Recommendation: Conduct regional planning for human capital

As the economic asset that least heeds jurisdictional boundaries, human capital is indispensable to regional prosperity.^{{{Nicola Gennaioli, Rafael La Porta, Florencio Lopez-de-Silanes, and Andrei Shleifer. “Human Capital and Regional Development,” The Quarterly Journal of Economics 128, no. 1, 2013. 105-164.}}} Economic growth necessarily hinges on addressing common obstacles to residents’ long-term employability. Metropolitan Chicago is home to a well-educated and diverse workforce of nearly 5 million workers,^{{{Chicago Metropolitan Agency for Planning analysis of Bureau of Labor Statistics data.}}} whose knowledge and ingenuity are why many businesses choose to operate here.^{{{Chicagoland Chamber of Commerce and Loyola University Chicago, Quinlan School of Business, “The State of Small Business: 4th Annual Chicagoland Small Business Outlook Survey,” 2018, https://www.chicagolandchamber.org/Portals/0/Small Business/2017_Chicagoland Small Business Survey_Infographic Brochure.pdf.}}} Yet our region must bridge the gaps between adults seeking to build a career and employers looking to build their workforce. Our education and workforce development investments must become more strategic and demand-driven in the face of uncertain future labor market shifts.

• Gallery 1
• Gallery 2
• Gallery 3
• Gallery 4
• Gallery 5

People in the Chicago region work in a wide variety of jobs that contribute to the regional economy.

People in the Chicago region work in a wide variety of jobs that contribute to the regional economy.

People in the Chicago region work in a wide variety of jobs that contribute to the regional economy.

People in the Chicago region work in a wide variety of jobs that contribute to the regional economy.

People in the Chicago region work in a wide variety of jobs that contribute to the regional economy.

Employment and demographic trends, demand for skills, and economic inequality are changing the demands placed on workers, as well as on adult education and training programs. Technological advancements are augmenting work in most occupations and at all skill levels, altering how workers use their time and conduct tasks.^{{{Era Dabla-Norris, Si Guo, Vikram Haksar, Minsuk Kim, Kalpana Kochhar, Kevin Wiseman, and Aleksandra Zdzienicka, “The new normal: A sector-level perspective on productivity trends in advanced economies,” International Monetary Fund Staff Discussion Note, 2015, https://www.imf.org/en/Publications/Staff-Discussion-Notes/Issues/2016/12/31/The-New-Normal-A-Sector-level-Perspective-on-Productivity-Trends-in-Advanced-Economies-42730}}} Residents increasingly need to earn additional post-secondary training to enter the workforce and continuously enhance their skills over time to stay in the workforce.^{{{James Manyika, Michael Chui, Mehdi Miremadi, Jacques Bughin, Katy George, Paul Willmott, and Martin Dewhurst. “A future that works: automation, employment, and productivity,” McKinsey Global Institute: 2017.}}} Applicants increasingly need to demonstrate improved problem solving, literacy, numeracy, professional, and communication skills to be competitive in the job market.^{{{World Economic Forum, “The Future of Jobs: Employment, Skills and Workforce Strategies for the Fourth Industrial Revolution,” 2016, http://reports.weforum.org/future-of-jobs-2016/.}}} Workers increasingly need to interact adeptly with technology to anticipate, identify, and resolve problems.^{{{Melanie Arntz, Terry Gregory, and Ulrich Zierahn. “The risk of automation for jobs in OECD countries: A comparative analysis,” OECD Social, Employment, and Migration Working Papers 189, 2016, https://www.oecd-ilibrary.org/social-issues-migration-health/the-risk-of-automation-for-jobs-in-oecd-countries_5jlz9h56dvq7-en.}}} Employers often struggle to accommodate workers with disabilities in diverse job locations and employment arrangements.^{{{Alan Jette and Marilyn Fields, eds. The Future of Disability in America, National Academies Press, 2007.}}}

