Photo by Sylvia Hall
Chicago’s industries and businesses are so diverse and broadly based that its economy is similar to the U.S. economy, according to Tom Bartkoski, director at World Business Chicago.
Which means it’s not surprising that Chicago’s recovery is moving similar to the rest of the country, according to William Testa, vice president at the Federal Reserve Bank of Chicago.
Graphic by Crain’s Chicago Business
“It appears that Chicago is sharing in the economic expansion about apace of the United States,” Testa said.
The industrial diversity means that Chicago’s economic recovery will rely on the recovery of Chicago’s businesses and industries as a whole, Bartkoski said.
“With a diverse economy your eggs aren’t in one basket, so in terms of the ups and downs of the economy, we’re not tied to one particular sector,” Bartkoski said. “That’s good when one sector is down. You don’t do as well when that sector is up.”
Here is a breakdown of some of Chicago’s main economic sectors.
The Chicago area accounts for a large portion of the national pharmaceutical employment—about one out of eight employees, according to Bartkoski.
“That’s a large sector and it’s one that involves a lot of moving parts, because you not only have the big pharmaceutical companies but you have smaller firms, the research firms, the research hospitals, the universities,” he said. “It’s a pretty significant slice of the economy here.”
And it’s not all drug development, Bartkoski said. The industry also encompasses important aspects such as research and general pharmaceutical production, which all employ people.
Recently, Chicago has attempted to raise its visibility in the industry through measures such as hosting a prominent biotechnology conference.
Photo by Kevin Sue
The excessive homebuilding in the United States also affected Chicago, which is experiencing a low demand for retail construction.
“The homebuilding residential sector is still very moribund and weak in the Chicago area,” Testa said. “The overbuilding that took place was greater than in a lot of the surrounding cities in the Midwest.”
All of this adds up to too many available houses, he said.
“[Residential home] retail sales have been weak,” Testa said. “So it will take some while even after sales have recovered before homebuilding starts to be pulled along.”
Additionally, there was some overbuilding of retail strip development that went along with the home development, he said.
Photo by Kevin Sue
Chicago has a tremendous cargo industry that spans road, rail and air, Bartkoski said.
The recession may have hurt the demand for goods, which means less freight was carried, but railroads still have a stronger outlook than compared to the sluggish 90’s. Good news for Chicago, Bartkoski said.
“We are the rail hub of the United States,” Bartkoski said. “We are the location where the eastern railroads and western railroads come together. So that puts us in a unique position in the U.S. rail grid.”
Unfortunately, airport traffic at O’Hare International Airport has been sluggish so there is little justification for airport expansion, Testa said. How the airlines handle or hedge fuel costs will also determine how the industry plays out, Bartkoski said. On a positive note, the merged Continental-United is locating in Chicago rather than Houston.
According to Testa, manufacturing stands out from the other industries due its post-recession growth.
“U.S. economic output has just about regained about what it lost before the recession and manufacturing has been growing very rapidly, much more rapidly than the U.S. economy. But it has only recovered about 60 percent of the downturn,” Testa said. “So it went down much more sharply than the general economy and it’s snapping back more quickly and leading the recovering in terms of growth, but it’s from a very low point.”
Part of this recovery is due to manufacturers rebuilding their inventories and experiencing growing exports. The purchasing in the industry could indicate forthcoming demand, he said.
“If that trend continues, you’re going to see a pickup in the manufacturing sector and that would be very welcome anywhere,” he said.
Chicago’s manufacturing is particularly diverse, producing products ranging from medical supplies to metals to food, Bartkoski said. In particular, food manufacturing has a large presence in the area, he said.
“Because we’re in the middle of this huge agricultural base and the transportation system, it makes us natural for food processing and production,” Bartkoski said.
The election is just 18 short days away. The four remaining candidates for mayor of Chicago — Rahm Emanuel, Gery Chico, Carol Moseley Braun and Miguel del Valle—are hitting the streets, trying to get Chicago’s support. The economy weighs heavily into the debate, as the Windy City carries a multimillion dollar deficit. Move your cursor over each candidate’s head to see how they plan to stimulate the economy.
One day it’s up, the next day it’s down, way down. Given the tumultuous nature of the economy as of late, it’s hard to tell where the nation’s financial status is headed next.
But things may be looking up, Chicago. Last week it was announced unemployment rates—a trusted economic indicator—dropped two points in December in the Chicago-Naperville-Joliet area. Additionally, the Illinois Department of Employment Security reported there were 46,300 more jobs in Illinois in December than there were the year before. And according to Chicago Business, Employment Director Maureen O’Donnell says the long-term trend has Illinois gaining jobs. It may be a slow and steady climb, but it’s a climb nonetheless.
And there’s more good news: The Conference Board, an business research organization reported a jump of 15% in online job advertisements. Advertisements don’t equal jobs, but from all indications it’s one small step towards a large wave of economic recovery.
In light of this news, we wanted to get Chicago’s view of the state of things. We asked 50 people in the Loop to tell us what they think of the economy right now. You can see the results in our Tagxedo word cloud below.
Clearly, Chicagoans are hopeful but there is still a strong sense of skepticism among the respondents.
Michael Anderson of Chicago is worried that the economy won’t get better because of the people at the top.
