Employment (Economic theory) ; Federal Reserve District, 8th

G.J. Santoni

English

Research Papers in Economics

FEDERAL RESERVE BANK OF ST. LOUIS JANUARY 1984
Employment Trends in St. Louis:
1954—82
G. J. Santoni
UII1NGthe last fewyears, economic activity has
been depressed in both St. Louis and at the national
level.’ Some observers haveargued that St. Louis’ econ-
omy was particularly sluggish during the recent reces-
sion and is recovering at a rate that is lagging behind
the national recovery.’
The relatively poor economic performance of the St.
Louis metropolitan area is alleged to have had impor-
tant consequences for local employment opportu-
nities. Since it is generally thought that the area’s de-
pressed economy was due to the slump in automobile
production, many commentators are pinning their
pr-ojections for a recovery in the labor market on the
current expansion in the area’s auto industry.3 Others
have argued that the longer-term prospects for the
labor market in the St. Louis metropolitan area depend
upon more fundamental forces than those capr-icious
G. J. Santon! isa senioreconomist at the Federal Reserve Bankof St.
Louis. Thomas A. Pollmann provided research assistance.
‘The St. Louis area is defined to be the St. Louis Standard Metropoli-
tan Statistical Area (SMSA), which includes St. Louis City; Franklin,
Jefferson, St. Charles and St. Louiscounfies in Missouri; and Clinton,
Madison, Monroe and St. Clair counties in Illinois.
‘See SL LouisPost-Dispatch (September 13,1983). For an exception
to this view regarding St. Louis’ relatively slow recovery, see Wag-
man (1983).
‘St. Louis Post-Dispatch (September 20, 1983); St. Louis Globe-
Democrat (August 17, 1983); and St. Louis Globe-Democrat
(September 19, 1983).
circumstances that have buffeted the U.S. auto indus-
try in recent years.4
This article will desclibe the cur-rent employment
mix in the St. Louis labor’ market, compare the longer-
run growth in employment opportunities in St. Louis
to other similarly sized metropolitan areas and the
nation, and assess the recent past in terms of this
longer-run view.
THE 1982 EMPLOYMENT PICTURE
IN ST. LOUIS
Chart I presents the 1982 percentage distribution of
employment by industrial sector in the St. Louis Stan-
dard Metropolitan Statistical Area (SMSAI.5 For’ com-
parison, a similar distribution for the United States is
also given.
The data in char-t 1 suggest that the distributions of
employment in St. Louis and in the United States
in 1982 were quite similar. In both areas, nonmanu-
facturing employment amounted to about 80 p~-
cent of total nonagricultural employment, and
manufacturing employment accounted for- about 20
4See Gilbert (1973); Kester (1983).
5The numbers are obtained bydividing employment in each sector by
total nonagricultural employment and multiplying by 100.
14FEDERALRESERVE BANK OF ST. LOUIS JANUARY 1984
chart I
Percentage Distribution of Employment in 1982: St. Louis and u,5~ LI
Nonmanufacluring
U.S.: 79.0% St. Louis: 77.8%
Ii As a percent 0n Total Nonagricultural Employment.
Manufacturing
U.S.: 21.0% St. Louis: 22.2%
Percent
24
20
16
12
8
4
0
percent. Much of the St. Louis work force Iabout 45
percent) was employed in wholesale/retail trade and
services. The same was true at the national level.
Two differences seem to stand out in chart I: em-
ployment in government and in transportation equip-
ment. Since government employment by geographic
sector is related to whether the national capital, state
capital or county seat fallswithin that sector, we might
expect government employment in the St. Louis SMSA
to be less than it is at the national level.
Employment in transportation equipment
amounted to 4.6 percent of total nonagricultural em-
ployment in the St. Louis SMSA and only 2 percent at
the national level. This industry includes motor vehi-
cle, aircraft, ship and boat, and railroad equipment
manufacturing.
St. Louis employment in motor’ vehicle manufactur-
ing, a subcategory of transportation equipment,
amounted to about 1 percent of total nonagricultural
employment in 1982. At its peak in 1978, St. Louis
employment in motor vehicle manufacturing
accounted for slightly more than 2.6 percent of total
nonagricultural employment. Consequently, although
events in the automobile industry may have a larger
effect on the local economy than they do on thenation-
al economy, the percentage impact on employment
locally would appear to be fairly small.
