Regional Economic Changes A decade of economic change and population shifts in U.S. regions Regional ‘fortunes,’ as measured by employment and population growth, shifted during the 1983–95 period, as the economy restructured, workers migrated, and persons immigrated to the United States etween 1983 and 1990, the United States The national share component shows the pro- William G. Deming experienced one of its longest periods of portion of total employment change that is Beconomic expansion since the Second due simply to overall employment growth in World War. After a brief recession during 1990– the U.S. economy. That is, it answers the ques- 91, the economy resumed its expansion, and has tion: “What would employment growth in continued to improve. The entire 1983–95 pe- State ‘X’ have been if it had grown at the same riod also has been a time of fundamental eco- rate as the Nation as a whole?” The industry nomic change in the Nation. Factory jobs have mix component indicates the amount of em- declined in number, while service-based employ- ployment change attributable to a State’s ment has continued to increase. As we move from unique mix of industries. For example, a State an industrial to a service economy, States and re- with a relatively high proportion of employ- gions are affected in different ways. ment in a fast-growing industry, such as ser- While commonalties exist among the States, vices, would be expected to have faster em- the economic events that affect Mississippi, for ployment growth than a State with a relatively example, are often very different from the factors high proportion of employment in a slow- which influence California. This article examines growing or declining industry such as manu- the economic fortunes of the individual States facturing. The third effect, State employment between 1983 and 1995. The first part of the ar- share, shows whether the industries within a ticle examines employment growth within the State performed better or worse than the same States, using a shift-share analysis. Next, because industries on a nationwide basis.1 State employment growth often goes hand-in- Analyses of this sort typically aggregate hand with population growth, these two variables employment data into census regions and di- are examined in combination. Finally, several visions rather than considering individual key issues related to regional economic growth States. This has not been done in this case over the last decade are discussed. primarily because these divisions are largely arbitrary, being based mainly on the geo- graphic proximity of the States. While there Shift-share analysis no doubt can be economic similarities between One technique that often is used to measure em- adjacent States, there are, in many cases, at ployment changes at the State or regional level is least as many dissimilarities.2 For example, it William G. Deming is an shift-share analysis. As applied in this article, may make sense to combine Vermont and New economist in the Office shift-share analysis decomposes State employ- Hampshire for analytical purposes, but the of Employment and ment growth into three components: national economies of Louisiana and Arkansas are Unemployment Statistics, Bureau of Labor Statistics. share, industry mix, and State employment share. driven to a large extent by different factors. Monthly Labor Review November 1996 3 ElderlyRegional Economic Consumers Changes The argument also can be made that even individual States are no more than a collection of possibly dissimilar sub-State Table 1. Components of employment change, 198395 [Numbers in thousands] areas. However, it would be extremely cumbersome to exam- National share ine every sub-State area. Also, individual States are gener- State Total Industry employ- ally viewed as economic units for administrative and gov- State State State mix ment ernmental purposes. Even at the State level, it is not practi- growth Total growth / national share cal to analyze the data for each industry in each State in share detail, so only State-level totals are shown in this article.3 Table 1 summarizes the results of the shift-share analysis. Alabama ................. 474.70 390.50 121.56 –49.93 134.12 Alaska ................... 47.77 62.98 75.85 .29 –15.50 The national share component is most usefully viewed in Arizona .................. 705.20 316.74 222.64 19.76 368.70 relation to the actual total employment growth for each State. Arkansas ............... 327.30 217.85 150.24 –24.71 134.16 If, for example, total State employment growth is greater than California ............... 