The Power of Regional Partnerships

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1 The Power of Regional Partnerships THE MARKETS AND CIVICS OF CONTINUOUS GROWTH AND PROSPERITY Alan Berube Brookings Metropolitan Policy Council for Community and Economic Research Minneapolis, MN June 9, 2016

2 Components of economic success GROWTH PROSPERITY INCLUSION

3 The US economy is growing, but growth is not deep or broadly shared GROWTH PROSPERITY INCLUSION +10.1% Economic output, % Output per capita, % Median wage, Source: Brookings, Metro Monitor, January 2016

Aggregate Wages Average Annual Wage Relative Income Poverty Jobs

4 Measuring economic success in metro areas GROWTH PROSPERITY INCLUSION Gross Metro Product (GMP) Productivity (GMP per job) Median Annual Wage Aggregate Wages Average Annual Wage Relative Income Poverty Jobs Standard of Living (GMP per capita) Employment Rate (employment-to-population ratio)

5 Metro economies are growing, but growth is not deep or broadly shared GROWTH PROSPERITY INCLUSION 95/100 Metros saw growth 63/100 Metros improved prosperity 8/100 Metros improved inclusion Source: Brookings, Metro Monitor, January 2016

6 Minneapolis-St. Paul has fared better than the nation GROWTH PROSPERITY INCLUSION Economic Output Output per Capita Median Wage % +12.9% +5.6% +7.5% -0.9% -5.0% UNITED STATES MSP UNITED STATES MSP UNITED STATES MSP Source: Brookings, Metro Monitor, January 2016

7 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 $25, % 38.2% -2.7% -3.7% -0.6% +1.1% since since since since WHITES PEOPLE OF COLOR WHITES PEOPLE OF COLOR Source: Brookings, Metro Monitor, January 2016 MINNEAPOLIS-ST. PAUL MSA

Disparities by place remain large as well, especially for blacks Share of poor population living in extremely poor neighborhoods 21% 15% 11% 11% TOP 100

8 Disparities by place remain large as well, especially for blacks 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 ource: Brookings, US Concentrated Poverty in the Wake of the Great Recession (2016)

9 1 Adapting to disruptive forces 2 The markets and civics of growth and prosperity 3 Remaking economic development

10 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

11 New technologies are disrupting firms and labor markets Estimated impact of 12 technology platforms on the global economy $14-33 trillion annually by % of U.S. occupations at risk of partial or complete automation Source: James Manyika and others, Disruptive technologies, McKinsey & Co., 2013 Source: Michael Chui and others, Four Fundamentals of Workplace Automation, McKinsey & Co

12 International trade is exploding Cross-border flow of goods, services and capital $54-85 trillion $26 trillion $3 trillion Source: James Manyika and others, Global flows in a digital age, McKinsey & Co., Photo: Wikimedia/Wmeinhart

13 International trade is exploding and foreign markets continue to drive global growth Cross-border flow of goods, services and capital $54-85 trillion 86% of global growth will occur $26 trillion outside the United States over the next five $3 trillion years Source: James Manyika and others, Global flows in a digital age, McKinsey & Co., Source: World Economic Outlook, International Monetary Fund, 2015

Source: US Department of Education, Digest of Education Statistics, 2013 Data projected from 2012-2020 The United States is rapidly

14 Source: US Department of Education, Digest of Education Statistics, 2013 Data projected from The United States is rapidly diversifying Non-white share of public elementary and secondary school students 70% 60% 50% 50.2% % 30%

15 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 % 51.5% 60% 50.2% % 33.6% 50% 19.7% 40% 14.4% 30% Source: US Department of Education, Digest of Education Statistics, 2013 Data projected from TOTAL ASIAN WHITE BLACK HISPANIC Source: US Census, American Community Survey, 2014

16 Traditional approaches are insufficient $80 billion/year Short-Term Siloed Subsidy-Driven of job creation comes from out-of-state business 3%relocation

17 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

18 1 Adapting to disruptive forces 2 The markets and civics of growth and prosperity 3 Remaking economic development

19 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.