HAS MUCH CHANGED OVER THE
PAST 28 YEARS?
Chart 2 presents the 1954 percentage distribution of
employment by sector for St. Louis and the nation. A
comparison ofcharts 1 and 2 reveals several interesting
differences. First, there has been ashift in employment
from manufacturing to nonmanufacturing sectors in
both St. Louis and thenation. In St. Louis, manufactun-
ing employment accounted for 38 percent of total
nonagricultural employment in 1954, but only 22 per-
cent in 1982. A similar shift occurred at the national
level. In this case, manufacturing employment
amounted to about 33 percent of total nonagricultural
employment in 1954, but only 21 percent in 1982.
Percent
24
20
Source, u.s. Deportment of tobor
Reel Estate
15FEDERAL RESERVE BANK OFST. LOUIS JANUARY 1984
Chort 2
Percentage Distribution of Empbyment in 1954: St. Louis and U.S. Li.
Honmanufacluring
U.S.: 66.7% St. Louis: 62.0%
Manufacturing
11.5.: 33.3% St. Louis: 38.0%
Percent
36
32
28
24
20
16
12
S
4
0
Note also that) in 1954, a greater- proportion of St.
Louisans were employed in manufacturing when com-
pared with the national employment mix: 38 percent
for St. Louis and 33 percent for the nation. By 1982,
however, the proportion of St. Louisans employed in
manufacturing had fallen to about the national
average~
The i-educed concentration of employment in the
manufacturing industn-ieshas been offset by increased
employment in government and service industries, in
the St. Louis area, the proportion of individuals em-
ployed in manufacturing fell by 15.8 percentage points
between 1954 and 1982 thom 38.0to 22.2percent), while
the proportion ofpeople employed in government and
service industries increased by 16.9 percentage points.
6There is some ambiguity in these numbers. The definition of the St.
Louis SMSA was changed a number of times between 1954 and
1952. The relative decline in manufacturing employment may have
been solely due to this redefinition.
Though somewhat smaller- in magnitude, a similar
shift occurred at the national level over this period. As
noted ear’lier, the resulting 1982 employment mix in
the St.Louisarea was roughlythe same as thenation’s.
Anexception to this general decline in manufactur-
ing employment in the St. Louisarea was employment
in transportation equipment manufacturing. This
grew from 3.9 percent of St. Louis nonagriciritural em-
ployment in 1954 to 4.6 percent in 1982; at the national
level, however, it fell fr’om 3.7 percent in 1954 to 2.0
percent in 1982.
LONGER-TERM EMPLOYMENT
GROWI’H IN ST. LOUIS RELATIVE TO
THE UNITED STATES
While the curn-ent employment mix in St. Louis is
about the same as the national mix, thegrowth rate in
local employment has been substantially below that of
Percent
36
Source, u.s. Deportment of labor
Reel Estate
Li. As a percent of Total Nonagricultural Employment.
16FEDERAL RESERVE BANK OF ST. LOUIS JANUARY1984
the nation. Table I presents the average annual growth
rates in nonagricultural employment by industrial sec-
tor forthe period 1955—82 for-St. Louis and the nation.
‘the annual growth rate in total nonagricultural em-
ployment for St. Louis was 1,18 percent; nationally.
total nonagricultural employment grew at an annual
rate of 2.36 per-cent. The difference, —1.18 percent, is
statistically significant, which means that the observed
slower’growth forSt. Louis is unlikely to be simply an
artifact produced by chance variation in the data.
Further, significantly slowergrowth in St. Louis em-
ployment is common to both the manufacturing and
nonmanufacturing sectors. Moreover, the slower
gn’owth in nonmanufacturing employment is not con-
centrated in any par-ticular category but seems to be a
fairly gener-al phenomenon. The differences between
local and national growth rates are statistically insig-
nificant only for construction and government.
