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President Obama spoke to employees of a Chrysler assembly plant in Toledo, Ohio on Friday afternoon. In his speech, he declared the American auto industry “is back.”
Bridget Bodnar covered the event for our partner station Michigan Radio, and was kind enough to bring Changing Gears back audio of the president’s speech. You can listen to it below.
Five must-read stories about the Midwest economy
1) Exporting to economic growth. A study released today on nine Midwestern states shows that exports are helping to revive the economy.
Creighton University’s Business Conditions Index for the Mid-America region rose to 60.2, from 57.7 in April. The index is a survey of supply managers and purchasing executives, who rate the economy on a scale of zero to 100. Anything above 50 reflects growth in the next three to six months.
2) From yachts to wind. The recession forced many small manufacturers to find new products to make in an attempt to survive. Tiara Yachts, a Michigan manufacturer, is taking risks to keep its factory open and employees on the job. Lindsay Smith of our partner station Michigan Radio looked at the company.
3) Cruising to Detroit. In another boat related story, Detroit is about to open a new cruise ship terminal. The $22 million project, paid for with mostly federal dollars, expects at least two boats to pay call this summer. But some in the city question whether it was a wise move. Here is the story from Marketplace.
4) Pay for performance. Ohio lawmakers are working on the state’s new budget, and the Ohio Senate is looking at a plan that would give $115 million more over the next two years to better-performing schools. The latest proposal also makes charter schools more accountable for funds they would receive. Our partner ideastream looked at the debate.
5) Farmers market innovations. Farmers market season is in full swing across the region. Tonight, the Ann Arbor Farmers’ Market will hold a special evening session, a pilot for a Wednesday night project that may kick off this summer. In Chicago, more farmers are accepting food stamps. Natalie Moore from our partner WBEZ reported on the trend.
Throughout the Great Recession, investment in start-up companies has been viewed as a central component in recharging the economy.
The Midwest, in particular, has been fertile ground for small-business incubators, as local governments have encouraged and funded these public-private business collaborations. The city of Cleveland has seven incubators alone.
But are cities getting good returns on their investments? That’s the question our partner station Ideastream explored in a report about the proliferation of incubators in northeast Ohio. Here’s a glimpse at what was found: these companies fail at a high rate.
While signs of economic rebound have emerged on a small scale in recent months, home prices continue their decline. The Associated Press reported today that major areas, including Cleveland, Detroit and Chicago, are seeing their lowest price points since the housing bubble burst in 2006.
Elsewhere in the Midwest today:
A hearing will be held today in East Lansing, Mich. that examines agricultural opportunities for Michigan contained in the 2012 federal farm bill. The hearing will focus on the upcoming reauthorization of the farm bill, and look at agriculture, as well as energy, conservation and other policies that affect Michigan.
Meanwhile, one Ohio farmer’s quandary over weeds has become a cautionary tale on the, ahem, thorny issues involved in consolidating municipalities, reports the Columbus Dispatch. It’s also a glimpse of issues found at the crossroads of farmland and suburbia.
There’s more pushback aimed at Newsweek for including Grand Rapids, Mich. in its list of “dying cities.” Pulitzer Prize-winning film critic Roger Ebert calls the city’s response, a lip-dub video set to Don MacLean’s “American Pie” that’s gone viral in recent days, “the greatest music video ever made.”
The federal government has earmarked $400 million for high-speed rail projects in Michigan. Six public meetings will be held across the state in coming months, according to Michigan Radio, to discuss the future of passenger and freight rail service.
What else is in store for Michigan? Gov. Rick Snyder is expected to detail plans that include an overhaul of the state’s teacher tenure system at this week’s Mackinac Policy Conference.
In Illinois, lawmakers spent Memorial Day approving legislation that would “dramatically expand gambling,” according to the Chicago Tribune, including plans for a Chicago casino supported by the city’s new mayor, Rahm Emanuel.
