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Sunday, 04 August 2013 21:21

A tale of two (similar) cities

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Perception is not reality when economic comparisons are made about Battle Creek and Kalamazoo.

Despite what on the surface seems like two different economic bases and two communities with divergent talent needs, the data show that Battle Creek and Kalamazoo are not that dissimilar, at least on paper.

“These two areas are 18 miles apart, which probably does reflect that wages in the two areas may be more similar than we think,” said George Erickcek, senior regional analyst with the W.E. Upjohn Institute for Employment Research.

The educational profiles of county and regional employment seem to show little or no difference between the educational attainment for jobs in the two counties and for their residents. In Kalamazoo County, 21.7 percent of jobs are held by individuals with a bachelor’s degree and about 22.2 percent of residents who are employed have a bachelor’s degree, a 0.5 point difference. Similarly 20.4 percent of Calhoun County jobs and 20.1 percent of county residents have bachelor’s degrees.

Although there is essentially no difference between the wages for top occupations in both counties, available data about people who commute for work from Kalamazoo to Battle Creek or vice versa show some interesting results, said Brian Pittelko, regional analyst with the Upjohn Institute.

According to Pittelko’s research, 38 percent of the jobs held by people who live and work in Calhoun County pay at least $3,333 per month. However, 56 percent of the jobs in Calhoun County that are held by Kalamazoo residents pay that amount.

“While it might make sense that commuters make more because it offsets the cost of commuting, the opposite is not true into Kalamazoo,” Pittelko said. “Forty-two percent of the people who live and work in Kalamazoo and 41 percent of the Calhoun residents employed in Kalamazoo make at least $3,333.”

The 20 fastest-growing occupations between now and 2020 fall into categories such as home health care, biomedical science, the trades and market research analysts, according to the Bureau of Labor and Statistics.

Closer to home, Erickcek said he thinks the trends we see today will continue into the future in both communities. In particular, Western Michigan University and Borgess and Bronson hospitals in Kalamazoo and Battle Creek’s Fort Custer Industrial Park will continue to have a major impact on their respective communities.

“My feelings are that you can’t underestimate the influence of WMU, not only as a major employer but also as a cultural hub to the area because it brings in professors and the students, and they do make a difference as to what kind of bars, restaurants and entertainment venues the community can have,” Erickcek said. “Battle Creek has a stronger manufacturing sector than Kalamazoo. Not only is the cereal industry providing stability and some growth, but Fort Custer has been successful in bringing some of the world’s best auto manufacturers to the area.”

As manufacturing continues to rebound, Pittelko said he worries that it won’t be the economic driver for the region that it once was. He said he was encouraged to see manufacturing in Kalamazoo come back at a slower pace because that signals that it’s not on a bubble that could burst.

There was a difference of just 23 people employed in the manufacturing sectors in both communities, according to 2010 Census data. Kalamazoo’s manufacturers employed 4,325 workers compared to Battle Creek with a total of 4,302. However, new manufacturing jobs have come into the Battle Creek area since then with the addition of several new companies.

“The fact that we haven’t seen tremendous growth in manufacturing means that even if Battle Creek maintains a competitive advantage in manufacturing, it could be hurt because we’re not seeing the wage growth here,” Erickcek said.

Despite 15 quarters of positive growth nationwide, wages have stayed stagnant and in some cases even dropped a little. This is particularly troubling to Erickcek, who said when there are shortages of food and gasoline, you’d expect prices to go up in much the same way you’d expect wages to start creeping up in a worker shortage.

“Employers have told me that because of competition, especially at the international level, they really can’t afford to increase wages,” Erickcek said. “So the question becomes: Is there a skill shortage or wage shortage? If you increased wages, could you find the workers you need?

“When I talk to employers, they are very, very honest. They can’t find individuals they really want to hire. They’re being very selective, and rightly or wrongly not increasing wage rates.”

The manufacturing sector’s talent woes have been well publicized. From June 2008 to March 2010 in Southwest Michigan, manufacturers cut 16,000 jobs and hired back 6,000 individuals. The question becomes what happens to the other 10,000 workers and why aren’t they being hired back, Erickcek said.

He said he thinks it’s because on average, 38 percent of those individuals have been unemployed for longer than six months, which may be a stigma and cause employers to have doubts about the individuals.

“It’s easy to imagine that maybe something is wrong with this person because if he/she really was the right fit, they would have been picked up already,” he said.

For people who were in their 50s when they lost their jobs during this most recent recession, the process of becoming re-employed is difficult, Erickcek said. It’s possible that many of them have opted for a forced retirement out of frustration because employers don’t want to hire someone in that age range, he said.

This appears to be the case in Kalamazoo County where about 1,700 people left the unemployment rolls “all because they’re giving up,” Erickcek said.

While acknowledging that it’s hard to paint a good picture of the current employment climates, Erickcek said there is reason for cautious optimism.

“The positive news is that when we did look at what happened over the past year, employment increased by about 2,500 jobs generated totally by growth in manufacturing,” he said.

The caveat: The multiplier effect for those jobs, which measures their indirect economic impact, is really small at 1.1 jobs, Erickcek said. In other words, for every 10 manufacturing jobs created in the region, just one additional job is created as a result.

“That’s really small,” he said. “What’s shocking to me is that there’s even a decline in health care jobs.”

According to the 2010 Census data, Kalamazoo had 9,768 people employed in the education and health care sectors and Battle Creek had a total of 4,342 working in these sectors. The disparity is likely due to the presence of WMU and the two hospitals in Kalamazoo.

The leaders of the regional economic development organizations, Battle Creek Unlimited and Southwest Michigan First, based in Kalamazoo, have taken a proactive approach to work more closely with the colleges, community colleges and universities in their areas to find ways to train individuals for the jobs available. They also are working closely with each other by taking a more regional approach to attracting outside investment in the region.

While residents in both communities may consider it a disconnect that people work in Battle Creek and live in Kalamazoo or vice versa, economic development leaders and analysts say in the grand scheme of things, those trends should not make a difference.

“With professional people in Battle Creek, when they do look for housing, realtors tend to direct them to the Kalamazoo market because there’s a wider selection,” Erickcek said. “I would argue that you could find the exact same street in Battle Creek as Kalamazoo, but you do have more variation and options to choose from in Kalamazoo.

“The executives tend to be pretty conservative with their residential decisions. They look at a house and see whether they’ll be able to unload it in two years should they be transferred or relocated. If I was going to buy a house and stay maybe five years, I would want to be in a neighborhood with a good track record, and those neighborhoods would be in Kalamazoo.”

Still, for its size, Erickcek said Battle Creek is way ahead of Kalamazoo in certain areas such as bicycle paths.

“They were so far ahead of the curve when it came to bicycle paths. They prepared wonderful bike paths that my kid and I used to use all of the time, and this was well before Kalamazoo and Portage came up with theirs,” Erickcek said.

The city also has a group of young entrepreneurs who grew up in Battle Creek and have committed themselves to creating a more vibrant community. They are doing this through the creation of recreational opportunities such as disc golf courses and outdoor music celebrations.

To be fair, Erickcek said Kalamazoo has a larger population base than Battle Creek, something that cannot be overlooked when talking about the employment base and amenities in both communities. However, local and community leaders in both Battle Creek and Kalamazoo are looking forward and think they each have much to be proud of.

As a for-instance, Erickcek mentioned the downtown areas in both communities.

“Battle Creek has done everything right with their downtown, but Kalamazoo is a larger community and size does matter,” he said.

Read 2748 times Last modified on Sunday, 04 August 2013 13:57

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