Editor’s note: The following is part two of a three-part series. Part one appeared in the June 19-25 issue. In this series, The Rock River Times presents the results of a two-year study by the Rockford Metropolitan Agency for Planning (RMAP). In 2010, the U.S. Department of Housing and Urban Development awarded RMAP a $600,000 grant to research and report on the state of Rockford from a social, economic and environmental perspective. This week, we focus on what the research showed with regard to the economic well-being of Rockford. Each report can be downloaded at www.ourvitalsigns.com.
By Audrey Carpenter
Economic vitality is perhaps the most important factor in a quality standard of living and the most driving force in creating a sustainable region. When a regional economy is strong and diversified, according to the second report from RMAP concerning economics, it is less susceptible to economic downturns, unemployment and poverty.
When a region is strong financially, residents have more disposable income to invest in their communities and for their personal well-being.
Boone and Winnebago counties have relied heavily on industry to support the region. Because of this, both have been hit hard by the recession in the last five years. And the trend has been a lag in recovery from the recession, as compared to the nation.
Cost of government
The cost of government is an indicator of sustainability of a community. The two municipalities that collect the most revenue are Rockford and Cherry Valley. They are much higher than surrounding jurisdictions. They are $200 million and $289 million, respectively, compared to surrounding jurisdictions that bring in on average $78 to $98 million.
The second factor of government activity on a region is how revenue is generated. Some communities rely heavily on taxes and others on user fees, according to the report. Cherry Valley, for example, has the highest reliance on taxes, but a vast majority of that revenue is from the sales tax generated by CherryVale Mall.
The cost of government and how the revenue is generated can have an impact on sustainability of a community. If taxes are too high, residents will leave the community, and businesses will be reluctant to move in. Taxes must be balanced so they are not too high and public services, such as public safety, emergency response, water, sewer, garbage pick-up, road maintanence, etc., are not too low.
In today’s workforce, there are generally three classifications of workers: working class, service class and creative class.
The creative class are entrepreneurs, those employed by think tanks and innovators. This sector of workers is key because they position communities to be on the leading edge of progressive growth, rather than following development trends from other regions, according to the report.
In the Rockford region, 34.7 percent of all workers are from the creative class. This is less than the state average of 42 percent.
The lower percentage is a result of the high percentage of manufacturing-sector and working-class occupations in Rockford.
In the region, 30.8 percent of the workers are in working-class occupations, as opposed to 21.5 percent for the state.
The share of workers in the service class occupation is just about the same as the state — 34.3 percent versus 35.7 percent.
The highest percentage of creative workers are concentrated away from the central cores of Rockford and Belvidere. The majority of those central cores show a high percentage of service workers.
Entry level and experienced wages
Entry-level wages for half of the occupational categories are below the state average. For the region as a whole, 49 percent of the workers are employed in occupations that pay less than the state average for that occupation. Many are low-paying jobs such as office, administrative support, community support and social service occupations, the research found.
Those in computer and mathematical fields were only being paid 75 percent of what other areas of the state pay for similar jobs. However, and interestingly, those who work in construction in this region earn on average 14 percent more than those throughout the state.
Those who are in experienced positions also earn less on average than those in other parts of the state.
Health care, computer and mathematical jobs, installation, maintenance and repair jobs, education, training and library jobs, farming, fishing and forestry jobs, and sales and transportation sectors were among the best-paying jobs in the Rockford region.
However, experienced workers were by far the worst relative to the rest of the state. This is because workers in only three occupations exceed the state average; they are: health care and maintenance/installation, computer and mathematical. and production occupations.
Protective service workers (emergency providers) are the most disadvantaged experienced workers, earning 28 percent less than their counterparts throughout the state, the report states.
These statistics provide a challenge for sustainability in that the data show the region has a competitive disadvantage in retaining experienced workers.
The Rockford region has a high presence of manufacturing jobs. In 2001, manufacturing companies employed almost 40,000 people, or 21 percent of the regional workforce. The next-highest employer was the trade and transportation industry with approximately 30,000 employees, or 15 percent.
Since 2001, total employment in the region has declined by about 6,000 jobs, according to the report, and manufacturing jobs have decreased by 25 percent to 29,000 jobs.
However, the presence of health care and social service jobs have led to an increase of about 5,000 jobs from 2001 to 2011. Growth was also evident in employment and educational services, finance, insurance and real estate management during that same time.
In 2011, research shows that the region was more diversified in its job sectors, but our reliance on manufacturing was still vastly larger than for the nation as a whole.
Movement of companies
The Rockford region experienced significant movement of businesses in and out of the region between 1990 and 2009. In total, 5,628 firms changed location. The good news, according to the report, is that 74 percent of those moves were within the region.
Of the remaining 1,480 firms, 711 moved out of the region and 768 moved in. Over a 20-year period, more companies moved into the region than left.
For those companies that left, they most often relocated to Wisconsin, over the border into Rock County.
Ninety six percent of all companies moving in or out of the region had fewer than 50 employees. Only six companies that moved out of the region had 250 or more employees from 2000 to 2009, the study shows.
Again, with the large manufacturing base in the Rockford region, over a 20-year period from 1999 to 2009, the region had a net increase of 35 manufacturing establishments and a loss of 61 service establishments.
Rockford, however, was a major loser in regional establishments moved between 1999 and 2009. Just more than 600 companies moved from Rockford, which accounted for 6,202 jobs at the time of the move. Only 403 companies moved into Rockford, or a gain of 2,953 jobs. The net loss for Rockford is 198 companies and 3,249 jobs.
Personal consumption expenditures account for 70 percent of economic activity, and retail purchases account for 25 percent of economic activity.
The study estimates that for Boone and Winnebago counties, retail sales are 15 percent below the potential demand. This accounts for $419 million in net loss for the region.
The only category for which there was a net gain in retail sales was for furniture and home furnishings.
Preparing the workforce
A large factor in workforce success is how well our children are educated and prepared for jobs upon graduation. To measure this, the study evaluated the amount of investment made in K-12 education. They did this by cost per pupil that the region spent on education.
There are 13 school districts in the region, two in Boone County and 11 in Winnebago County. Of those 13 districts, only three have per-pupil operating expenses above the state average.
All four of the elementary school districts have per-pupil operating expenses below the state average.
The Illinois State Board of Education’s school funding formula allows for higher per-student state funding for districts with a higher percentage of students coming from poverty households.
However, the report clearly showed that the school district with the highest expenditures on students had the lowest percent of minorities.
The school district with the highest rate of poverty among students is Rockford, at close to 30 percent.
For most communities, between 60 to 75 percent of the value of their property assessment comes from residential properties with the remaining value assessment coming from commercial, industrial, farmland and railroad properties.
The districts with the lowest average fair-market value of housing are concentrated in the inner city of Rockford.
Between 2007 and 2011, there was a decline in the fair-market value of housing in the region. The most decline was seen in the areas where houses were assessed for less than $100,000.
Also, those houses that cost $140,000 or more decreased from 63 districts to 33 districts during that time frame.
The only sector that showed improvement and increase in housing was houses assessed for between $100,000 to $140,000. There was an increase in that area from 58 percent to 72 percent, according to the study.
Because of the decrease overall in property assessments, local government takes in less money, which then impacts municipalities in the area of expenditures: education, public safety, road maintenance, etc.
Sustainable communities need a balanced and growing property base to cover public services without putting too high a burden on any one group of property owners, the study concludes.
From the June 26-July 2, 2013, issue