Amid uncertainty over a push to limit collective-bargaining rights for Wisconsin’s public employees, some of the state’s school districts have gained concessions from unions in benefits to ward off layoffs and program cuts, reports the Milwaukee Journal Sentinel.
Some good – but not great – news for northeast Ohio. Our partner station Ideastream reports today that a glitch in a reporting system led to an overly optimistic April home sales report. Revised numbers still show a 4.6 percent increase in sales from March.
Ohio’s unemployment rate dropped substantially in April and now ranks below the national average, according to Crain’s Cleveland. More than 100,000 have returned to the workforce over the past year across the state.
Also in Ohio, American Greetings will move its headquarters from Brooklyn 13 miles west to Westlake, reports The Plain Dealer. And the merger of AirTran and Southwest could mean fewer flight operations at the Akron-Canton Airport.
Elsewhere across the Midwest today:
WBEZ.org says the University of Chicago’s new $81 million library is more than an architectural feat. It’s a glimpse of the future for libraries, a topic that Changing Gears reporter Niala Boodhoo examined earlier this month.
Does Michigan’s new tax structure make fiscal sense? Michigan Radio received an answer to that question from Charles Ballard, a Michigan State University professor and author of “Michigan’s Economic Future.”
Caterpillar CFO Edward Rapp says the U.S. economy is ready to lift off, but that businesses need better direction from the government on upcoming policy developments before investing, according to the Associated Press.A movie based on a novel from author Elmore Leonard, a Detroit native, will be filmed in Michigan after being awarded $2.8 million in state tax credits. “Freaky Deaky” is the 14th of Leonard’s books to be turned into a movie, but the first to be filmed in his home state.
After a bruising couple of years, companies around the Midwest are planning to expand, rehiring workers and in some casing, adding new ones. But some also have used the recovery as an opportunity to hint that they might move elsewhere. In response, cities, states and local communities have come up with significant financial incentives aimed at convincing these companies to stay put.
In Illinois, Motorola Mobility Holdings Inc. is getting $100 million in financial incentives to keep its corporate headquarters in Libertyville. Company officials said they had considered moving the headquarters to more “tech-friendly” locales like the Bay Area or Austin, Texas. Most of that $100 million in incentives comes from tax credits spread out over the next decade. In return, Motorola Mobility is keeping its 3,000 jobs at the Illinois based headquarters and will invest about $600 million over the next tree years on research and development.
Caterpillar Inc. made similar headlines last month when its CEO, Douglas Oberhelman, wrote an open letter to Illinois Governor Pat Quinn. The letter outlined his concerns about the business environment in Illinois and mentioned that he was considered moving the Peoria, IL based company elsewhere. Not long after that letter was published, Oberhelman said he received e-mails, letters, packages, and even a hand delivered request from more than 30 states inviting Caterpillar to move. Shortly after that, Oberhelman met with Quinn, and later announced “Caterpillar is here to stay.”
Still, Oberhelman continues to lobby Quinn to make Illinois more “business-friendly.” Oberhelman argues Illinois needs to offer more incentives to businesses to keep up with ultra business friendly states like Texas. Incidentally, it was Texas who sent the lone hand delivered offer to lure Caterpillar away.
Two years ago, NCR Corp. announced it was moving its headquarters from Dayton, OH to a suburb of Atlanta, GA. Georgia had enticed the world’s top ATM provider through $60 million in incentives. The move was a huge blow to hard-hit Dayton, made only worse by competitor Diebold’s decision to look for a home elsewhere. The ATM and bank security system manufacturer ultimately announced this past April that it would be staying in Ohio, accepting $56 million in tax breaks, grants, and loans from the state. The company said it will use that money to build a new $100 million world headquarters in the Akron area.
It’s costing Ohio a bit more to keep American Greetings Corp. The greeting card maker will be getting $93.5 million in incentives over the next 15 years. Ohio Governor John Kasich even signed the tax reform legislation making the deal possible at the company’s Cleveland area headquarters. It’s still unclear if the company will be moving its headquarters within Ohio.
