Indicators of Economic Competitiveness Mahoning Valley Peer Metro Report
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May 2017 1 Title VI/Non-Discrimination Policy
It is Eastgate’s Policy that all recipients of federal funds that pass through this agency ensure that they are in full compliance with Title VI and all related regulations and directives in all programs and activities.
No person shall, on the grounds of race, color, national origin, sex, age, disability, low-income status, or limited English proficiency, be excluded from participation in, be denied the benefits of, or be otherwise subjected to discrimination under any of Eastgate’s programs, policies, or activities.
This report was financed by the Economic Development Administration’s Partnership Planning Grant, Eastgate Regional Council of Governments, and the Regional Economic Development Initiative at Youngstown State University.
2 Mahoning Valley Peer Metro Report Contents
Introduction ...... 4
Population Dynamics ...... 7
Traded Clusters ...... 10
Peer Metrics ...... 11
Recommendations ...... 16
Data Sources ...... 18
3 Introduction The Comprehensive Economic Development Strategy (CEDS) for the Eastgate Regional Council of Governments (Eastgate) counties of Ashtabula, Mahoning, and Trumbull was updated in the fall of 2016. The CEDS is the road- map for diversifying and strengthening the regional economy across public, private, and non-profit sectors. The CEDS includes regional priorities and evaluates progress towards achieving goals and objectives that were created through public outreach and steering committees.
The CEDS is divided into six pillars, or themes, that provide the foundation for holistic economic development. They include the following:
• Workforce/Training & Education • Innovation & Entrepreneurship • Access to Capital • Infrastructure & Site Development • Industry & Business Climate • Quality of Life & Community Vitality
The six pillars allude to the importance of developing human capital for the resiliency of the region. Human capital is defined as the skills, knowledge, and experience possessed by a population that are viewed as having economic value. Human capital is tied to the cultural, social, and economic wealth that society may have. The more abundant and diverse human capital is, the more likely a society is to be productive and grow. The human capital of the region is at risk given demographic trends. The following findings are included in theCEDS :
The Region is in the bottom quantile for health
The Region will shrink by 60,000 people over the next 20 years. By 2030, 1/3 of the outcomes in population the state. will be 60+ Sources: American Community Survey 5-Year, Ohio Development Services Agency County Trends, Robert Wood Johnson Foundation County Health Rankings 4 Mahoning Valley Peer Metro Report The demographic findings of theCEDS tasked Eastgate and the Regional Economic Development Initiative (REDI) at Youngstown State University (YSU) to evaluate metrics for regions comparable to the Mahoning Valley to determine what differentiates shrinking and growing populations. The team established peer metropolitan regions by using Metropolitan Statistical Areas (MSA’s) as a baseline. Peers were chosen based on the following criteria:
• within population range of three to eight-hundred thousand • not the state capital • not closer than sixty miles from a metropolitan area with a population over one-million • within eight-hundred miles of Youngstown, OH • have less than thirty-thousand higher-education enrolled students
Each of the metros chosen have experienced deindustrialization. It is important to note that readily available public information was utilized and no true statistical tests for relationships were calculated for this report. The selection process resulted in the following metros:
• Canton, OH • Chattanooga, TN • Davenport, IA • Huntington, WV • Flint, MI • Fort Wayne, IN • Lancaster, PA • Peoria, IL • Reading, PA Scranton, PA • Scranton, PA Flint, MI • Winston-Salem, NC Lancaster, PA • Reading, PA Davenport, IA Fort Canton, OH Wayne, IN Peoria, IL
Huntington, WV
Winston-Salem, NC
Chattanooga, TN
5 POPULATION SHARE OF CORE CITY IN EACH METRO Canton, OH Chattanooga, TN 18% 36%
406, 934 476,421
Davenport, IA Flint, MI
32% 23%
326,019 436,141
Fort Wayne, IN Huntington, WV 15% 71%
362,556 325,455
Lancaster, PA Peoria, IL 13% 32%
470,658 366,889
Reading, PA Scranton, PA 24% 14%
373, 638 560,625
Winston-Salem, NC Youngstown, OH 42% 12%
569,207 556,243
Numbers from 2015 6 Mahoning Valley Peer Metro Report POPULATION DYNAMICS
Utilizing state and metropolitan planning data and the 2010 United States Census, population projections were calculated for each of the metros for 2020 and 2030. The national population growth rate is expected to be 16% between 2010 and 2030. Canton,OH, Flint, MI, Huntington, WV, and Youngstown, OH are expected to shrink below 2010 levels. Chattanooga, TN and Lancaster, PA are expected to gain population at rates greater than that of the nation for this time-period. Growth in small and mid-sized cities outside of the southern and western parts of the United States counters many assumptions about the nation’s growth.