These trends deepen concerns that technological advances, industry shifts, and other macro issues could exacerbate existing trends toward “job polarization.” Since 1980, relative demand for labor has been concentrated in either low-skilled (e.g., personal services or food production) or high-skilled jobs (management and professional occupations), accompanied by an erosion of those in the middle.^{{{Maximiliano Dvorkin and Hannah Shell, “Labor market polarization: How does the district compare with the nation?” Regional Economist 2, 2017, https://www.stlouisfed.org/publications/regional-economist/second-quarter-2017/labor-market-polarization-how-does-the-district-compare-with-the-nation.}}} In particular, technology has helped to automate or streamline many repetitive tasks, while augmenting higher skilled jobs. The profile of a middle-income job — traditionally in middle-skilled construction, production, or clerical roles — has shifted toward occupations that require more training.^{{{David Autor and David Dorn, “The growth of low-skill service jobs and the polarization of the U.S. labor market,” The American Economic Review 103, no. 5, 2013. 1553-1597.}}} Many workers in the Chicago region face the prospect of more training requirements for fewer middle-skill, middle-wage jobs in occupations dramatically different from those of the past. These economic realities have contributed to a decline in real median household income nationwide and a 4.9 percent decline in the Chicago metropolitan area during 1989-2016.^{{{Chicago Metropolitan Agency for Planning, “Regional Economic Indicators,” 2017, http://www.cmap.illinois.gov/economy/regional-economic-indicators/trends.}}}

Recent studies also show that economic mobility is declining for many Americans: Children’s prospects of eventually earning more than their parents have fallen in America from above 90 percent for those born in 1940 to near 50 percent for those born in the early 1980s.^{{{Raj Chetty, David Grusky, Maximilian Hell, Nathaniel Hendren, Robert Manduca, and Jimmy Narang. “The fading American dream: Trends in absolute income mobility since 1940,” Science 356, no. 6336, 2017. 398-406.}}} In other words, fewer than half of millennials are likely to earn more than their parents. An analysis of economic data demonstrates that declines in economic mobility are more concentrated in the middle class, the industrial Midwest, and regions with higher existing levels of economic inequality, like Michigan and Illinois.^{{{Chicago Metropolitan Agency for Planning analysis of data in Raj Chetty, Nathaniel Hendren, Patrick Kline, and Emmanuel Saez. “Where is the land of opportunity? The geography of intergenerational mobility in the United States,” The Quarterly Journal of Economics 129, no. 4, 2014. 1553-1623.}}} The cumulative effect of income inequality also hinders the growth and resilience of urban U.S. counties in the face of future economic uncertainty.^{{{Randall Eberts, George Erickcek, and Jack Kleinhenz, “Dashboard Indicators for the Northeast Ohio Economy: Prepared for the Fund for Our Economic Future,” Federal Reserve Bank of Cleveland Working Paper, no. 06-05, 2006.}}} Between 2006-10, income inequality was one of the most effective ways of predicting a county’s risk of entering into recession.^{{{Paul Lewin, Philip Watson, and Anna Brown. “Surviving the Great Recession: the influence of income inequality in US urban counties,” Regional Studies 52, no. 5, 2017. 781-792.}}} Existing disparities — particularly by race and ethnicity — further erode the region’s human capital when all residents cannot fully contribute to and benefit from the regional economy. Instead, regions can experience more robust and longer periods of growth if residents have equitable access to economic opportunity.^{{{Andrew Berg and Jonathan Ostry. “Inequality and Unsustainable Growth: Two Sides of the Same Coin?” International Monetary Fund Economic Review 65, no. 4, 2017. 792-815.}}} Addressing these issues will require coordinated action on strategies across ON TO 2050.

The adult education and training systems provide essential knowledge and skills for workers to secure their own long-term employability as part of the region’s human capital( The skills, knowledge, experience, and ingenuity of the region’s residents ). However, persistent administrative challenges and limited public funding can undermine the effectiveness of these systems. Emerging issues will require these systems to become more responsive and employers more engaged in addressing labor market needs on a regional scale. ON TO 2050 focuses on the critical role of high-quality adult education and training in achieving the region’s economic goals, while acknowledging the vital importance of early childhood, primary, and secondary education.

In many ways, the Chicago region has been a national leader in reforming the public workforce system. The Workforce Innovation and Opportunity Act (WIOA) requires workforce boards to conduct state-level and regional strategic planning, as well as to strengthen and expand partnerships with the private sector. Some of the Act’s key reforms were based on strategies already underway in our region. To be resilient in the face of a rapidly changing global economy, metropolitan Chicago must build on related local and state efforts to improve unified workforce planning, partnership development, and integrated data systems. While these strategies focus on improved coordination, the importance of robust public investment in workforce development cannot be overstated.

Strategies