It took the help of outside financiers to keep Goodyear Tire & Rubber in the Akron area. Akron, Summit County, and Ohio had been saving up for years to pitch in for the tire makers $160 million new headquarters to help keep it in state. Most of the money for that project ($98 million, to be exact) came from a New York based private-equity firm. That was just a few weeks ago, and construction is already under way. Local officials say this means Goodyear stays, and more jobs for construction workers.
But these sorts of corporate moves aren’t just happening between states. Within Ohio, breakfast restaurant chain Bob Evans Farms Inc. recently decided to move its headquarters from Columbus to New Albany. That move upset Columbus officials, who had offered the company incentives to stay. It also caused Ohio Valley Bank to pull out of Columbus, too. In the Miami Valley alone, Ohio spent more than $1.3 million in state funded tax credits to keep existing jobs.
Around the Midwest, the economic recovery is finally starting to show. Automakers like General Motors, Ford, and Chrysler are announcing that they plan to hire and rehire thousands of autoworkers, bringing employment among the U.S. automakers backnear pre-recession levels. GM also plans to invest $2 billion in 17 of its plants nationwide.
Illinois Gov. Pat Quinn and Ohio’s John Kasich (both Republican) say financial incentives are worth it if it means keeping thousands of jobs in state. They say it’s a critical part of keeping the Midwest on track for a complete economic recovery. But critics of such incentive programs say these aren’t new jobs. They say states like Ohio and Illinois are too broke to afford paying this much just to keep the same jobs and should instead by focusing on creating new jobs.
What do you think of incentives to keep companies in states and communities? Is it money well spent, or should communities act differently in a time of tight budgets?
GARY, Indiana – What happens when your local library shuts its doors? That’s a question Midwestern towns from Evanston, Ill., to Troy, Mich., are asking as local libraries are targeted in budget cuts. I went to Northwest Indiana, where the Gary Library Board has just decided to close its main branch, to find out the impact on a local community.
Gary has five library branches. The other four have names, like Kennedy, or Du Bois. This one is simply called the “main library”.
There was steady rain on the Saturday morning when I went to check it out. From the outside, the concrete slab exterior makes it hard to realize it’s actually a library – until you step inside.
There, the muted quiet and musty scent of stacks of books are familiar.
But we all know libraries aren’t just for books anymore. Inside the reference room, I found Craig and Zachariah Boyd, a father and son who often spend Saturday mornings here.
Craig said this is the only branch nearby that he knows is open on Saturdays. He takes advantage of the wireless Internet at the library and does work – and brings Zach to do his homework, too.
“I just want to teach him a good work ethic,” said Craig Boyd.
Father and son sit quietly in the reference room for hours – Craig on his laptop, Zach first with schoolwork, then books and games. When Craig’s done, Zach gets to go to the children’s section as a reward.
But Craig worries about what will happen to other children when the library closes on Dec. 31. Like many communities, the Gary Public Library Board decided it couldn’t afford to keep all of its branches open.
When it shuts, half of the system’s 60 employees will be out of work.
The system now has five branches because it was created when the city had 180,000 people.
Today, Gary’s population is 80,000.
Four other branches across the city will stay open – but many of the main library patrons don’t have their own transportation, so they’ll have a hard time getting there.
Seniors citizens walk here for computer classes.
The charter school down the street uses this as its school library.
And unemployed people come here to look for jobs – like Michael Jenkins.
“I’m not too computer savvy,” said Jenkins, who also doesn’t have access to a computer. He does have a commercial driver’s license and is looking for Chicago companies to target for work. That’s why he’s flipping through the Yellow Pages.
“It’s not just like closing a gas station,” said Jenkins of the impact of the library’s closing. “The library becomes a part of the community. You close a library, you’re closing down part of the community.”
Upstairs, part of that community is on the second floor.
Public meeting spaces are hard to find in Gary.
