For many factory towns, white-collar job loss hurts the most
ERIE, PA.» With the abandoned smokestacks off the bay and ramshackle factories along 12th Street, it’s easy to pin the blame for this industrial city’s plight on the loss of manufacturing jobs to China and Mexico.
Many, including President Donald Trump, hold the belief that shuttered factories are what primarily ails Erie and other aging blue-collar company towns.
Yet since 2008, Erie has suffered a less-known and potentially more devastating exodus of well-paying white-collar jobs. Half its CEOS — 220 jobs — have disappeared. The city has shed 8 percent of its accountants, 10 percent of its computer workers, 40 percent of its engineers and 20 percent of its lawyers, according to government data analyzed by The Associated Press.
They are the professional class jobs that buttressed Erie’s manufacturing might. And they are the type of work that has increasingly become the backbone of the U.S. economy.
After reviewing Labor Department figures dating to 2008, the AP found that a third of major metro areas — nearly 80 communities — are shedding a greater percentage of white-collar than blue-collar jobs.
In Ohio, such cities as Toledo and Canton have had a harder time retaining jobs in offices than on factory floors. It’s a similar story in Sheboygan, Wis. And in Wichita and Topeka, Kan. And Birmingham, Ala. And Decatur, Ill.
“That’s one of the most painful aspects of the economic decline of these manufacturing centers: They get hit twice,” said Enrico Moretti, an economist at the University of California, Berkeley. “First, they lose the factories. But second, and most importantly, they lose everyone who was supportive of those factories.”
It’s that second hit that increasingly matters nearly four decades since U.S. manufacturing employment peaked. Without a foundation of white collar jobs, it
becomes difficult for these areas to reinvent themselves in an era when the economy more and more requires specialized knowledge and technological skill.
“It’s painful because it makes it even harder for the community to recover,” Moretti said.
Trump had rallied voters on the promise that he would restore factory jobs to revive areas that had lost them. But the data show how higher-paying occupations are abandoning smaller cities, taking with them a generation of workers who could otherwise start new companies or serve existing businesses.
White-collar workers are increasingly shifting from smaller cities and settling in such thriving metro areas as Seattle, Nashville, Chicago and Silicon Valley. As those higher-paying occupations become more highly concentrated, the wealth they generate is less likely to filter through the rest of the country to areas with a long-standing legacy of manufacturing.
And while Trump and other political leaders vow to boost businesses with tax cuts, lower taxes may do little for communities with fewer white collar workers who could plow them into new businesses.
In Erie, many business leaders say the city mainly needs to keep and attract more white-collar workers.
Its largest for-profit employer, Erie Insurance, recently restored an old armory and has been renovating old homes nearby, gradually turning part of the city into a corporate campus. Out of a headquarters built as a replica of Independence Hall, with handblocked French wallpaper depicting an American Revolution battle, the insurer is leading a private $40 million effort to fill the downtown with apartments and retail, in hopes that a friendlier streetscape will draw more employers and college graduates.
For the company’s CEO, the mission is personal. Tim Necastro has five adult children; only one has chosen to stay local.
“If this is successful, 10 years from now, two more of my kids will move to Erie,” he said. “They will find a reason to get back here.”
It’s the same high-stakes gamble many small- and mid-size cities face. Children who left for college aren’t returning home as they once did. Many are choosing to live in metro areas or communities anchored by a major university, like Pittsburgh, 130 miles south of Erie.
In these larger cities, it’s easier for white-collar workers to quit their jobs to join employers that offer more money or opportunities for advancement. This trend has turned certain larger cities into magnets that draw employers and better-paid workers away from smaller cities.
“Size matters, and I think, this dynamic is accelerating,” said Mark Muro, a senior fellow at the Brookings Institution.
Census Bureau data show, for example, that Chicago added nearly 40,000 college graduates under age 35 since the Great Recession began in late 2007. Boston gained about 10,000, Denver 25,000. Compare that with Toledo, which lost 1,600 young college graduates.
In a 2016 campaign speech in Erie, Trump didn’t touch on this brain drain. Rather, he blamed unfair trade — from the North American Free Trade Agreement to the entrance of China into the World Trade Organization — for the struggles in those communities.
“We will stop these countries from taking our companies,” Trump said. “You can’t do well when you have a government that is so stupid, that is so incompetent.”
This argument helped win him Erie County, which had twice voted for Barack Obama. But in the 12 months since Trump’s election, Erie has shed about 800 jobs. The number of people seeking jobs declined by more than 2,000. Trump has announced taxes on steel and aluminum imports in hopes of bolstering U.S. industry.
Community leaders in Erie note that manufacturing remains a strength for northwest Pennsylvania. But it seems impossible to restore a long-gone era of prosperity that was built on factory work.
Bob Glowacki, who heads a real estate management company and once served on Erie’s city council, said the city must look beyond manufacturing.
“It’s fine that Donald Trump says he’s going to get all the companies that moved to China to come back to the United States,” he said. “But if that happened, you’re only going to get 20 percent of those jobs back. Technology has replaced them. How do you change that in Erie?”
What people are truly nostalgic for, Glowacki said, isn’t merely the grind of factory jobs but the community fostered by the old ethnic neighborhoods, with their churches and clubs where residents once gathered. Chain restaurants in strip malls outside the city proper have supplanted many of these institutions. Housing vacancies have risen around the downtown core.
So instead, Erie’s goal is now more to recapture some of those lost white-collar jobs by renovating the downtown. Business leaders see a model to replicate in the Cincinnati neighborhood of “Over the Rhine” with its charming Italianate brick buildings and hipster restaurants.
After taking a tour through Erie’s neighborhoods and industrial sites, Glowacki, 66, said he feels hopeful that the city now has a plan of action.
“I’ve never felt more positive about what is happening in Erie than I do right now,” he said.