Interestingly, the difference between the local and
national employment growth rates in the transporta-
tion equipment industry is statistically insignificant;
the reported difference could have occurred by
“chance” or measurement problems even though the
actual growth rates were identical. Thus, despite re-
cent events in the auto industry, the transportation
equipment industry does not appear to have contrib-
uted to the generally slower long-run growth rate.
WAS THERE A CHANGE IN
EMPLOYMENT TRENDS IN
THE LATE 1960s?
Since some observers have claimed that St. Louis’
employment problems became particularly severe be-
ginning in the mid-1960s, tables 2 and 3 split the 1954—
82 period in halfat 1968.2 Bydoing so, we can examine
the growth rates in total nonagricultural employment
during the two subperiods. Table 2 considers the ear-
lier period, 1955—68, and table 3 considers the mor’e
7See R. Alfon Gilbert, ‘Employment Growth in St. Louis,” pp. 9—IS.
17FEDERAL RESERVE BANKOF ST. LOUIS JANUARY1984
--\:~t~.-.’~ -:1
tábIe2 N NN ~ : 1~~2/ /
Growth RatesinTot$ Nonagrkufturat ~Growtb RatesS~ TotalNinag~tctu~t~
Em~ymát froth 1955to 1*. Em~toy$~er, tSniS6flo498Z~t
St Louis $MSkandUnfted StatS St.\LoutsSMSkand On NStátó&~\ ~.
Before making this comparison, it is important to
note that Jefferson County was added to the St. Louis
SMSA in 1958 and Franklin County wasadded in 1963.
Notice that the difference between the growth rates in
St. Louis and U.S. employment is positive and large in
these two years (see table 2). ‘rhese observations are
excluded from the analysis because including them
would bias upward the growth rates for’ St. Louis in
these twoyears. Excluding the data for 1958 and 1963,
the results in table 2 show a statistically significant
difference of — 1.03 percent per year between the
growth of total nonagricultural employment in thena-
tion and that for St. Louis. Thus, over this 14-year
period, employment growth in St. Louis was substan-
tiallv slower than that in the rest of the nation.
eThe period begins in 1955 rather than in 1954 because 1954 is our
firstobservation of total employment and this observation is used in
calculating the 1955 growth rate.
The data in table 3 indicate that the slower growth
that characterized St. Louis employment during the
1955—68 period has persisted over the more recent
period. The second column indicates that the average
annual growth rate in total nonagricultural employ-
ment for St. l..ouis, .67 percent, is statistically indistin-
guishable from zero over this period. Employment
growth at the national level, however, is significantly
positive. Just as in the earlier period, more recent em-
ployment growth in St. Louis was substantially slower
than that for’ the nation as a whole.
Further-, the average difference between the local
and national annual growth rates during the 1969—82
subperiod, —1.31 percent, is statistically indistinguish-
able from the eariier difference shown in table 2.°The
data in tables 2 and 3 appear to indicate that there has
been no substantive change in the differentially slower
9t-statistic = .85.
recent period, 1969—8Z.~
18FEDERAL RESERVE BANKOF ST. LOUIS JANUARY 1984
employment growth in St. Louis between the two sub-
periods.’0
ARE RECESSIONS PARTICULARLY
SEVERE IN ST. LOUIS?
The data in table 3 are also useful in analyzing
whether employment in the St. Louis ar-cawasparticu-
larly har-d hit during the recent recession when com-
pared with the rest of the nation. The past recession
began in the third quarter of 1981 and ended in the
foirrthquarter of 1982. The data in table 3 indicate that
St. Louis employment growth was below the national
average in 1981 and 1982, but the differences do not
appear to be “unusual.” As the previous analysis has
pointed out, average employment growth locally has
been below the national average since 1955. The differ-
ence between local and national growth rates was un-
usual (in the sense that the difference exceeded a 95
percent confidence interval) only in 1972. Conse-
quently, the recent recession does not seem to have
singled out St. Louis, at least in terms of employment
growth.
In fact, recessions generally have not had adifferen-
tially severe impact on the local labor- market. Reces-
sions occurred in 1970, 1974, 1980, and from the thir-d
quarter of 1981 through the fourth quarter of 1982. St.