20 Metropolitan areas have distinctive specializations Boise City, ID Boston, MA Wichita, KS Washington, DC Source: Brookings, America s Advanced Industries (2015)

21 Advanced Industries Innovation W H A T W Skills H E R E Infrastructure W H Y

22 Advanced Industries include a diverse range of sectors Manufacturing 35 Energy 3 Services 12 Pharmaceuticals Aerospace Oil & Gas Extraction Telecommunications R&D Consulting Services Motor Vehicles & Parts Medical Equipment Electricity Generation Software Computer Systems Design Source: Brookings, America s Advanced Industries (2015)

23 Advanced Industries support good jobs Advanced Industries offer a significant wage premium at every level of education $153k $117k $130k $115k AI AVERAGE WAGE $89k $89k NON-AI AVERAGE WAGE $69k $56k $60k $38k $54k $32k $44k $28k $33k $20k DOCTORAL DEGREE PROFESSIONAL DEGREE MASTER S DEGREE BACHELOR S DEGREE ASSOCIATE S DEGREE SOME COLLEGE SECONDARY DIPLOMA NO SECONDARY DIPLOMA Source: Brookings, America s Advanced Industries (2015)

24 Advanced Industries support good jobs and are accessible to many $153k workers $117k $130k $115k 1 out of 2 $89k $89k Advanced Industry jobs require less than a 4-year degree $69k $56k $60k $38k $54k $32k $44k $28k $33k $20k DOCTORAL DEGREE PROFESSIONAL DEGREE MASTER S DEGREE BACHELOR S DEGREE ASSOCIATE S DEGREE SOME COLLEGE SECONDARY DIPLOMA NO SECONDARY DIPLOMA Source: Brookings, America s Advanced Industries (2015)

25 yet Advanced Industry intensity has declined in past decades Metropolitan areas with at least 10% of employment in Advanced Industries Source: Brookings, America s Advanced Industries (2015)

26 Minneapolis-St. Paul s Advanced Industries are growing 170,060 Advanced Industry total employment Rank: % Advanced Industry share of employment Rank: % Advanced Industry output growth, (Compared to +2.4% total output growth) Rank: 39 Source: Brookings, America s Advanced Industries (2015)

27 Minneapolis-St. Paul s Advanced Industries are growing and possess a range of strengths 170,060 Advanced Industry total employment Rank: 15 MSP Advanced Industry employment COMPUTER SYSTEMS DESIGN 9.2% OTHER 16% Advanced Industry share of employment Rank: 36 46% 14% PRECISION INSTRUMENTS +4.0% Advanced Industry output growth, (Compared to +2.4% total output growth) Rank: 39 7% 8% MANAGEMENT CONSULTING 9% ARCHITECTURE & ENGINEERING MEDICAL EQUIPMENT AND SUPPLIES Source: Brookings, America s Advanced Industries (2015)

28 But MSP faces wide disparities in educational attainment Associate s degree or higher, % 50.7% 53.6% 28.3% 23.9% TOTAL ASIAN WHITE BLACK HISPANIC Source: US Census, American Community Survey (2014)

29 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.

30 The civics of continuous growth and prosperity URGENT & VISIBLE NETWORKED WITH HIGH-CAPACITY INSTITUTIONS TRANSPARENT & INCLUSIVE

31 1 Adapting to disruptive forces 2 The markets and civics of growth and prosperity 3 Remaking economic development

32 SET THE RIGHT GOALS GROW FROM WITHIN BOOST TRADE INVEST IN PEOPLE AND SKILLS CONNECT PLACE

33 Minneapolis-St Paul Regional Dashboard

34 Louisville-Lexington Advanced Manufacturing Apprenticeship

35 Greater Portland and Columbus Trade & Investment Plans

36 Chicago: Inclusive Tech Skills

37 Milwaukee: Aligning local and regional economic strategies

38 The Power of Regional Partnerships THE MARKETS AND CIVICS OF CONTINUOUS GROWTH AND PROSPERITY Alan Berube Brookings Metropolitan Policy Council for Community and Economic Research Minneapolis, MN June 9, 2016

Like much of the country, Detroit suffered significant job losses during the Great Recession.

Like much of the country, Detroit suffered significant job losses during the Great Recession. 36 37 POPULATION TRENDS Economy ECONOMY Like much of the country, suffered significant job losses during the Great Recession. Since bottoming out in the first quarter of 2010, however, the city has seen