Area's weak job growth paints a bleak picture
By Eric Heisler
Of the Post-Dispatch
Thursday, Jun. 16 2005

The days of blaming St. Louis' subpar economic growth on factory losses may
have ended. The region's weak job growth has not.

While the St. Louis metro area lost one in five manufacturing jobs over the
last 10 years, the region trailed the nation more dramatically in other
employment sectors, according to U.S. Labor Department numbers.

The numbers give a deeper look at a trend exposed last month when St. Louis
business leaders unveiled a seemingly odd economic strategy: Aiming for
average. In terms of growth, it's a goal that's rarely been reached in the last
3 1/2 decades. But the reasons for the weak growth may be changing.

In the key measure of job growth, the St. Louis metro area trailed the nation
in eight of the last 10 years. Years ago, that problem often was traced to the
decline of manufacturing. Between 1995 and 2005, however, the nation began to
catch up with St. Louis in factory job losses. And St. Louis' lagging moved to
other areas, too, the data show.

What is behind this continued economic funk? Some experts blame it on a smaller
pool of educated workers. Others point to a culture unfriendly to startup
firms. And still others say the region's long-running Rust Belt hangover still
lingers.

"I'd say some of it's geography, some of it's economics and some of it's
demographics," said Russell Signorino, a vice president and labor market
analyst with the United Way of Greater St. Louis. "The thing is, we just don't
attract new workers and new industries like other areas."

Another question that economists have raised: Is growth crucial to a healthy
economy?

Conventional wisdom says yes, but despite the weak growth, St. Louisans have
been slightly ahead of their peers in another key measure: income.

Concern about St. Louis' slow job growth was raised last month by the St. Louis
Regional Chamber & Growth Association.

The RCGA looked back beyond the last decade and found that St. Louis has only
equaled or exceeded the nation in employment growth in four of the last 35
years.

Over that time, the cause of the lagging growth has evolved, a breakdown of
that period shows.

In the years between 1975 and 1985, as the dark days of the Rust Belt period
were hitting full steam, factory closings began to plague St. Louis. But other
parts of the nation went unscathed. In fact, the nation gained production jobs
during that period.

Then, between 1985 and 1995, St. Louis was ravaged by defense cutbacks. The
nation began to feel St. Louis' pain in a small way as U.S. manufacturing
employment dropped 4 percent. Still, that was a tiny number compared to the 20
percent lost here..

From 1995 to this year, however, the floodgates opened for manufacturing
declines nationwide. Outsourcing and the recession of 2001 dealt a widespread
hit across much of the nation. Manufacturing losses actually increased in St.
Louis during that time, but they increased even more nationwide. The gap
narrowed as St. Louis and the United States lost 22 percent and 17 percent of
manufacturing jobs, respectively.

At the same time, St. Louis struggled to keep pace with the nation in growth of
other kinds of jobs, trailing the nation 19 percent to 13 percent in growth of
all other employment, Labor Department data show.

In addition, some peer regions, like Charlotte, N.C., were hit even harder than
St. Louis in the last decade by manufacturing losses, yet bounced back to top
the nation in growth by a larger margin.

As the blame for St. Louis' below-average status shifts away from
manufacturing, it creates a dilemma for economists. Twenty years ago, St.
Louis' problems were more obvious. Today, in a changing economy, they're not so
clear.

"If you want my opinion, it's our relatively low educational attainment," said
Bryan Bezold, chief economist at the RCGA. "Having more educated workers means
more skilled and adaptable workers. That means having more productive firms,
and more productive firms will grow fast and add people."

Bezold cites 2000 census figures showing that St. Louis workers lag other metro
areas in terms of adults with college degrees.

Others say the region gets tripped up with its dependence on older, mature
companies like Anheuser-Busch Cos. and A.G. Edwards Inc. As a result, startups
get lost.

"At least part of it is your very heavy reliance on several large employers,"
said Ross DeVol, an economist at the Milken Institute, a California-based think
tank. "You just haven't had new startup firms to any extent. Those startups are
crucial because they're the companies that eventually create jobs in today's
economy."

Still others say the pain of losing factory jobs years ago may still hurt St.
Louis, as its work force has been slow to move on. "Manufacturing workers have
a low rate of success transitioning to other jobs," said Chris Wheeler, an
economist at the Federal Reserve Bank of St. Louis.

And economists raise another key point in all of this: Maybe growth isn't the
most important thing. (emphasis added)

Last month, the RCGA made lifting job growth to match the national average a
priority. And it even pinpointed the cost of being below average: 100,000 jobs.
That's how many more workers the St. Louis area would have now if it had
matched the growth pace of the nation in the last 15 years, the agency said.

Still, a 2002 Brookings Institution report may throw a wrench into the theory
that growth is inherently good.

The report, titled "Growth without growth: An alternative economic development
goal for metropolitan areas," makes the case that the best way to measure a
metro area's economic health may instead be income.

With growth, the report contends, comes the need to spend money on highways,
schools and other infrastructure. And some of those new jobs won't go to an
area's current residents, who pay the price for that infrastructure.

"Given the admitted costs associated with increasing a region's body count,
policymakers may actually wish to minimize job and population growth as they
attempt to increase income and wealth," writes Paul Gottlieb, now an assistant
professor at Rutgers University. (emphasis added)

In St. Louis, per-capita income rose 49 percent between 1993 and 2003, the most
recent 10-year period for which data is available, according to the U.S. Bureau
of Economic Adjustment. That tops the nationwide increase of 47 percent.

Additionally, there's the argument made on behalf of cities like Boston, where
job growth has only been slightly more rapid than in St. Louis over the last
decade. Still, Boston's economy is frequently recognized as a model for
building newer industries such as biotechnology.

Wheeler, of the Federal Reserve, said the idea that income should be a primary
measure for a local economy is one to consider.

"Theoretically, you could have a situation where there's no job growth but your
income is increasing and everything is just fine," he said. "Usually, we just
don't see that in the numbers."

Narrowing the gap

St. Louis once was losing manufacturing jobs at a higher rate than the nation.
In recent years, the gap has started to close.
Below is the change in manufacturing employment in different periods for the
United States and St. Louis.
St. Louis United States
1975-85 -5 percent +4 percent
1985-95 -20 percent -4 percent
1995-05 -22 percent -17 percent

St. Louis has lost ground to the rest of the nation in the growth of
non-manufacturing employment.
St. Louis United States
1975-85 +28 percent +31 percent
1985-95 +27 percent +26 percent
1995-05 +13 percent +19 percent

Note: The numbers reflect employment in January of each year.

Source: Labor Department

Reporter Eric Heisler
E-mail: eheisler@post-dispatch.com
Phone: 314-340-8183