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home : most recent : statewide implications October 17, 2017

10/5/2017 12:27:00 PM
Chicago Fed helps cities learn from each other

Doug Leduc, Greater Fort Wayne Business Weekly

Local foundations, financial institutions, government agencies, educational institutions, nonprofit groups and grant-making organizations have become better prepared to start using a new benchmarking tool developed by the Federal Reserve Bank of Chicago.

Chicago Fed officials launched its Peer City Identification Tool earlier this year to help cities with similar characteristics learn from each other. Representatives met with Fort Wayne leaders Sept. 22 to walk them through the tool, answer questions and welcome ideas that might make it more useful.

The event was hosted at Citizens Square by Fort Wayne’s Community Development Division and Indiana University-Purdue University Fort Wayne’s Community Research Institute. CRI Director Rachel Blakeman said hosting the event fit in with its mission to help area leaders make informed decisions.

Developing strategies

The data visualization and comparison tool traces its origins to the Chicago Fed’s Industrial Cities Initiative, a report and study tour of 10 industrial cities in its region with economies that rely on manufacturing.

Part of the report looked at economic and community development strategies the cities used to deal with major changes in the nation’s manufacturing sector.

The study prompted interest in finding other cities in the country experiencing similar trends, said Taz George, a Chicago Fed research analyst.

“People thought, ‘There must be some other place that’s seeing this same combination of factors, and how are they coping with that, or how are they leveraging new opportunities that their city may be well positioned to utilize,’” he said.

Officials working on the Industrial Cities Initiative created an algorithm to cluster cities together based on similar characteristics, using the Census Bureau’s American Community Survey data.

They expanded the data set to 300 cities, limiting the peers to cities that had populations of at least 50,000 in 1960 in order to provide historic comparisons. Indianapolis was not included because of boundary changes when the city’s government combined with that of Marion County.

Plugging the name of any city among the 300 in the online tool at will generate a group of peer cities and present data on characteristics of the target city and peers along four themes: resilience, outlook, housing and equity.

“We’re really talking about resilience in terms of the labor force and the labor market characteristics, including things like unemployment, labor force participation, and also the change in the mix of jobs. Included here is the labor share of manufacturing, which we found was a really defining characteristic for the cities in this data set,” George said.

“You can see that in this peer group, Fort Wayne’s peers have somewhat lower unemployment and higher labor force participation. They also have a higher labor share of manufacturing. And while they’ve experienced a large decline in labor share of manufacturing back to 1970, it’s still a much smaller decline than what the typical city across the country saw.”

Where we stand

The median manufacturing labor share decline from 1970 through 2015 for the 300 cities in the data set was 61 percent. For Fort Wayne it was 44 percent.

“This reflects really that there’s been a bit more strength in manufacturing as a share of the job market in Fort Wayne relative to other places in this data set,” George said.

Fort Wayne’s median family income was $54,837, slightly below the data set median of $54,888, but between 2000 and 2015, Fort Wayne’s median family income fell 11.5 percent, compared with 8.1 percent for the data set.

Fort Wayne’s median family income drop was less than that of its peer cities. It fell 13.1 percent for Wichita, Kan.; 14.2 percent for Sioux City, Iowa; 18.5 percent for Fort Smith, Ark.; and 20 percent for Green Bay, Wis.

When you click on a new theme with the online tool it will automatically generate a new set of peers. The outlook theme focused on population growth included Fort Wayne in a group of a dozen cities.

“These are cities that have experienced enormous growth in population. The median for the group is 25 percent, which is almost exactly where Fort Wayne is,” George said.

The growth took place between 2000 and 2015, and “in the case of Fort Wayne, the bulk of the population growth is probably attributable to annexation over that period,” he said.

Other cities in the peer group grew through annexation, and some of them saw a economic growth over a short period of time from the oil and shale boom, George said.

Fort Wayne’s population was 7.7 percent foreign born, compared with 9.1 percent for the peer group and 10.8 percent for the data set.

The housing theme featured data on housing affordability, characteristics of the housing stock and the home ownership rate.

About 78 percent of the data set’s housing units were built before 1980, but for Fort Wayne and the peer group, which numbered five cities, that share was much lower, at about 67 percent.

“And so there’s a lot of relatively new housing stock. That probably reflects that there’s been a lot of growth. In part, that’s growth of the population, and more demand to move to this area and to more desirable housing,” George said.

The fact that only 46 percent of rent payers in Fort Wayne spend more than 30 percent of their income on rent, compared with 54 percent for the data set, “really shows the degree to which affordability has been an asset for the city and probably suggests that there has been a lot of creation of new housing stock to meet the demand among new residents,” he said.

The equity theme includes city poverty rates, share of the population with a bachelor’s degree and measures of wage inequality and segregation.

Among 16 cities considered peers, Fort Wayne had the lowest level of wage inequality. It also had a lower level than the data set median, which “suggests that there’s not a particularly high level of wage-based inequality,” George said.

The share of Fort Wayne’s population with a bachelor’s degree was 26.1 percent, compared with 26.2 percent for the data set.

Officials with the Chicago Fed hope people use the online tool “to have conversations about the condition of their places, informed by data,” said Susan Longworth, a senior business economist working with its community development and policy studies.

“Often, they’re informed by emotions or sort of gut feelings about things. So it just sort of changes that framework for the conversation.”

The American Community Survey recently released annual survey data, and when the Peer City Identification Tool is updated this year to take that into account, its data set will expand to 900 cities, including Indianapolis.

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