The library’s auditorium is used this Saturday morning by a local chapter of Phi Delta Kappa, a sorority for teachers.
And across the hall, there’s a meeting of a chapter of the National Federation for the Blind.
Raymond Harris brought his wife Ella to that meeting, where they found out about the library’s future.
“How can you close a main library? It’s just ridiculous,” said Raymond Harris.
But libraries all over the country are facing budget cuts. If they’re not shutting down entirely, they’re at least trimming hours.
The most extreme case may be Detroit – where an $11 million budget shortfall means at least 10 of its 23 local branches may close. (The Detroit News has been doing some extensive coverage of the situation there – you can see it here.)
The country’s best funded libraries are in Ohio, where money comes directly from the state. But even there, next year’s budget will be cut at least 5 percent. (By the way, if you’re curious about specific funding throughout Ohio, check this out.)
Raymond Harris thinks the state of Indiana should intervene for this library.
“I think our state is closing us out,” he said, simply. “They don’t care whether Gary lives or Gary exists. I don’t think they even know we are here.”
Gary’s library system is typical of most systems – the money comes from local property taxes. And that revenue has plummeted with the housing market downturn. The situation in Indiana has been further complicated by a property tax cap that was passed by Indiana voters last fall – meaning that even if the local library authority wanted to ask for more money, it can’t.
“When people hear the word ‘property tax’ cap they think it’s a good thing, but they don’t think about how it will shift public services they’ve come accustomed to,” said Susan Akers, the executive director of the Indiana Library Federation.
The president of the Gary Public Library Board, which voted 4 to 3 to shut down the main branch, is Tony Walker.
“It was just impossible to continue on when you are going to lose 50 to 60 percent of your tax revenue in a year,” said Walker.
That meant cutting about $3 million from the $5 million budget. An outside consulting firm analyzed the data, and pointed out the choice was either to close the main library branch or close the other four spread out across Gary.
Walker knew the decision wouldn’t be popular, especially during an election year. He’s running for the Gary City Council, though, and said he didn’t think it made sense to postpone the vote until after the election.
“I’m running for is Gary City Council, whose total focus is going to be what to take away from people,” he said. “So, if I’m signing up to run for that type of job there is no sense in running from it now.”
The elections were last week. Tony Walker lost.
And those who were elected are left to reconcile an $11 million budget shortfall – and to figure out what other services to cut for Gary to survive.
Here’s a slideshow of my Saturday morning at the library, where I met folks like Mary Jenkins, who is organizing a petition to protest the main branch’s closing:
We asked, and you answered. Here are more of your nominations for the Best from the Midwest. Any current band or performer with Midwest roots is eligible. (More suggestions? Post them in Comments.)
From Chicago and Illinois:
Kanye West is from Chicago, Illinois. He’s already received 14 Grammy awards, and often asserts that he deserves even more.
Songwriter and multi-instrument player Andrew Bird also hails from the Windy City, as does Steve Goodman. Illinois also gets the credit for American country/folk singer John Prine, from Maywood.
Cleveland and Ohio:
The home of rock and roll — and home city of Changing Gears partner ideastream is also well represented in this latest round of Twitter and Facebook votes. Among the best known is the industrial rock band Nine Inch Nails founded in Cleveland in 1988. They have earned two Grammys, plus an additional Golden Globe and an Oscar for front-man Trent Reznor (along with Atticus Ross) for the score of The Social Network.
The group that produced the ultra catchy song I Know What Boys Like is also from Cleveland – that would be the new wave band The Waitresses. Recently reunited power pop group The Raspberry’s are Clevelanders, as is the band The James Gang. That latter group is perhaps best known for their guitarist, Joe Walsh, who later went on to become a part of The Eagles. Musician, DJ and politician Michael Stanley is also from the Cleveland area.
Detroit and Michigan:
One Changing Gears fan noted that we would be remiss not to mention musician and activist Ted Nugent, from Detroit Michigan. Bob Seger of Bob Seger and the Silver Bullet Band was born in Dearborn and grew up in Ann Arbor, home to partner station Michigan Radio. You can catch Seger on tour now.
