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Why white collar job loss is hurting factory towns

Manufacturing jobs are vital, but so are those jobs that help create companies

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Politicians and local leaders constantly debate potential job creation strategies, whether its investing in infrastructure, funding education initiatives, or doling out corporate incentives.

A new review of Labor Department data suggests that some of the received wisdom about job loss, especially what kind and to what effect, may need to be re-calibrated.

According to research conducted by the AP, a third of major metro areas in the United States are losing more white-collar than blue-collar jobs. Of the nearly 80 communities in this category, many include cities long seen as manufacturing hubs, such as Toldeo, Ohio, Sheboygan, Wisconsin, Birmingham, Alabama, and Decatur, Illinois.

Enrico Moretti, an economist at the University of California, Berkeley says it’s this “second hit” that’s really hitting manufacturing centers during an era where technology and innovation are core to job creation.

“It’s painful because it makes it even harder for the community to recover,” Moretti told the AP.

In effect, these areas don’t have the human capital needed to sustain and create new businesses and manufacturing centers. An AP review of Bureau of Labor Statistics found that white-collar workers are increasingly moving to and clustering in cities such as Nashville, Seattle, Chicago and Silicon Valley, meaning their economic impact is less and less likely to filter to areas with a legacy of manufacturing looking for investment.

These number support the contention that winner-take-all urbanism is creating more concentrated centers of business, economic activity, and innovation, and therefore leaving less opportunity and upward mobility in smaller cities and rural areas. It’s an economic shift accelerated by the overall struggle of small businesses.

According to Dynamism in Retreat, a report by the Economic Innovation Group, a bipartisan public policy think tank, small businesses are in the midst of a striking, and historic, decline, with new business formation declining rapidly and becoming more concentrated on the coasts. From 2010 to 2014, New York, Miami, Los Angeles, Houston, and Dallas produced as big of an increase in businesses as the rest of the nation combined, underlining the new era of economic concentration.

The article also notes that pushing tax cuts to benefit these job creators “may do little for communities with fewer white collar workers who could plow them into new businesses.”