Fed economist: Area job growth falling short

The economy is growing locally and nationally, but it’s on pace to realize less job growth locally than it did in 2014, according to an economist with the Federal Reserve Bank of St. Louis.

Charles Gascon, a Federal Reserve senior research support coordinator, delivered the news June 29 to 120 businesspeople at a Springfield Business Development Corp. economic briefing. The forecast counters generally positive economic expectations in a small-sample survey by area business professionals.  

Gascon predicts less than 2 percent job growth locally, after last year ended right at 2 percent. The 2014 rate still may be revised when final figures are released in the fall.

Gascon estimates 2015 year-to-date job growth at 1.8 percent.

“There’s nothing that stands out to me that indicates a big change in trends,” he told the crowd at north Springfield’s DoubleTree Hotel. “The national economy is improving a little bit. There is going to be probably some slowdown in job growth. The unemployment rate is pretty low, so it is going to be pretty hard with fewer workers in the pool to boost things up.”

Survey says
In February, the Fed surveyed 114 area businesspeople. Over two-thirds of respondents expect an improved economy this year compared to last. Only 9 percent predict worse economic conditions locally, and a quarter of businesspeople were neutral on the year.

Gascon said survey respondents – 80 percent of which were in the service sector, 16 percent in goods’ production and 4 percent were in government – were asked for the area’s strengths and weaknesses. Answers pointed to a diverse economy led by health care.

“Seventeen percent of the region’s workforce is employed in the health care sector, which is about 30 percent more than the national average. It was instrumental, particularly during the recession, when most sectors were laying off jobs,” Gascon said. “Beyond health care, there isn’t one sector that drives growth in the region.”

The economist also put Springfield’s economic data into a larger context.

“Springfield’s economy is at about $16 billion, based on gross output,” Gascon said, noting the figure represents roughly 6 percent of the total state economy.

Wage woes
With nearly 450,000 living in the five-county Springfield metropolitan statistical area, the per capita income is about $32,000 per year. Compensation is well below the U.S. average of $39,600, but cost of living locally is about 11 percent less than the national average. Gascon concluded Springfield’s “real income” is roughly $36,000.

Wage growth, he said, has been largely stagnant nationally and locally since 2011.

But in Springfield, the unemployment rate remains below state and national averages. Through the first quarter, the unemployment was 4.7 percent in Springfield, compared to 5.5 percent nationally. The state unemployment rate was 5.8 percent in May, the most recent period available.

Low wages were noted in the survey as a local weakness, along with poverty and workforce quality.

“Difficulty attracting skilled workers is something we see all across the district,” Gascon said.

According to the survey, 21 percent said low availability of qualified employees was the area’s greatest weakness, while 19 percent said a stagnant middle class and poverty were key problems. Also, 17 percent said a lack of typically higher-paying manufacturing jobs was an issue, and suppressed pay was a challenge listed by 12 percent.

Meeting attendee Dan Nelson, an attorney with Lathrop & Gage LLP, said the wage data rang true.

“The other comment he made that we’ve talked about often is the lack of skills and qualified workers in our community. Even though we’re seeing population growth, that continues to be a problem,” Nelson said.

“We’ve got the people here, now we have to educate and train them.”[[In-content Ad]]