John Mellencamp, best known for his heartland rock, was born in Seymour, Indiana.
And then there’s Prince…
Though the Changing Gears coverage area is generally Illinois, Ohio, Michigan, Indiana and Wisconsin, we’re bending the rules for some notable exceptions this time around. Michelle Norris, co-host of NPR’s All Things Considered, nominated Prince from Minneapolis, Minnesota. Prince has earned himself seven Grammy awards , one Golden Globe and an Oscar for Best Score too. American musician, poet and painter Bob Dylan calls Duluth, Minnesota home.
We also had a few nominations for musicians who aren’t from the Midwest but still had a big impact on the area’s music scene. Chief among those is McKinley Morganfield, otherwise known as Muddy Waters. He’s from Mississippi but is better known as the Father of Chicago blues.
[YOU TUBE VIDEO]
Cleveland coined the term Rock and Roll. People still talk about Detroit and Motown. And, Chicago is known for the Blues. Yet, despite evidence that music can revitalize rust belt cities, that it can raise property values, and make these places more attractive to workers and companies, the music industry doesn’t seem to be a priority here.
“ Maybe the first two years we were open, we were miraculously making money,” says Cindy Barber, co-founder of the Beachland Ballroom, one of Cleveland’s top venues—and few venues—for live music. It’s an intimate place: the kind where you feel like you’re up close with the music. Yet, Barber just can’t make any money. She’s thinking of turning the Beachland into a nonprofit.
“You go to Beachland Ballroom, every one of those shows should sell out,” says David Spero. He’s been a producer, manager, and in the 70s, was one of the pioneering Cleveland DJs who introduced the nation to performers like David Bowie. Back then, the industry here was alive.
“Every label was represented here: Columbia, Atlantic, Warner Brothers, Capital, RCA,” Spero says.
It soon got too big and technology changed, and Cleveland lost its place as kingmaker for rock.
Today, Cleveland bands have to find labels and booking agents elsewhere.
About two years ago, the Cleveland band Cloud Nothings was nothing more than the tinkerings of Dylan Baldi, who was more interested in music than college.
“I’d just record songs all the time like when I wasn’t in class, or instead of going to class,” Baldi says.
He put his basement recordings on the internet and to his amazement, found himself booked with a show in Brooklyn and record deals with labels in DC and the UK. He had been playing all the instruments himself and had to scramble to find band mates. Now, he’s just getting used to seeing his name in the music press. And, Baldi says they always mention his hometown.
“They definitely write about that because it’s such a strange thing for a band people know about to be from Cleveland, which is too bad because there are a lot of good bands here,” he says.
One winter day, he was at the Beachland Ballroom celebrating the release of the band’s self-titled album.
There’s a sense that Cleveland and the Midwest are doing a poor job supporting their music industry, and a poor job benefiting from it. Richard Florida is an academic and the author of The Rise of the Creative Class, and he says these post-industrial cities have a lot of assets that could create vibrant music scenes, but it can’t just happen on its own.
“So the first thing we can do in Cleveland, and Pittsburgh, and Detroit, and Milwaukee, and Chicago, is to create real incubation assistance for young bands. I think the band is a better example of a start-up company than these high tech garage start-ups,” Florida says.
He recommends marketing assistance, help with business planning. Cities should make it easier for musicians: provide cheap housing and create incentives like Austin did.
And, the effects can be huge. Austin estimates its music industry contributes more than $600 million to its economy. A Cleveland nonprofit is currently studying how much the music business means here. Michigan has tax breaks for the music business but hasn’t bothered to promote them.
And, Chicago’s Music Commission did its own economic study and found it had the third biggest industry in the country, but no one knew it. But its new Mayor, Rahm Emanuel, wants to change that with his plan for Uptown Music District.
