficits
18 Dearth of Capital Investment
Source: Hyde Park Angels analysis of Pitchbook Data,, published by the Brookings Institution 19 Infrastructure Needs
20 Fiscally Distressed and Racially Segregated Communities
21 Outdated Employment Security Compact
22 Covid-19 has twisted the picture a bit
Some of the existing forces will be enhanced and accelerated • More innovations, products and services urgently needed: in health care, mobility/transport systems, food systems, communications systems • More automation, digitizing and “human proofing” systems • More flexible, dispersed work arrangements • Enhanced attention to equity & changed demographics, young people, people of color • New communications and media formats • Climate-positive regions and innovators win even more
23 Covid -19 refracted picture
Some of the existing forces will be enhanced and accelerated
• Attributes of place, quality of life to attract/keep talent more important that ever • Non-coastal capital looking for innovations, new locations • Will need even more retraining, upskilling, higher education • More attention to geographic economic disparities • Rearrangement of global supply chains and economic interdependence relationships
24 Success Stories
• Major Metros Minneapolis-St. Paul, MN • Diverse economies, labor forces, skill levels, and • The Twin Cities rank near the top on a variety socioeconomic backgrounds measures for large metros, including per-capita • Minneapolis-St. Paul, Indianapolis, Columbus (OH), income, educational attainment, transportation Chicago, Pittsburgh access, quality of government services, and • College and University Cities and Towns amenities such as parks and bike trails. • Young, high-skilled workforces; connections to innovative Milwaukee, WI research partnerships • Madison, Ann Arbor, Iowa City, State College • 20 years ago, business leaders organized the Water Council to guide the development of a • Most Interesting are the Small to Medium- global research and technology hub through the Sized Manufacturing and Agro-Industrial coordinated efforts of the private and public Communities sectors, academic institutions, and federal • Grand Rapids, Duluth, Eau Claire, Kalamazoo, Decorah, government programs; the network now boasts Ashtabula, Columbus (IN) more than 238 water-technology businesses.
25 Communities have run effective economic development efforts to move through the loss of anchor employers…
26 In other places “company-town” employers stayed on cutting edge…
27 Still others have a unique history, quality of place and life, or are located on a special piece of real estate that makes them attractive places to live, work, and play.…
28 Today “Two Midwests”
29 Policy Priorities and Recommendations – Federal & State
•Emerging-sector innovation hubs •Place Focused Federal Block Grant •Open doors and fair trade •Green and “Blue” leadership •“GI Bill for Workers” •Portable pensions and healthcare •Heartland Visas for Communities in Transition
30 Policy Priorities and Recommendations – Communities
Build on who you are and what you got: •Innovation •Talent •Global Engagement •Remade Infrastructure •Natural and Place-based Assets •Inclusive Growth •Combination Strategies
31 Cleveland Minneapolis
Rust Belt can become “Freshwater Coast”
32 Milwaukee Detroit “The opportunity for the Great Lakes region to thrive economically, as a center of innovation and as an environmentally sustainable, ‘clean-green’ playground for our nation’s people to live and work is unrivaled” Ned Gramlich, Former Federal Reserve Board Governor 33 34 Thank you. Contact me at [email protected] or Linkedin
To learn more, visit thechicagocouncil.org.
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