Next week the Democratic presidential candidates will debate here in Detroit, the symbol of the industrial Midwest’s rise, fall and fledgling rebirth. The candidates would do well to speak tangibly to the issues that shape the economic prospects of working families in the region.
Work with the Brookings Institution, W.E. Upjohn Institute and the upcoming “Vital Midwest” report from the Chicago Council on Global Affairs, has identified several key levers that can power economic opportunity for more swing state residents.
Turn innovation into new jobs and businesses. The Midwest boasts an impressive network of leading research universities (20 of top 200 in the world—more than anywhere else). But while they produce one-quarter to one-third of America’s research and development, new patents and top-talent, that innovation isn’t turned into new jobs and businesses here.
Only a tiny fraction of the nation’s venture capital (4.3 percent) finds its way to the region, so we miss the explosive start-ups that could create a more Silicon Valley-like growth dynamic. And much of the wealth in our pension funds, university endowments and company-spawned fortunes is exported as investments in coastal economies.
To change this dynamic, we need federal investment in emerging sector innovation hubs, including R&D and innovation in energy, water, food systems, mobility, health care, information technology and advanced manufacturing, deployed through University-hubbed public-private innovation centers.
We should also create Midwest Innovation Funds as an analog to the current Opportunity Zone investment incentive but targeting broader regional areas undergoing economic transition.
A Promise for high school graduates and new “GI Bill for Workers.” Ninety-nine percent of jobs created since the Great Recession demand education past high school. Robots and artificial intelligence are obliterating many formerly well-paying, low-skill Midwest occupations. Meanwhile only 30 percent of adult workers in Midwest states – and as high as 36 percent in Pennsylvania, and 34 percent in Indiana and Ohio – have only a high school diploma. Our young people need an affordable path to higher education that also supports the rebirth of communities where they grew up and go to college. Here’s a focused response:
- National “Promise” Program replication. As Kalamazoo, Michigan and dozens of imitators show, well-designed community-based College “Promise” programs can help more young people realize higher education (including poor and minority students with proper design) and revitalize struggling communities. A new federal-state-local matching grant program would spread these programs.
- A “GI Bill for Workers.” America once delivered higher education for most adults. A new GI Bill for Workers can be forged by breaking down federal funding silos, packaging current workforce, trade adjustment, aid to needy families (TANF), education and other resources to help states deliver a financial guarantee for adult worker credentialing.
Reboot the Infrastructure. As vividly seen in Flint, Michigan, and elsewhere, the Midwest’s infrastructure is a mess. One-third of U.S. infrastructure repair needs – deficient bridges, drinking water systems, parks, roads, schools and wastewater systems – are found in our states. The Midwest also hosts 40 percent of the nation’s brownfields (polluted former industrial areas). And 70 percent of Midwestern counties are below the national average in share of population with access to fixed broadband or mobile LTE internet. So the Midwest would benefit most from a serious national infrastructure commitment. Candidates need to detail how they plan to increase federal subsidies for infrastructure modernization (and extension of cyber) to flexibly support infrastructure priorities at the state and local level.
Place-based support for transitioning economies. The Midwest is home to numerous small and medium-sized older industrial cities, many still struggling. But at a time when quality of life and lifestyle are foundations for economic growth, Midwestern communities do have valuable place-based assets. Cradled by the Great Lakes and the Mississippi and Ohio River Valleys, the region boasts countless acres of farms, prairies, woods, wetlands and tens of thousands of lakes, rivers and miles of spectacular Great Lakes freshwater coastline. Dotted with historic cities, college and university towns rich with history, culture, architecture and authenticity, the region has a rich quality of life, a low cost of living and a welcoming population undergirded by solid Midwestern values.
Federal policies that can leverage these place assets include those that support place-specific economic development priorities in federal economic development programs and those that enhance Great Lakes Restoration Initiative (GLRI) funding for waterfront rehabilitation and development.
Open, don’t slam shut, the door to the world. Midwest community economies rely on fair and open trade, as well as new immigrants to power growth, and repopulate communities. Our robust agricultural production base, advanced manufacturing and business service expertise makes us responsible for 28 percent of U.S. export-derived GDP. We rely on legal immigrants and international students to repopulate communities, create new businesses and jobs, and meet skilled talent demands – a dynamic imperiled by the current administration’s anti-immigrant policies. We need:
- Federal trade policy that creates a stable, predictable environment, opens markets and secures opportunities for exports, ensures a steady supply of fairly traded imports and includes aggressive policies to accelerate workers effective adjustment to trade dislocations.
- Federal immigration policy that increases the flow of high-skill immigrants, refugees, guest workers to the Midwest, including incentives for immigrants who locate in communities designated as economies in transition.
Economic safety net for a new era. Our industrial employers and unions pioneered a national social compact in which employers provided health care, pensions and unemployment insurance to tie workers over during down times. Today that economic security safety net is in tatters. Employers can’t be relied on for pensions; only 27 percent of all unemployed workers are covered by unemployment insurance. With a growing share of workers on contract, working multiple “gigs” or working full-time, “part-time” jobs—an employment security system based on full-time employment with one employer, doesn’t work. To remake this safety net, while supporting adaptation to change, we need:
- Portable Pensions, savings and health care: The feds can offer states incentives to create public-private portable pension/savings and portable health care programs—helping workers adjust to new employment realities and lessening inequities between full-time and part-time workers.
- Expand eligibility for and access to unemployment insurance (UI). Cover more non-traditional workers; and expand uses of UI resources to support re-training, and labor mobility
Specific federal responses that speak to the particular needs and opportunities for Midwest workers and their families are what Midwestern voters deserve from those who want to win their vote and lead our nation.
John Austin is director of the Michigan Economic Center and a nonresident senior fellow with the Brookings Institution, Chicago Council on Global Affairs, and W.E. Upjohn Institute. @John_C_Austin