Louis employment growth has not slowed unusually
relative to the national average during any of these
recessions.
Further, the slow growth in St. Louis employment
was not unusually aggravated during the yearsof sub-
stantial reductions in the work forces of the various
auto manufacturing plants located in the St. Louis
SMSA. The work forces of these plants fellfrom a 1978
peak ofabout 27,000 workers to about 9,000 in 1982. Yet
the growth r’ate in St. Louis employment was not un-
usually depressed relative to the national average in
any of these years.
This evidence suggests that the problem of relatively
slow employment growth in St. Louis is neither the
result of problems confronting domestic auto manu-
facturers in recent years nor the result of differential
effects of business cycles on the St. Louis labor market.
Instead, the slower growth in St. Louis employment
when compared with overall employment growth in
‘°Clintonand Monroe counties in Illinois were added to the St. Louis
SMSA in 1970. Due totheir relativelysmall size, however, they do
not appear to have significantly distorted the estimated growth rate
for 1970.
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the nation is a phcnomenon that has been fairly con-
stant over the past 28 years.
IS THE EMPLOYMENT SITUATION IN
ST. LOUIS UNIQUE?
Although the growth rate in St. Louis employment
has been substantially lower than the national growth
rate, it is not necessarily lower than employment
growth rates in similar metropolitan areas. Iable 4
presents the annual growth rates of total nonagricul-
tural emnploymcnt for St. Louis and thc average offour
other comparably sized and geographically located
SMSAs for the past 14years. these comparable SMSAs
are Baltimore, Chicago, Cleveland and Pittsburgh.”
Asthe last column of the table indicates, the growth
rate of employment in St. Louis fluctuates around the
11The selection was restricted to cities located outside the Sun Belt
and of roughly the same size as St. Louis in 1982
19average employment growth for the four other SMSAs.
On average, however, it does not differ significantly
from their average growth rates. St. Louis’ relativelyslow
rate of growth in nonagricultural employment, when
compared with employment growth in the nation, is
not unique; it is shared by other comparable SMSAs.
CONCLUSIONS
The mix of nonagricultural employment has
changed both in the St.Louis SMSA and at the national
level since 1954. Employment in manufacturing indus-
tries has declined in relative importance whileemploy-
ment bygovernment and in the service industries has
increased. Concentration of employment in manufac-
turing industries was relatively high in the St. Louis
area in 1954 but has declined to about the national
average. A notable exception is transportation equip-
ment manufacturing. While the percentage of indi-
viduals employed in this industry had declined at the
national level since 1954, it has increased in St. Louis.
The average rate of employment growth in St. Louis
has consistently been lower than the national average
since 1954.Once this lower averagegrowth rate is taken
into account, it does not appear- that recessions have a
differentially severeeffect on the St. Louislabor market.
Finally, relatively slow growth in employment is not
unique to St. Louis; other comparable SMSAs display
the same pattern.
REFERENCES
Employmentand Earnings, Statesand Areas 1939—78, and 1977—SO
supplement. U.S. Department of Labor, Bureau of Labor Statis-
tics.
Employment and Earnings, United States, 1909—78, and July 1983
supplement. U.S. Department of Labor, Bureau of Labor Statis-
tics.
Gilbert, R. Alton. “Employment Growth in St. Louis,” this Review
(August 1973), pp. 9—15.
“G.M. Plans Second Shill at Wentzville.” St. Louis Post-Dispatch,
September 20, 1983.
Kester, Bill. “St. LouisRebound Lags U.S. Economic Recovery,” St.
Louis Post-Dispatch, September 7, 1983.
Reporton Employment U.S. Department of Labor, Bureau of Labor
Statistics.
“StrongEconomic Muscle.” St. Louis Globe-Democrat,August 17,
1983.
“Strong Upward Trend in Hiring.” St. Louis Globe-Democrat,
September 19, 1983.
“The Slow Roadto Recovery.” St. Louis Post-Dispatch, September
13, 1983.
Wagman, Paul. “Auto Industry in St. LouisReturning toHigh Gear,”
Christian Science Monitor, September 26, 1983.

Employment trends in St. Louis: 1954-82

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