The Power of Regional
Partnerships
THE MARKETS AND CIVICS OF CONTINUOUS GROWTH AND PROSPERITY
Alan Berube
Brookings Metropolitan Policy Program
@berubea1
Council for Community and Economic Research
Minneapolis, MN
June 9, 2016
Components of economic success
GROWTH
PROSPERITY
INCLUSION
The US economy is growing, but growth is not deep or broadly shared
GROWTH
PROSPERITY
INCLUSION
+10.1%
+5.9%
-5.0%
Economic output,
2009-2014
Source: Brookings, Metro Monitor, January 2016
Output per capita,
2009-2014
Median wage,
2009-2014
Measuring economic success in metro areas
GROWTH
Gross Metro Product (GMP)
Aggregate Wages
Jobs
PROSPERITY
Productivity
(GMP per job)
INCLUSION
Median Annual Wage
Average Annual Wage
Relative Income Poverty
Standard of Living
Employment Rate
(GMP per capita)
(employment-to-population ratio)
Metro economies are growing, but growth is not deep or broadly shared
GROWTH
95
/100
Metros saw
growth
Source: Brookings, Metro Monitor, January 2016
PROSPERITY
63
/100
Metros improved
prosperity
INCLUSION
8
/100
Metros improved
inclusion
Minneapolis-St. Paul has fared better than the nation
GROWTH
PROSPERITY
INCLUSION
Economic Output
2009-2014
Output per Capita
2009-2014
Median Wage
2009-2014
+10.1%
+12.9%
+7.5%
+5.6%
-0.9%
-5.0%
UNITED
STATES
MSP
Source: Brookings, Metro Monitor, January 2016
UNITED
STATES
MSP
UNITED
STATES
MSP
Disparities by race in Minneapolis-St. Paul remain wide
INCLUSION BY RACE
Median Income by Race
2014
Share of Workers with Low Income by Race
2014
$40,337
38.2%
$25,211
25.2%
-3.7%
since
2009
-2.7%
since
2009
WHITES
Source: Brookings, Metro Monitor, January 2016
+1.1%
since
2009
-0.6%
since
2009
PEOPLE OF
COLOR
WHITES
MINNEAPOLIS-ST. PAUL MSA
PEOPLE OF
COLOR
Disparities by place remain large as well, especially for blacks
Source: Brookings, US Concentrated Poverty in the Wake of the Great Recession (2016)
Share of poor population living in
extremely poor neighborhoods
21%
15%
11%
11%
TOP 100
METRO
AVERAGE
ALL
POOR
BLACK
POOR
LATINO
POOR
MINNEAPOLIS-ST. PAUL MSA
1
Adapting to disruptive forces
2
The markets and civics of growth and prosperity
3
Remaking economic development
New technologies are
disrupting firms…
Estimated impact of 12
technology platforms on the
global economy
$14-33 trillion
annually by 2025
Photos: Google, Shadow Robot Company
Source: James Manyika and others, “Disruptive technologies,” McKinsey & Co., 2013
New technologies are
disrupting firms…
Estimated impact of 12
technology platforms on the
global economy
$14-33 trillion
annually by 2025
Source: James Manyika and others, “Disruptive technologies,” McKinsey & Co., 2013
…and labor markets
60%
of U.S.
occupations at
risk of partial or
complete
automation
Source: Michael Chui and others, “Four Fundamentals of Workplace Automation,” McKinsey & Co. 2015.
International trade is
exploding…
Cross-border flow of goods,
services and capital
$54-85 trillion
$26 trillion
$3 trillion
1980
2012
2025
Source: James Manyika and others, “Global flows in a digital age,” McKinsey & Co., 2014.
Photo: Wikimedia/Wmeinhart
International trade is
exploding…
…and foreign markets
continue to drive global
growth
Cross-border flow of goods,
services and capital
$54-85 trillion
of global growth
will occur
outside the
United States
over the next five
years
$26 trillion
$3 trillion
1980
2012
86%
2025
Source: James Manyika and others, “Global flows in a digital age,” McKinsey & Co., 2014.
Source: World Economic Outlook, International Monetary Fund, 2015
The United States is rapidly
diversifying…
Non-white share of public elementary
and secondary school students
70%
60%
50.2%
2014
50%
40%
30%
2000
2005
2010
2015
Source: US Department of Education, Digest of Education Statistics, 2013
Data projected from 2012-2020
2020
The United States is rapidly
diversifying…
…yet we are not preparing
our future workforce
Non-white share of public elementary
and secondary school students
Bachelor’s degree attainment
2014
51.5%
70%
60%
50.2%
30.1%
2014
50%
33.6%
19.7%
14.4%
40%
30%
2000
2005
2010
2015
Source: US Department of Education, Digest of Education Statistics, 2013
Data projected from 2012-2020
2020
TOTAL
ASIAN
WHITE
Source: US Census, American Community Survey, 2014
BLACK
HISPANIC
Traditional approaches are insufficient
$80
billion/YEAR
Short-Term
Siloed
Subsidy-Driven
3%
of job creation
comes from
out-of-state
business
relocation
Purpose of economic development
“To put a regional economy on a higher long-run trajectory
(growth) by increasing the productivity of firms and
workers in order to raise living standards (prosperity) for
all people (inclusion).”
