Many of us living in West Michigan see, hear about and experience the exciting population and economic growth our region has witnessed since the recession; however, it begs the question, is this type of growth and energy unique to our region or are our peer communities across the country experiencing similar trends?
Using data from federal labor market sources aswell as data produced by Economic Modeling Specialists International (EMSI), we compared Grand Rapids against nine peer communities. This article will focus on high level comparisons including: recent population growth, postrecession job growth, average earnings, cost of living, exports, and STEM occupation growth.
As shown in Table 1, the population growth between these 10 communities ranges from 0.03% in Rochester to 4.7% in Greenville, SC. Between 2010-2014 Grand Rapids added more people (38,765) than any of the other nine MSAs.
Our MSA had the third highest percentage of growth at just under 3% during this period.
The MSA is one of the strongest growing in the group – especially when you note that the three largest MSAs only grew between 0.05% and 1.4%. Given the recent upticks in new home construction and the explosion of urban and downtown residential units, there is reason to feel confident this growth should continue in West Michigan.
JOB GROWTH 2010-2014
The total number of jobs in MSAs are typically related to the region’s population. The MSAs with the most people should have the highest number of jobs. This is generally true for this group of peer communities; however, while Grand Rapids is the fourth most populous MSA, it contains the second highest number of jobs. Post-recession, the Grand Rapids-Wyoming MSA has seen an explosion of job creation.
Although most of this job growth is a result of the post-recession recovery, we clearly continue to outperform our peers. Chart 1 shows the Grand Rapids MSA growing by 15% between 2010-2014, while Greenville, SC saw the next largest growth percentage (9%), and the rest of the communities growing between 2%-6%.
Even more significant is the fact that of the more than 250,000 jobs created among the 10 communities, the Grand Rapids MSA accounted for nearly a third of those jobs. It’s no surprise Area Development ranked the MSA as the third best location for economic development for 2015!
EARNINGS ACROSS ALL INDUSTRIES
Chart 2 illustrates the average earnings per job. The range of earnings for these MSAs is from $57.8K in Worcester to $48.5K in Tucson, all of which are below the national average of $59,200 (the horizontal line in the chart). Grand Rapids is on the lower end of the range at $50.7K. On one hand this highlights the cost savings of doing business in West Michigan, but it may also be an indicator that earnings are continuing to lag in the market.
The red diamonds in the chart indicate where each MSA falls on the Cost of Living Index. 100 is the national average, which indicates most of the cities have a below average cost of living (food, transportation cost, housing, utilities, etc). On Chart 2, the earnings and cost of living national averages [left and right axes respectively], are aligned at the same vertical level. This attempts to correlate average earnings (including wages, salaries, supplements and proprietor income) with the cost of living in the region.
This alignment sheds light on the MSAs with earnings above or below their cost of living. For example, Grand Rapids offers a cost of living that is slightly above the average earnings per job. This is an indication that earnings are lagging behind inflation and the cost of living.
It is important to note that this appears to be an issue the majority of MSAs in this group are facing. The states that contain the MSAs with earnings above their cost of living include Oklahoma, Alabama, and Tennessee. Unfortunately, there is no cost of living data available for Allentown & Worcester from the Cost of Living Index.
Grand Rapids plays above its weight class in international exports.
Even though it is the fourth largest by population and second largest by total number of jobs, Chart 3 shows the value of the MSA’s exports are larger than any of its peers. By far the largest industry sector fueling the export value is Motor Vehicle Parts Manufacturing with more than 20% of the $7.7B. Exports are particularly important because they bring in new money to our region, which increases the overall well-being of the regional economy. One concern is that we are too dependent on the automotive industry to fuel our export value. Many companies have increased their diversification since the recession; however, this must continue if we are to avoid the pitfalls of the past.
Occupations in the STEM fields are essential to the future economic health of all regions. They not only provide well-paying jobs to the economy, but also feed into the advanced industries that require a highly skilled workforce.
Grand Rapids has seen a significant increase in the number of STEM related jobs since the recession.
While the total number of STEM related jobs in the metro area was the fourth highest compared to its peers, Chart 4 illustrates that the rate of growth in these occupations in GR was unmatched. Between 2010-2014, jobs in this occupation group increased by 17%. This is largely fueled by the explosive growth in life sciences in Grand Rapids as well as the higher than average concentration of engineers in the MSA.
THE BOTTOM LINE
Grand Rapids is significantly outpacing its peer communities when comparing population and job growth, including STEM jobs, during the post-recession years.
There is no single explanation for the significant growth we have experienced; however, based on the job and export data, the resurgence of the automotive industry and other advanced manufacturing industries certainly have played a very large role. Another significant force during the recovery has been the continued public and private investment in the life sciences, now exceeding more than $2B of investment on Medical Mile, which has contributed to the massive growth in STEM occupations.
While there are significant hurdles to overcome, particularly lagging earnings, the Grand Rapids MSA is certainly leading the way among its peers.
GRAND RAPIDS MSA
The Grand Rapids-Wyoming MSA is composed of Barry, Kent, Montcalm, and Ottawa Counties
All peer communities meet the following requirements:
- Population 20% above or 20% below the Grand Rapids-Wyoming MSA
- Not located on an oceanic coast (as those economies have unique economic characteristics)
- Not a state capital city (as those regions have unique educational attainment characteristics)
- Must have at least 10% of their overall GDP generated from the manufacturing sector (due to the fact that GR-Wyoming is very strong in this sector)