“Where arts and culture can be the engines of economic growth,” Rahm said.
Maybe Chicago, then, will become the model for this region.
Ohio is facing an $8 billion dollar budget deficit. Governor John Kasich has put forward his ideas on how to solve that in his budget proposal, but what does the rest of Ohio think?
The forum was split into two parts. First, it looked at the impact the proposed budget would have. Education was a key topic, as guests and attendees alike questioned what the effect of evaluating teachers based on a mix of classroom performance, student test scores, and other criteria would be. Anthony Podojil of the Alliance for Higher Ed said Senate Bill 5, Ohio’s recently signed law the greatly reduces the collective bargaining power of public employees is intended to give the state more options on how to control its budget. But, he said the state also wants to attract the best and brightest to teach in its classrooms. Podogil asked, “Can both be done?”
Consolidation was another idea that was brought up. Cleveland Plain Dealer reporter Aaron Marshall called that idea “dangerous.” It’s one thing to share certain services between school districts, he said, but people can get very upset at the idea of blending school mascots or colors.
The second half of the forum brought such concerns straight to legislators. Democratic State Senator Nina Turner and Republican Senator Tim Grendell were in the studio to answer questions, while Republican State Representative and House Finance Chair Ron Amstutz joined the conversation via web-cast. Senate Bill 5 was born under the “guise of giving local governments flexibility,” said Turner, adding that she thinks it vilifies public employee unions.
Amstutz said some of the pain is being shouldered by public employees like teachers, but it’s also spread out amongst nursing homes, local governments, and other groups. He said he can’t tell how many people may lose their jobs because of this budget, but he thinks “it will be less than what people are worried about.”
April 4th, 2011
Personal income per capita has grown nationwide over the last ten years by 5.7 percent, according to the Bureau of Economic Analysis (BEA). Yet, Americans are not really any better off, because that growth is due to an increase in tax-exempt benefits. That’s what Donald Grimes, an economist at the University of Michigan Institute for Research on Labor, Economics, and the Economy has found. For a look at how Wisconsin, Illinois, Indiana, Michigan and Ohio residents are faring, scroll to the graphs below.
Tax exempt benefits, also known as nontaxable transfer payments, include programs like Social Security, Medicare and Medicaid, health insurance, unemployment, welfare and disability benefits provided by the government and employers. It you subtract those nontaxable transfer payments from the equation, U.S. income actually decreased. In fact, U.S. taxable income per capita fell by 3.4 percent, from $32,403 in 2000 to $31,303 by 2010.
Grimes said the personal income data as calculated by the BEA is misleading, “because it’s including all of these transfer payments and so it’s essentially artificially inflating our sense of well-being.”
Grimes said the bad news does not end there. Nontaxable transfer payments continue to grow, while taxable income continues to shrink. Essentially, more and more people are relying on programs like Medicare and Medicaid, while the population paying for those programs is shrinking.
He said if this trend continues, “we would eventually end up in a crisis where all of the earned income is taxed in order to pay for the transfer benefits. At some point the benefits that people are getting in terms of transfer payments has to grow at a much smaller rate. It’s sad, but it’s just a mathematical inevitability.”
Grimes said even returning to 2000 level tax rates, before the tax cuts imposed by former President George Bush and extended by President Barack Obama, would not be enough.
The situation may be even worse in the Midwest. Even before the recession, the region has struggled with attracting and keeping its youth, while the older population is increasingly relying on those nontaxable transfer payments like Medicare and Medicaid. Around our region, that disparity between the number of people relying on nontaxable transfer payments and the number people paying for those programs is growing especially quickly.
Grimes predicts some painful decisions have to be made on the Federal level very soon to answer his question, “where are we going to get the money to pay these transfer payments?”
You can see some of the data Grimes collected in some maps below. “Modified personal income” equals personal income with social insurance taxes (such as social security, Medicare, Medicaid) added back in. Be sure to play around with the data through time by changing the year in the bottom left drop down menu.