Source: Brookings, Metro Monitor, January 2016
1
Adapting to disruptive forces
2
The markets and civics of growth and prosperity
3
Remaking economic development
Why markets?
Economic development requires building strong
ecosystems for core industries, improving
productivity, and engaging in trade — the foundations
from which growth, prosperity and inclusion emerge.
Metropolitan areas have distinctive specializations
Boise City, ID
Boston, MA
Washington, DC
Wichita, KS
Source: Brookings, America’s Advanced Industries (2015)
Advanced Industries
WHAT
Innovation
WSkills
HERE
WHY
Infrastructure
Advanced Industries include a diverse range of sectors
Manufacturing
35
Energy
12
3
Pharmaceuticals
Aerospace
Oil & Gas
Extraction
Motor Vehicles &
Parts
Medical Equipment
Electricity
Generation
Source: Brookings, America’s Advanced Industries (2015)
Services
Telecommunications
Software
R&D Consulting
Services
Computer Systems
Design
Advanced Industries support good jobs
Advanced Industries offer a significant wage
premium at every level of education…
$153k
$130k
$117k
$115k
$89k
AI AVERAGE WAGE
NON-AI AVERAGE WAGE
$89k
$69k
$60k
$56k
$38k
DOCTORAL
DEGREE
PROFESSIONAL
DEGREE
Source: Brookings, America’s Advanced Industries (2015)
MASTER’S
DEGREE
BACHELOR’S
DEGREE
ASSOCIATE’S
DEGREE
$54k
$44k
$33k
$32k
$28k
$20k
SOME
COLLEGE
SECONDARY NO SECONDARY
DIPLOMA
DIPLOMA
Advanced Industries support good jobs
…and are accessible to many
workers
$153k
$130k
$117k
1 out of 2
$115k
$89k
Advanced Industry jobs require
less than a 4-year degree
$89k
$69k
$60k
$56k
$38k
DOCTORAL
DEGREE
PROFESSIONAL
DEGREE
Source: Brookings, America’s Advanced Industries (2015)
MASTER’S
DEGREE
BACHELOR’S
DEGREE
ASSOCIATE’S
DEGREE
$54k
$44k
$33k
$32k
$28k
$20k
SOME
COLLEGE
SECONDARY NO SECONDARY
DIPLOMA
DIPLOMA
…yet Advanced Industry intensity has declined in past decades
Metropolitan areas with at least 10% of employment in Advanced Industries
1980
Source: Brookings, America’s Advanced Industries (2015)
2013
Minneapolis-St. Paul’s Advanced
Industries are growing…
170,060
Advanced Industry total employment
Rank: 15
9.2%
Advanced Industry share of employment
Rank: 36
+4.0%
Advanced Industry output growth, 2010-2013
(Compared to +2.4% total output growth)
Rank: 39
Source: Brookings, America’s Advanced Industries (2015)
Minneapolis-St. Paul’s Advanced
Industries are growing…
…and possess a range of
strengths
170,060
MSP Advanced Industry employment
Advanced Industry total employment
Rank: 15
9.2%
Advanced Industry share of employment
Rank: 36
+4.0%
Advanced Industry output growth, 2010-2013
(Compared to +2.4% total output growth)
Rank: 39
Source: Brookings, America’s Advanced Industries (2015)
COMPUTER SYSTEMS DESIGN
OTHER
16%
14%
46%
9%
7%
8%
MANAGEMENT
CONSULTING
PRECISION
INSTRUMENTS
ARCHITECTURE &
ENGINEERING
MEDICAL EQUIPMENT AND
SUPPLIES
But MSP faces wide disparities in
educational attainment
Associate’s degree or higher, 2014
50.3%
50.7%
53.6%
28.3%
TOTAL
ASIAN
WHITE
Source: US Census, American Community Survey (2014)
BLACK
23.9%
HISPANIC
Why civics?
It takes intentionality to create and sustain a portfolio
of mutually reinforcing initiatives that enhance the
productivity of firms and workers and put a region on a
path to improving growth, prosperity, and inclusion.
The civics of continuous growth and prosperity
URGENT & VISIBLE
NETWORKED WITH HIGH-CAPACITY INSTITUTIONS
TRANSPARENT & INCLUSIVE
1
Adapting to disruptive forces
2
The markets and civics of growth and prosperity
3
Remaking economic development
SET THE
RIGHT
GOALS
GROW FROM
WITHIN
BOOST
TRADE
INVEST IN
PEOPLE
AND SKILLS
CONNECT
PLACE
Minneapolis-St Paul
Regional Dashboard
Louisville-Lexington
Advanced Manufacturing Apprenticeship
Greater Portland and Columbus Trade & Investment Plans
Chicago: Inclusive Tech Skills
Milwaukee:
Aligning local and regional economic strategies
The Power of Regional
Partnerships
THE MARKETS AND CIVICS OF CONTINUOUS GROWTH AND PROSPERITY
Alan Berube
Brookings Metropolitan Policy Program
@berubea1
Council for Community and Economic Research
Minneapolis, MN
June 9, 2016