September 20, 2019 | By William Testa, Alexander Hryhorczuk

Has Economic Globalization Helped Great Lakes Cities?

Economic globalization has revitalized many once struggling cities (think New York, Singapore, Shanghai, and London) and created or re-created metropolises like Doha, Dublin, and Frankfurt. 

How have the leading cities in the Great Lakes region fared? Nearly every downtown area has been revitalized to bolster the local economy, but for metropolitan areas overall, economic performance has been mixed. Most large cities have outperformed their surrounding rural areas and outpaced smaller satellite cities that were built around old-line manufacturing. Yet, cities like Detroit and Cleveland continue to lag in their re-development, while others such as the Twin Cities, Indianapolis, and Columbus, are much further along the path to wealth and growth.

Population and per capita income provide an answer. 

Using population estimates for the Great Lakes metropolitan areas from the U.S. Department of Commerce (BEA) (all the way back to 1969), we can examine eleven large, historically prominent metropolitan areas that represent the backbone of the Great Lakes economy. The chart below indexes each area’s own population to a value of one starting in 1969 and tracks relative population growth to 2017. 

This shows that first, there is marked dispersion in the population growth of these places. At the bottom, populations have declined markedly in metropolitan areas of Cleveland, Pittsburgh, Buffalo, and Detroit to a lesser extent. At the other end of the spectrum, population has soared in the Twin Cities, Indianapolis, and Columbus. Second, for the most part, this divergence began at the outset in 1969 and continued through 2017. By the end of this period, the Twin Cities population had grown 70 percent, while Pittsburgh and Buffalo had fallen 15 percent.


 

Per capita income offers a second performance yardstick. Income per person measures the overall annual resources that are earned by metropolitan residents through workforce earnings, government payments, and by earnings from capital and businesses.  

In the same time frame, 1969-2017, we can see each metropolitan area’s per capita income compared to the per capita earnings of the overall U.S. population. This analysis highlights changes in income growth over time compared to the United States average. 


The chart shows a marked dispersion in performance, though not at the scale of differences in population growth. Most of the Great Lakes metropolitan areas have experienced declining average incomes in relation to the overall U.S. since 1969. For example, an index value of .95 for the Chicago metropolitan area in 2017 indicates that average per capita income relative to the overall U.S. has fallen 5 percent since 1969.

Yet, in this instance (and others), average figures on income hide important indicators of economic resurgence. Wealth and opportunity generating cities like Chicago attract immigrant and young workers with lesser skills and fledgling careers so that, at least at the outset, earnings of such workers tend to depress the average. Chicago’s workforce and population were buoyed by heavy immigration from the mid-1980s through the turn of the century before slowing markedly. In addition, young professionals have continued to flock to Chicago’s downtown and surrounding areas. A report on recent college grads found that the Chicago metropolitan area ranked only behind NYC as the favored destination of job-applying Midwest grads. Chicago’s central area has been ground zero for such job opportunities as college-educated millennials have increased by seventy percent over a recent 10-year period.

In what enterprises are the young workers finding jobs? Large corporate headquarters continue to move to Chicago from both the suburbs and from outside the metropolitan area. These include marquee names such as McDonalds, Caterpillar, Mondelez, and Dyson.  Expansion of key business service facilities in accounting, consulting, insurance, and logistics have paralleled Chicago’s attractiveness to headquarters activities and points beyond.

Despite such promising developments, Great Lakes metropolitan areas that have fallen behind in growth in per capita income are generally also those with lagging population.  At the bottom, we again find Detroit, Cleveland, and Buffalo. The theme here is that wages and earnings do tend to fall in places with moribund population and job growth. 

Exceptions to these well-worn paths of declining population and income can be perhaps very telling in helping us further understand the mechanisms of growth and re-birth.  Pittsburgh is a marked exception to the tendency of growth and per capita income to progress in similar direction. Remarkably, the Pittsburgh metropolitan area recorded the most severe population decline between 1969 and 2017. Yet, its relative per capita income outpaced every other Great Lakes metropolitan area, including the Twin Cities area.  Pittsburgh, then, may represent the type of place that has been successful in shifting its old industrial economy to new industries like robotics, health care research, and computer programming. Yet, despite evident progress in average incomes, Pittsburgh is a much smaller place. What is the price progress?