Population Projections for 2030
Chattanooga, TN & Lancaster, PA 18%
United States 16%
Reading, PA 14%
Winston-Salem, NC 14%
Fort Wayne, IN 13%
Scranton, PA 5%
Davenport, IA 3%
Peoria, IL 1%
Huntington, WV -1%
Canton, OH -4%
Flint, MI -5%
Youngstown, OH -8%
7 Why do metros shrink or grow? A complex number of factors may determine a region’s population growth rate. The two components of population growth are birth and migration, both domestic and international. The Mahoning Valley has an aging population, resulting in more deaths than births and a negative young population growth rate. For example, between 2010 and 2015, the MSA had 29,566 births and 36,271 deaths, resulting in a net loss of 6,705 individuals. In most regions, migration influences population growth more than births and deaths.
The MSA has a negative domestic migration rate and meager international migration rate. Between 2010 and 2015, there was a net loss of 10,149 people from the MSA. 1,727 migrated to the MSA from abroad, most of them, settled in Mahoning County (1,383). The following chart illustrates the rates of domestic and international migration for each metro from 2001 to 2014 as a percentage of the total population. In Fort Wayne, IN, Lancaster, PA, and Peoria, IL domestic outflow was neutralized by international migration that resulted in positive net growth. The metros with the least international migration are also the metros that are projected to decline in population.
Rate of Migration as a Percentage of Total Population 2001-2014
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DOMESTIC INTERNATIONAL
US Cluster Mapping Project 8 Mahoning Valley Peer Metro Report
Toledo 57 Cleveland25 Lima Akron • 44 0 48 Canton
23 Columbus 0 Dayton 636 234 Cincinnati
Net Metro Area Migrations 2010-2014 Migrations Area Net Metro 145
In the Youngstown metro, comparing outward and inward migration from 2010 to 2014, the greatest domestic net gains to the region are from New York, NY, Washington DC, New Bern, NC, Philadelphia, PA and Chicago, IL. The largest international migration to the region came from Asia. The greatest net losses in the region are to Pittsburgh, PA, Columbus, OH, Phoenix, AZ, Dayton, OH and Sarasota, FL.
New York, NY (353) Canton, OH Youngstown, OH Asia (400) Akron (2,717) Washington, DC (301) Youngstown (486) New Bern, NC (205) Asia (411) Philadelphia, PA & Cleveland (377) Growth Chicago, IL (193) Growth Dayton (311)
Sarasota (-255) Columbia, SC (-422) Dayton (-234) Pittsburgh, PA (-175) Phoenix, AZ (-455) Nashville, TN (-142) Columbus, OH (-636) Houston, TX (-141) Pittsburgh, PA (-1,065) Ocala, FL (-122)
Decline Decline
American Community Survey (ACS) Metro-to-Metro Migration Flows 9 TRADED CLUSTERS
A traded cluster, or basic industry, is a group of related industries that serve markets beyond the region in which they are located. Looking at traded clusters is one way of understanding the competitive strengths of a region. Traded clusters differ from employment clusters based on job growth. For example, Health Care and Social Services are the largest employers in each of the peer metros with the exception of Chattanooga, TN and Flint, MI where Retail is greatest. However, Health Care and Social Services and Retail in these metros mainly serve the local population and do not attract outside investment. Utilizing the Cluster-Mapping Tool, the top-traded industries by employment for Youngstown in order are:
Business Services Distribution & Electronic Commerce Automotive
Upstream Metal Manufacturing
Food Processing
Comparing the traded clusters of each of the peer metros, the metros most similar to Youngstown, OH are:
• Canton, OH • Flint, MI • Huntington, WV • Lancaster, PA • Reading, PA
Given that Canton, OH, Flint, MI, and Huntington, WV have projected population losses, understanding as to why Fort Wayne, IN, Lancaster, PA and Reading, PA will experience growth requires further investigation.
