Regional Economic Indicators: Workforce

Workforce

A skilled workforce is a critical component of regional economic growth.  Many jobs that once required only a high school degree now require additional training or a postsecondary education.  Ensuring that Chicago's workforce has access to these opportunities will prepare the region to compete in the global economy.   

Educational Attainment

What

The proportion of residents in the Chicago region and peer metropolitan areas who are age 25 and older holding high school, associate, bachelor, and advanced degrees.

Why it matters

With a growing number of jobs nationwide and in the region requiring postsecondary education, higher levels of educational attainment indicate a skilled workforce and contribute to regional economic prosperity.  The proportion of the Chicago region's residents holding postsecondary degrees lags behind Boston and Washington, D.C., and exceeds the rate in Los Angeles. 

Population age 25+ with academic degrees in select metropolitan areas, 2016

Higher levels of educational attainment create benefits for both individuals and regional economies.  As residents receive additional postsecondary education, they can generally expect increased median earnings and a decreased likelihood of joblessness.  On a regional scale, these trends translate to lower unemployment rates and greater economic output.  Nearly half of Chicago residents (45.7 percent) have an Associate degree or higher, including more than 2.2 million residents with a Bachelor degree or higher.

Developing and maintaining an educated workforce is a critical component of business growth and retention.  A 2012 IBM survey of CEOs, for example, found that, when asked about their business' key source of economic value, CEOs most frequently cited human capital -- more so than customer relationships, technology, innovation, or research and development.  Regions with a skilled workforce have a competitive advantage in a globalized economy largely shaped by innovations in transportation and communication technology.

Educational attainment among metropolitan areas

As employment in the U.S. has transitioned from agriculture and manufacturing toward service sector occupations and an increasingly knowledge-based economy, demand for workers with a postsecondary education and training has increased.  Although manufacturing output is near an all-time high, the share of employees working in manufacturing has steadily declined relative to those in service sector industries, such as health care, finance, business services, and education.  For instance, approximately 60 percent of the nation's employment during the 1940s was in the service sector.  Today, the proportion has risen to over 80 percent.

Proportion of metropolitan population age 25+ by highest degree held, 2016

Postsecondary degree attainment rates in the Chicago region and most other large metropolitan areas exceed national averages.  However, the region finds itself near the middle among peer metropolitan areas at each level of degree attainment.  Associate and bachelor degree attainment rates among the Chicago region and its peers are relatively similar; advanced degree attainment rates exhibit greater variability.

Approximately 15.0 percent of the Chicago region's population age 25 and older holds an advanced degree, placing it behind Washington, D.C. (25.0), Boston (21.1), and New York (16.3).  Advanced degree holders play an important role in regional economies because they have the highest potential to be job creators, either directly by starting a new company or indirectly by increasing demand for goods and services in the local economy.

Trends in job growth by educational attainment

Since 2001, jobs requiring an associate degree or higher in the Chicago region have grown more than jobs requiring less than an associate degree.  The following chart illustrates this trend and highlights the significant effect that the most recent recession had on jobs with lower postsecondary education requirements.

Chicago region job growth by typical entry-level education requirement, 2001-16

Between 2007-10, regional employment in occupations requiring less than an associate degree declined more rapidly than those at other educational levels.  Although the labor market has largely recovered, jobs requiring less than an associate degree only recently returned to their pre-recession 2007 peak.  Jobs requiring an associate degree have fared slightly better than those requiring a bachelor degree since the recession, due in part to the large number of health care and preschool education jobs.  CMAP analysis found that over 50 percent of regional jobs in occupation that typically require an associate degree are in these two sectors.  While consumers and businesses generally cut back spending during recessions, people tend to continue seeking medical and child care, making these occupations less susceptible to recessions.  Among advanced degree holders, the recession slowed employment growth, but did not lead to job losses as it did at other educational levels.  The most robust employment growth in the region has come from jobs requiring an advanced degree, which grew by 17.1 percent between 2001-16.

About the data

Metropolitan educational attainment is tracked by estimating the proportion of a region's population age 25 and older holding a high school, associate, bachelor, or advanced degree.  A key missing component of this data is information on certifications utilized in manufacturing, STEM occupations, and other growing areas of the economy.  While most individuals pursue a traditional associate or bachelor degree, educational institutions increasingly offer postsecondary certifications in specific fields.  While these certifications do not equate to an accredited degree, they can be a significant asset for jobseekers.  The lack of available data for these programs highlights the limitation of tracking educational attainment using traditional degree measurements.

