Blue Collar Jobs Continue to Increase Across Rust Belt
Consistent with national data showing modest increases in blue collar employment across the country, employment in construction and manufacturing increased in most states in the Midwest in February. Employment in both categories is up in almost every state in the region over the last year.
States with the largest increases in manufacturing in February were Wisconsin, with an increase in employment of 0.5 percent (2,500 jobs), and Ohio at 0.4 percent (2,900 jobs). Michigan, Minnesota, and Missouri all had increases in manufacturing employment of 0.3 percent in February (1,800, 700, and 900 jobs, respectively).
Over the last year, the biggest gainer was Iowa, with an increase in manufacturing employment of 4.9 percent (10,400 jobs), followed by Illinois at 3.2 percent (18,100 jobs), and Wisconsin at 2.5 percent (11,800 jobs). The biggest laggards were Minnesota and Michigan, with gains of 0.3 percent and 0.4 percent (800 jobs and 2,300 jobs, respectively).
The big growth in Iowa has been primarily in the durable goods sector, with an increase in employment of 6.1 percent (7,500 jobs). However, this is a bounce back from losses in the prior two years. Employment in the sector is still 1,900 jobs below the peak for the recovery, reached in May and June of 2014.
States with the largest increases in construction in February were Indiana, with a gain of 2.0 percent in February (2,800 jobs), and Pennsylvania at 1.5 percent (3,800 jobs). Construction employment in Indiana is now up 5.1 percent over the last year. The February increase in Pennsylvania was reversing a 1.4 percent decline in January, although employment in the state is still up by 4.4 percent over the last year.
Construction employment is not rising everywhere. It rose 0.8 percent in Missouri in February (900 jobs), but is still down 3.2 percent over the last year. This drop follows three years of rapid growth, with employment in the sector increasing by 13.6 percent in the three years from February of 2014 to February of 2017.
Construction employment in Iowa fell by 0.8 percent in February (600 jobs) and is down by 8.5 percent over the last year. This continues a pattern of weakness in the state. Employment in the sector is down by 8.5 percent from its February 2014 level. Illinois has also seen relatively weak growth in construction employment. It rose by 0.7 percent in February (1,600 jobs), but it is up by just 1.2 percent over the last year.
There is little evidence of any sort of boom in coal mining employment. Over the last year, employment in the mining and logging sector has risen by 8.0 percent (1,700 jobs) in West Virginia, but this is still 36.4 percent below the peak for the recovery reached in December of 2011. Coal mining jobs in Pennsylvania are up 4.0 percent (200 jobs) over the last year, but down by 41.6 percent from the peak in March of 2012. In Kentucky, employment in coal mining fell by 1.7 percent (100 jobs) over the last year. It is down 65.7 percent from the peak hit in August of 2011.
For the near-term, it looks like blue collar employment across the Midwest will continue to grow at a modest pace, following the national pattern. Manufacturing is expanding modestly along with the overall economy. The recent increases in the trade deficit will dampen this growth slightly, but as long as overall growth remains healthy, it is likely employment in the sector will continue to expand.
The impact of the Trump Administration’s tariffs raises some questions for the sector. The effect on steel and aluminum will undoubtedly be positive, but this will be offset by losses in downstream industries. Also, there could be some losses due to retaliation by other countries.
The trend in construction employment may be more questionable. While the sector is likely to also continue growing at a healthy pace, Federal Reserve rate hikes could dampen this growth. If the Fed gets too aggressive with its hikes, then employment growth in this sector could fall off sharply and possibly stop entirely.