10 Mahoning Valley Peer Metro Report PEER METRICS
Over one hundred and fifty metrics for the twelve metros were tabulated and compared. Data was retrieved from the Census, Department of Commerce, Bureau of Labor Statistics, StatsAmerica, the U.S. Cluster Mapping Project, and other public sources. Metrics reviewed include the following:
Brookings Metro Monitor U.S. Cluster Mapping Project • Advanced Industries • Cluster Portfolio • Economic Growth • Traded Clusters • Prosperity • Job Creation • Inclusion • Specialization • Gross Domestic Product • Exports • Jobs at Young Firms • Research and Development Expenditure • Competitive Shift • Venture Capital • Taxes • Scientific Degrees • Productivity • Unionization • Standard of Living • Manufacturing Intensity • Average Firm Size Innovation 2.0 • Headquarters of Large Firms • Human Capital and Knowledge Creation • Innovation • Business Dynamics Index • Business Profile Index Wallet HubStem Job Index • Employment and Productivity Index • Professional Opportunities • Economic Well-Being Index • STEM-Friendly Environment • National Equity Atlas • People of Color ZoomProspector • Earned Income • Labor Force • Median Hourly Wage • Blue Collar and White Collar • Total Establishments U.S. Census Bureau and American Community • Health Care and Social Service Jobs Survey • Retail Jobs • Population • Manufacturing Jobs • Population Change • Education Jobs • Age • Educational Attainment • Per Capita Income • Annual Wage • Poverty • Young Adult Population • Net Migration • Domestic Migration • International Migration • Gini Coefficient • Dissimilarity Index
11 As stated in Shrinking Cities: Understanding urban decline in the United States, the causes of population decline and shrinkage are extensive and complex1. Statistical models validate that population loss goes hand-in-hand with job loss and property abandonment. In this publication, decline is also strongly associated with loss is per capita income and social capital. In the graphic below from the National Equity Atlas, earned income growth for full-time wage and salary workers at the 10th, 20th, 50th, 80th, and 90th percentiles all declined from 1980-2014 in the shrinking metros (no data for Huntington, WV). The National Equity Atlas argues that if there were inclusive growth, all workers would see rising wages with the largest gains being among lower-wage workers.
1 Weaver, R., Bagchi-Sen, S., Knight, J., & Frazier A.E. (2017). Shrinking Cities: Understanding urban decline in the United States. New York, NY: Routledge.
Percentage Change in Earned Income 1980-2014
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In reviewing each of the metrics without statistical validation, few indicators strongly stood out in differentiating growing from shrinking metros. Despite a lack of conclusions, the indicators do provide interesting findings. Bachelor Degree Attainment and Graduate Degree Attainment rates were the lowest in shrinking metros as shown in the following graphics. Low education attainment rates can have a number of effects on a regional labor market. It may be a result of degree-earning individuals leaving the region for metros with more opportunities, individuals having barriers to accessing higher education, and/or a lack of appreciation for higher education by the community to name a few possibilities. National Equity Atlas
12 Mahoning Valley Peer Metro Report
Percentage of Population with Bachelor Degree
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Percentage of Population with Graduate Degree
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ZoomProspector
13 Degree-earning individuals leaving the region combined with population loss is shown in the “Salad Days” Population Growth Ages 25-44 metric from the Innovation 2.0 tool. The limited growth of this population is troubling for innovation and entrepreneurship. It may be also indicative of popular urban planning arguments such as those by former Pittsburgh mayor Tom Murphy that people are not following where the jobs are but are choosing first where to live, resulting in jobs aggregating in metros with higher quality of life scores.
“Salad Days” Population Growth Ages 25-44: 2002-2014 100 is National Average
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Limited education attainment has serious implications for the future development of the Youngstown, OH metro given that between 2000 and 2013 forty-four percent of manufacturing jobs for people with less than a high school education disappeared while jobs in manufacturing for people with graduate degrees grew by thirty-two percent.1 It may also be indicative of the low share of employees in high-tech relative to total employment such as scientists and engineers. Youngstown, OH has the lowest share of high-tech employees (72.8), where the national average is 100. Fort Wayne, IN and Peoria, IL have above-national average shares of high-tech employees.
Other indicators where shrinking metros ranked low is emblematic of deindustrialization and a constrained business climate. Shrinking metros with the exception of Canton, OH ranked below the national average in the number of large establishments with five hundred or more employees. Innovation 2.0 implies that a higher proportion of large businesses would positively contribute to innovation through research and development. Each of the shrinking metros also had a decline in the number of business establishments between 1998-2014. Diversifying the local economy and relying on small businesses is one strategy being employed by small to mid-sized metro regions. Innovation 2.0 1 Levinson, M. (2016). “Job Creation in the Manufacturing Revival”. Congressional Research Service. 14 Mahoning Valley Peer Metro Report
Percentage Change in Number of Establishments: 1998-2014
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In comparing the Youngstown, OH to its peer metros, the region didn’t rank as the highest or best in any of the metrics reviewed. It did however rank the lowest or worst in the following:
• Innovation Headline Index (Innovation 2.0) Innovation capacity and output such as knowledge spillovers, technology diffusion, and foreign direct investment • Human Capital and Knowledge Creation Index (Innovation 2.0) Education attainment, knowledge creation, STEM education • Connectivity Core Index (Innovation 2.0) Residential high-speed connection density • Employment and Productivity Index (Innovation 2.0) Industry performance, gross domestic product output, patents • Annual Wage (U. S. Cluster Mapping Project) Average private wage 1998-2014
US Cluster Mapping Tool 15 RECOMMENDATIONS The complexities of metropolitan regions and the many factors that shape their population growth and human capital potential cannot be understated. Quantitative analysis alone cannot distinguish the variables that are most critical. However, the findings of this report further strengthen the importance of the goals, objectives, and actions in the CEDS that address population decline through applying a holistic systems-approach to economic development. Leadership must develop the competitive advantages that we have today and not idolize yesteryear’s growth model. Metros like Youngstown, OH shouldn’t compare itself to large metros that can aggregate resources to attract outside investment. Internal investment strategies of improving downtowns, increasing transit access, and developing career pathways have seen success in small and mid-sized cities such Chattanooga, TN and Lancaster, PA. Other policies such as land use controls, tax structures, and modernized infrastructure can assist in furthering the business climate while limiting the race to the bottom. This race promotes fragmentation of the metro area and promotes inter-governmental competition that leads to even greater population decline. The Organization for Economic Co- operation and Development (OECD) has found that less fragmented metropolitan areas experience higher growth.1 Addressing the recommendations will improve the performance measures of the CEDS, thus improving indicators and rankings of the metro.