For estimates of job growth at different levels of post-secondary education and training, CMAP analysis uses education category assignments determined by the Bureau of Labor Statistics (BLS) based on survey data for the educational attainment rates of workers in each occupation.  The BLS has adjusted these assignments intermittently since 2007.  CMAP analysis uses current education category assignments and holds them constant for all previous years. Holding the education category assignments constant allows the analysis to focus on the types of occupations that gained or lost jobs since 2001 rather than on changes to the typical education requirements for individual occupations.  For many occupations, there may be more than one way to pursue entry-level jobs.  The education category assignments reflect the highest level of education BLS survey respondents have attained – not necessarily the level of education required for the occupation.

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Total Jobs

What

The estimated number of full- and part-time jobs in the seven-county CMAP region and peer metropolitan areas.

Why it matters

Growing job counts indicate that businesses are hiring and that the region's economy is growing.  The Chicago region has experienced steady job growth since the 2007-09 recession, but job growth rates have consistently lagged behind those of peer metropolitan areas since 2001.

Total jobs compound annual growth rate in select metropolitan areas, 2001-17

Regional employment Trends

Total job counts in metropolitan areas tend to follow national economic trends.  During the 2001 recession, employment in the Chicago, New York, Los Angeles, and Boston regions declined slightly before experiencing moderate growth through 2007.  The 2007-09 recession reversed much of this growth for the Chicago region and its peers.

Effects of the most recent recession were especially severe in the Chicago and Los Angeles regions, which lost 7.3 percent and 8.1 percent of their jobs, respectively.  Metropolitan regions nationwide have seen several consecutive years of growth in total job counts.  Recovery has varied widely among metropolitan regions.  The Chicago region only regained its 2001 total jobs count in 2014, as peer regions met or exceeded their 2007 pre-recession peaks.

Total jobs change in select metropolitan areas, 2001-17

Today, the number of jobs in the region continues to increase.  Yet, the available data do not indicate the quality or average pay of jobs created.  Total job counts can increase from the creation of part-time or low-wage jobs, as well as the creation of full-time or well-paying jobs.  Thus, measuring total jobs provides a high-level perspective on the health of employment in the region.

About the data

Total jobs data are reported by Economic Modeling Specialists International (Emsi 2017.3) and are primarily based on data from the U.S. Bureau of Labor Statistics' Quarterly Census of Employment and Wages, the U.S. Bureau of Economic Analysis, and EMSI proprietary sources.  The data report the sum of full- and part-time positions.  Data for metropolitan Chicago includes only the seven counties of northeastern Illinois; all other regions reflect U.S. Census Bureau metropolitan statistical areas.

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Workforce Participation

What

The proportion of working-age residents (20 to 64 years old) who are currently employed or looking for work.

Why it matters

A higher level of workforce participation is generally seen as a positive indicator of regional economic opportunity.  Workforce participation is a helpful measure for contextualizing unemployment  rates.  Rates tend to increase during periods of economic growth as more individuals choose to work.  Conversely, participation rates can decline during economic downturns as jobseekers become discouraged by poor employment prospects and choose to stop looking for work.

Workforce participation rate for population age 20-64 in select metropolitan areas, 2016

National and regional trends in workforce participation

The Chicago region's workforce participation increased to 80.5 percent in 2016, the second such rebound since the start of the 2007-09 recession.  This rate exceeds those of Los Angeles and New York and is slightly lower than rates in Washington, D.C., and Boston.  The 2007-09 recession also contributed to an overall decline in the national workforce participation rate, although the rate saw a slight uptick to 77.1 percent in 2016, from 76.8 percent in 2015.

Chicago region and U.S. workforce participation rates for population age 20-64, 2005-16

About the data

Workforce participation statistics come with many caveats.  Decreasing participation is generally attributed to an increasing number of discouraged workers.  When workers cannot find jobs and suspend their search, the U.S. Census Bureau no longer considers them to be in the workforce, resulting in a decline in participation rates.  However, lower workforce participation rates can also be attributed to positive factors.  Many people choose to forego work to pursue postsecondary education, retire early, provide family care, or because they have sufficient economic stability at home.  In general, higher rates of workforce participation are beneficial for the regional economy and indicate a larger labor force.