“We’re in bad shape. And it boils down to greed. If the top CEOs weren’t trying to make so many millions of dollars, things could be better,” says Anderson. “I mean, how much money does one person really need?”
There was a general consensus among those we interviewed—the wealth distribution in the U.S. is not entirely fair. The age-old sentiment rang true for many: the rich get richer, the poor get poorer.
But not everyone was feeling negative about the economy. More than a handful of respondents were hopeful 2011 would be the year of the recovery.
And if you’re going to be unemployed, Chicago’s not such a bad place to be, according to Chicagoan Jessica Bubin, a freelance visual artist who earned a PhD from the University of Chicago. “The only thing worse than being unemployed in Chicago is being unemployed in San Francisco or New York.”
- Curious about the economics of your neighborhood? How about the people that live on your block? Then check out this incredible interactive graphic from The New York Times and find out median income of your hood, how many people earn more than $200,000 around you and much more.
- Don’t get ballooned! Crain’s Chicago Business reports Com Ed is sending some customer so-called “balloon bills.” Watch Crain’s informative video on these bills and what you can do to prepare for them.
- See the full text of The Chicago Tribune’s Gail Marks Jarvis column here.
What happens when you suddenly get laid off or hate your job and want to switch career paths? Many people, out of university in their 20s and 30s, are taking unpaid internships to get their foot in the door. And with the pessimistic economy, more companies are providing internships to the unemployed who don’t want a gap in their resumes.
“Internships have been significantly increasing for lots of reasons, even previous to the recession,” said Lonnie Dunlap, executive director of Northwestern University Career Services. “It can be a very valuable way of getting opportunities in non-academic areas.”
Dunlap said employers have rediscovered internships during the recession, but noted that some employers have also taken advantage of people’s need to work.
“It’s important to look at the employer’s history and to see if it fits with the worker’s and employer’s needs,” she said.
A Tale of Three Adult Interns
Rick O’Connor, 37, worked the financial field, doing “stuff in retirement,” until he was laid off at age 30. Having an interest in radio, he decided to intern at Chicago’s WGN Radio.
“People were really questioning me,” he said. “Financially, we were able to do it but it was just a stigma.”
The idea seemed “crazy” because his wife wasn’t working, he said. But O’Connor’s goal was turn the internship into a job. After his internship was over, he hung around the station, completing random tasks, to keep his “exposure level” up.
When a full time producer left, O’Connor was in the running for the job because he had positioned himself well, he said. He worked at the station until he was laid off last year.
“The internship is a long job interview. You keep marketing it and treat it like a real job.”
O’Connor is currently going to school to become an English teacher.
Cole, an Austin, Texas resident, took the six-month apprenticeship with Kocurek Family Artisanal Charcuterie in October with hopes of getting hired after the experience. Apprenticeships with chefs are common in Europe, he says, unlike in the United States where people go to culinary school.
“We live in a culture where you’re spending $40,000 to $50,000 to go and make $10 dollars an hour,” he said. “That’s ridiculous.”
Cole previously earned a living fixing rims on luxury cars. To pay the bills, Cole works odd jobs and helps his wife with her photography business.
At his apprenticeship, Cole is learning the art of smoking and preserving meats, which he finds more gratifying than fixing rims.
“It takes a leap of faith to know that you’re not going to make a lot of money but develop yourself as an individual and as a person,” he said.
Anna Premo, 26, went from working in the fashion industry to working in the Amazon jungle for a tea company. In February 2010, after being laid off from her job at a clothing company, she took an unpaid internship with nonprofit buildOn.
“In truth, the job I had wasn’t satisfying on a personal level,” she wrote in an email from Archidona, Ecuador. “I was constantly volunteering after work at nonprofits around Chicago, hoping to put myself in a prime position to apply for an opening if the moment presented itself.” She had a connection with the nonprofit because she had volunteered with buildOn before losing her job.
While interning, Premo collected unemployment, worked odd office jobs and babysat to pay her bills. She also cut back on “comforts” such as having brunch with friends and shopping. Eventually, Premo was hired as buildOn’s social media writer.
She said her internship proved invaluable in making her a more competitive young professional, helping her get her current position at Runa Amazon Guayusa.
She adds, “It made me recognize how important it is to truly believe in what you choose as a career path.”
Premo gives some advice to people currently unemployed or looking to change careers:
“Keep moving forward. Recognize you have choices every step of the way and make decisions based on the information you have at the time. Your dream job may not appear as quickly as you might hope, but as long as you are taking productive steps toward the end goal, that is all a person can do. Opportunities will present themselves.”
The financial meltdown began in 2007 and swept across the globe in 2008 and 2009. Chicago was not immune to the effects of The Great Recession, suffering double digit unemployment rates and a staggering amount of foreclosures. More than two years removed, the Windy City now appears to be on track toward recovery.
Want a quick primer on the meltdown and recovery? Take a look at Chicagoloopster’s economic timeline.
Photo: Stocks at the Chicago Board of Trade by Scott Olson/Getty Images North America
Photo: Chicago Board of Trade by mheisel, used under the Creative Commons license
Photo: Foreclosure sign by BasicGov, used under the Creative Commons license
Photo: ABOVE (stocks falling) by obknoxious, used under the Creative Commons license
Unemployment statistics from the Bureau of Labor Statistics
Quarterly earnings reports from the Medill News Service