Putting together these two measures of growth—population and per capita income—raraises the question: where is the region headed? As the strong forces of globalization and technological change continue to play out, evidence from the varied Great Lakes landscape can be helpful for policymakers, businesses, and industries choosing how to adapt successfully in today’s economy. For many places, the choice between supporting an established industrial base versus turning toward a new one is as sharp as ever.  

The chart below clearly shows that growth in population and per capita income generally go hand in hand. Were it not for Pittsburgh’s performance, it would be even clearer that that the older industrial cities of Detroit, Cleveland, and Buffalo—all on the Great Lakes—are the region’s urban laggards. In contrast, the university-oriented and state-capital cities of Indianapolis, Columbus, and the Twin Cities have fared better in both income and population growth.  


Are these places perpetually blessed due to their former non-manufacturing orientation? Or do they merely have a head start on their older industrial neighbors who will eventually catch up to them as they re-structure their economic base? After all, being oriented in steel production as it once was, the Pittsburgh area arguably declined prior to cities with more auto and machinery-oriented economies. Perhaps prosperity can be just around the corner for the others.

About

The Chicago Council on Global Affairs is an independent, nonpartisan organization that provides insight – and influences the public discourse – on critical global issues. We convene leading global voices and conduct independent research to bring clarity and offer solutions to challenges and opportunities across the globe. The Council is committed to engaging the public and raising global awareness of issues that transcend borders and transform how people, business, and governments engage the world.

The Chicago Council on Global Affairs is an independent, nonpartisan organization. All statements of fact and expressions of opinion in blog posts are the sole responsibility of the individual author(s) and do not necessarily reflect the views of the Council.

Archive

| By Brian Hanson, Kori Schake, James Lindsay

Deep Dish: End of the Line with North Korea?

With news that North Korea may have the capability to launch a miniaturized nuclear weapon on an intercontinental ballistic missile, can the North Korea can be kicked any further down the road? In this summer bonus episode, Brian Hanson discusses with Kori Schake and Jim Lindsay, alums of the national security council and leading voices in foreign policy and national security.





Top 5 Deep Dish Podcasts of 2016-17

As part of the Council’s mission to provide insight and influence the public discourse, we created Deep Dish on Global Affairs, a podcast that goes beyond the headlines on critical global issues. With foreign policy and international relations in constant flux, Deep Dish brings together experts in politics, government, defense, finance, and wherever the news is happening to dig deep into current affairs.



| By Demetrius Amparan

If I Were Mayor

In a flash talk delivered at the 2017 Chicago Forum on Global Cities, poet Demetrius Amparan spoke about what he would do if he were mayor.


One More Question with Gideon Rachman

We asked Gideon Rachman, chief foreign affairs columnist at the Financial Times, for his thoughts about the shifting balance of global economic power between the East and the West. See what he said.


7 Summer Reads from the Council's Stage

Summer reading lists are about as ubiquitous this time of year as sunburns and cookouts, but not all of them exhibit a global affairs oeuvre. Here are seven great works featured in the 2016-17 Council program season that you can learn from, as well as videos of the authors speaking on the Council stage. 



One More Question with Ruchir Sharma

We asked Ruchir Sharma, Morgan Stanley's Chief Global Strategist, which country was best poised for economic growth and which country presented the greatest risk to the global economy. See what he said.





Top 5 "One More Question" Videos

The Council works hard to bring the brightest minds to Chicago to share their ideas on important global issues. With so much to discuss, it is sometimes difficult to fit all that there is to say on a subject into a single event. That's why we invited several of our guests to answer questions that may have gone unanswered. We’ve been releasing these brief interviews as part of our One More Question series. Discover our top five most popular episodes to date.