2,516.20 2,914.61 86.33 138.27 –536.69 its national share component (indicated by a value greater Colorado ................ 512.13 390.03 131.30 11.17 110.92 Connecticut ........... 120.06 424.42 28.29 –17.36 –286.99 than 100.0 in column 3 of table 1), then employment in that Delaware ................ 100.10 78.20 128.00 –3.57 25.47 State grew at a rate greater than the national average over the Florida .................... 2,095.00 1,147.71 182.54 171.37 775.92 period. (Put another way, an index of greater than 100.0 Georgia .................. 1,137.00 669.89 169.73 –40.74 507.85 Hawaii .................... 126.50 119.37 105.97 24.57 –17.44 means that part of the State’s job growth is not explained by Idaho ..................... 158.90 93.42 170.09 –1.12 66.59 overall national employment growth.) Those States with the Illinois .................... 1,067.74 1,331.44 80.19 27.48 –291.18 Indiana .................. 751.17 596.42 125.95 –63.88 218.62 lowest actual rates of employment growth relative to the over- Iowa ....................... 316.70 305.75 103.58 5.61 5.34 all national rate were generally concentrated in the North- east and in the “oil patch” (namely, Alaska, Idaho, Louisiana, Kansas .................. 279.20 270.84 103.09 –8.87 17.24 Kentucky ............... 490.90 338.63 144.96 –32.71 184.97 Oklahoma, Texas, and Wyoming), although employment in Louisiana ............... 209.30 459.98 45.50 –19.95 –230.72 Texas grew at about the same rate as the Nation as a whole Maine ..................... 116.60 124.90 93.36 –6.33 –1.97 between 1983 and 1995. States in the West (except Califor- Maryland ................ 456.90 506.67 90.18 62.08 –111.85 nia), the Midwest, and the Southeast grew at rates well above Massachusetts ...... 277.90 792.44 35.07 51.22 –565.75 Michigan ................ 1,028.90 947.20 108.63 –52.21 133.92 the national average. Minnesota .............. 655.67 505.00 129.84 17.95 132.72 The States that showed the poorest performance in terms Mississippi ............. 282.33 232.99 121.18 –33.00 82.34 of their industry mix statistic were concentrated in the South Missouri ................. 583.37 569.24 102.48 7.21 6.92 and the Midwest.4 However, it was not simply a case of the Montana ................. 74.70 81.11 92.10 4.67 –11.08 Nebraska ............... 204.56 179.50 113.96 10.52 14.54 States with the highest concentration of manufacturing jobs Nevada .................. 386.30 118.37 326.34 52.30 215.62 being the hardest hit, as one might expect. While North New Hampshire ...... 129.40 120.34 107.53 –5.37 14.42 Carolina, the State with the highest initial proportion of fac- New Jersey……… . 440.70 930.15 47.38 10.64 –500.09 tory jobs, did have the worst industry mix component, two of New Mexico ........... 210.23 140.91 149.19 2.85 66.47 New York ................ 558.03 2,149.21 25.96 192.99 –1,784.18 the States with the worst industry mixes, Oklahoma and Texas, North Carolina ........ 1,035.50 710.95 145.65 –126.81 451.36 owed their poor performances to declines in the oil and gas North Dakota ......... 51.50 73.65 69.93 7.17 –29.31 component of the mining industry.5 Neither had a large pro- Ohio ....................... 1,139.67 1,202.69 94.76 –51.36 –11.66 portion of manufacturing jobs in 1983. Oklahoma .............. 143.04 344.01 41.58 –40.10 –160.87 Oregon .................. 450.07 284.09 158.42 .81 165.17 Even more interesting is the fact that several States that Pennsylvania ......... 724.03 1,329.59 54.46 2.81 –608.37 did have high concentrations of manufacturing jobs in 1983 Rhode Island ......... 44.30 116.46 38.04 –3.11 –69.06 did not have poor industry mix statistics. The Northeastern South Carolina ....... 459.20 349.42 131.42 –56.72 166.50 States provide the best examples. Connecticut, which owed South Dakota ........ 109.13 69.15 157.82 6.65 33.33 Tennessee ............. 783.70 505.17 155.13 –42.86 321.39 nearly 28 percent of its jobs in 1983 to manufacturing, had Texas ..................... 1,833.62 1,820.16 100.74 –99.61 113.07 only a mildly negative industry mix, mostly because its large Utah ....................... 341.50 166.60 204.98 –2.70 177.60 proportion of jobs in the fast growing services industry offset Vermont…………….. 63.90 60.66 105.35 1.60 1.65 its concentration of factory—jobs. Virginia .................. 861.20 648.56 132.79 3.12 209.52 Washington ............ 762.17 466.12 163.51 16.11 279.95 The State employment share component in most cases pro- West Virginia ......... 105.30 171.12 61.53 –30.20 –35.62 vides a better explanation of employment growth (or de- Wisconsin .............. 687.57 548.76 125.30 –21.27 160.08 cline) than the industry mix.