Compared Year over to National Year “2016 Annual Progress Report” Growth CEDS Performance Measures Workforce/Training & Education Infrastructure & Site Development Labor Force Participation Transportation Expenditure Unemployment Rate Office & Retail Vacancy Skill Surplus Industry & Business Climate Sector-Led Initiatives Gross Domestic Product Innovation & Entrepreneurship Total Exports of Goods & Services
Innovation Index Quality of Life & Community Vitality Number of Establishments County Health Rankings
SBIR Grants Livability Index
Access to Capital Opportunity Index
Venture Capital Median Household Income
Revolving Loan *methodology and sources in the CEDS 1 OECD. (2014). “OECD Regional Outlook 2014”. OECD. 16 Mahoning Valley Peer Metro Report
In addition to implementing the CEDS, it is recommended that further investigation into best practices of each of the metros to answer the following questions:
• What are peer metros doing for increasing education attainment? • What are peer metros doing to increase access to economic opportunity? • What are peer metros doing to retain and attract both businesses and people? • What are peer metros doing to address knowledge transfer, innovation, and globalization? • What are peer metros doing to address quality of life issues?
Lastly, Youngstown, OH leadership should continue to strengthen its partnership with the Fund for our Economic Future because of their expertise in analyzing and communicating the underlying issues limiting economic prosperity in Northeast Ohio. The findings of the “What Matters to Metros” effort mirror the assumptions gathered in this report but at a larger scale. “What Matters to Metros” also includes critical questions for leadership to address around the following findings:
THE CRITICALITY OF EDUCATION AND INNOVATION. Together, higher education and innovation are associated with per capita income, productivity and GMP growth. The factor is neither positively nor negatively associated with job growth.
THE RISK OF JOB CREATION WITHOUT INCOME GENERATION. Many metros that experienced high levels of employment growth did not see these jobs translate into higher per capita income; in fact, inequality, poverty and crime tended to be more prevalent in those metro areas that saw the most job gains.
THE BENEFITS OF DIVERSE ENTREPRENEURIAL ECOSYSTEMS. Business starts and/or self-employment are associated with every measure of growth: jobs, income, productivity and GMP, and are especially pronounced in metro areas with more diverse and integrated populations.
The task is challenging and requires new thinking around assets and competitive strengths of the Youngstown,OH economy. Through commitment to collaborative and cross-sector problem-solving and the adoption of best practices for shrinking metros, the region can address the underlying issues that further population loss.
17 DATA SOURCES 2017’s Best & Worst Metro Areas for STEM Professionals: https://wallethub.com/edu/best-worst-metro-areas-for-stem-professionals/9200/
AARP Livability Index: https://livabilityindex.aarp.org/
American Community Survey/U.S. Census Bureau: https://factfinder.census.gov/faces/nav/jsf/pages/index.xhtml
Brookings Metro Monitor Dashboard: https://www.brookings.edu/interactives/metro-monitor-2017-dashboard/
Bureau of Economic Analysis: https://www.bea.gov/
County Health Rankings: http://www.countyhealthrankings.org/
Indiana Business Research Center: https: //www.iu.edu/~ibrciuws/index.html
Innovation 2.0: http://www.statsamerica.org/
Moody’s Economy: https://www.economy.com/
National Equity Atlas: http://nationalequityatlas.org/
National Science Foundation: https://www.nsf.gov/
Opportunity Index: http://opportunityindex.org/
U.S. Bureau of Labor Statistics: https://www.bls.gov/
U.S. Cluster Mapping: http://clustermapping.us/
U.S. Patent and Trademark Office: https://www.uspto.gov/
Venture Deal: http://venturedeal.com/
Zoom Prospector: https://www.zoomprospector.com/ 18 Mahoning Valley Peer Metro Report
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