Image: thefamilymarketplace.com
Personal Income growth rates in heartland regions continue to lag the coasts by 3.8 to 2.0 % comparing income growth from 2016 to 2017. The following chart from the US Bureau of Economic Analysis shows how large the gap is:
Source: US Bureau of Economic Analysis, The Wall Street Journal, The Daily Shot – 3/26/18
Core issues for the lack of growth are young people moving out, industrial companies leaving for non-union states or moving factories overseas, automation, poor health, slow Internet speeds and lower education. Added to these issues which have trended in these ways over the past 20 years are now tariffs on imports with soybean farmers threatened in the Midwest where they already are competing with lower price soybean products from Brazil. In the advanced manufacturing sector which is based in the Midwest and South will likely see increases in imported aluminum and steel prices of between 10 – 25 % used in their products they resell. These price increases threaten their ability to compete and may have to lay off workers.
Next Steps:
Our heartland neighbors continue to feel under siege from many different directions. We discuss these issues in our blog – The Hallowing Out of America’s Heartland. We understand the need to push back on imported products being dumped into US markets – however broad tariffs are counter-productive and can lead to lose – lose trade wars as economic history tells us in the 1930s. We recommend in our blog that a major set of investments be made with the federal government providing seed funding for a partnership between non-government organizations, health services providers, universities, corporations and state and local government. To bring focus to the development process we propose that Heartland Development Centers (HDCs) be located in key regions maybe near a major university – land grant universities are good candidates located in rural communities. Experts from across the country, in HDCs would join together with local leaders in customizing solutions to build entrepreneurship centers, high quality health services, high speed Internet services, job and career training and other services necessary to renew the economic vitality of these regions.