Midwest Does Well, but Looks to Democrats

CAPE Girardeau, Mo., is a place that should be cheery. Business is steady. The county has avoided the worst of the recession. "Not bad," says attorney Tim Gilmore about local prospects.

But the talk at the county fair is gloomy. "For an election year, it's a sorry year," says Sam Below, a salesman. His customers have the money to buy his machines, but not the optimism.

This funk sums up the Midwest's mood. No matter how much it outperforms the East or West Coasts, the region sees its glass half empty, not half full. This perception of the economy is a major reason why the Midwest is forsaking its conservative roots and leaning Democratic this year.

"There's a sourness that's national," says Robert Dederick, chief economist at the Northern Trust Company in Chicago.

"People are not seeing this as just another economic bump in the road," adds Terry Jones, a political science professor at the University of Missouri in St. Louis. "They're seeing this as a transformation in the economy."

In many ways, this swath of 14 states from industrial Ohio and Michigan to the Plains states of Kansas, Nebraska, and the Dakotas, is farther along in the transformation than other regions. Its big shakeout occurred in the early 1980s. High interest rates and foreign competition shuttered its factories and drove farmers off the land. Even border states such as Kentucky and West Virginia fared worse during the early Reagan years than they do today.

So, when Midwesterners talk about an economic transformation, they're speaking about more than a decade under the GOP. They're not particularly impressed with what they've seen.

Since its shakeout, the region's economy hasn't withered, nor has it boomed, as it used to. Factories have retooled. But more competitiveness hasn't translated into more jobs. The current economic dip is shallower than the one in the 1980s, but all income levels have gotten wet this time - white-collar as well as blue-collar employees, the rich and the poor.

Missouri's second congressional district on the suburban fringe of St. Louis is a good example of the pessimism. It's the wealthiest district and one of the fastest-growing. It's the kind of place that did well in the 1980s. Yet, polls show that more than 70 percent of the district's voters believe the country is on the wrong track, Professor Jones says. His wife, Rep. Joan Kelly Horn (D), is running for reelection. The economic worries are playing into the Democrats' hands, he says.

Even in Minnesota, the region's star performer, anxiety runs high. "We're better off than the rest of the country, but we're not better off than where we think we should be," says Tom Gillaspy, Minnesota state demographer. The state, like the rest of the Midwest, got battered during the two recessions of the early 1980s. Its manufacturing, mainframe computing, agriculture, shipping, and mining industries were hit hard. It took Minnesota longer to recover from the slump than the rest of the nation. Many a reas of the economy, including some farmers and manufacturers, never did.

Nevertheless, Minnesota managed to post a 7.3 percent population increase during the 1980s. That was the highest growth rate in the region, though it lagged behind the national 9.8 percent rate. In per capita income, its growth tracked the nation.

Minnesota's secret? The broad-based economy of metropolitan areas offset declines everywhere else. The Minneapolis-St. Paul area saw growth in medical and service sectors. The metropolitan population grew by 12.9 percent, overcoming the 2.8 percent decline in rural areas.

States with narrower economic bases did poorly during the 1980s. Mining-dependent West Virginia lost 8 percent of its population - the nation's worst decline, according to Calvin Beale, senior demographer for the United States Agriculture Department. West Virginia was followed by agriculture-dependent Iowa, which lost 4.7 percent of its population, and North Dakota, which lost 2.1 percent. Of the top population losers, all are Midwestern states except Wyoming, which fell by 3.4 percent.

Rural decline is a familiar, sometimes shocking story. "The average rural county in the whole central part of the country has lost population," Mr. Gillaspy says.

Of the 44 Missouri counties north of the Missouri River, 33 have fewer people today than in 1900. Daryl Hobbs, a rural sociologist at the University of Missouri in Columbia, found that 34 counties lost 34,000 people during the 1980s: the equivalent of evacuating Missouri's seven least populated counties.

While some rural areas boomed due to tourism or an influx of retirees, others did not. Mercer County, for example, lost 1 out of 5 residents in 10 years. Part of the reason was the farm crisis, beginning in 1983, which led to an exodus of farmers. Manufacturing - which plays an equally important role in rural America - took a huge hit in the early 1980s and never fully recovered.

But the outlook isn't completely gloomy.

After Minnesota, the most vibrant Midwestern state in the '80s was Wisconsin. Its rural population rose by 2.1 percent. Demographers aren't sure why, though some counties have become retirement or tourist destinations. The state's economic trends are revealing, however.

A widespread perception in America is that manufacturing is declining. Yet, in the manufacturing-intensive Midwest, the situation has stabilized.

In 1980, Wisconsin had 567,000 manufacturing jobs. Recession wrought havoc. Between 1979 and 1983, 1 out of 5 manufacturing workers left the work force, moved away, or took a nonmanufacturing job. It was worse in Illinois and Michigan. More than 1 out of 4 left manufacturing, says Michael Knight, senior information specialist at the Applied Population Laboratory at the University of Wisconsin.

By 1985, Wisconsin was down to 520,000 manufacturing jobs. By 1989, though, it had climbed back again to 566,000 - just 1,000 short of the 1980 total.

While that's hardly rosy, it's not disastrous either. Midwestern manufacturers are now far more competitive globally. They've restructured their factories. The fall in the dollar's value has made their products more attractive as exports. Last year, Wisconsin exported $6 billion worth of goods.

The real worry is that manufacturing is no longer a growth engine. Factory jobs won't multiply as they did in the 1950s and '60s. The US Bureau of Economic Analysis forecasts that Wisconsin will have 14,000 fewer manufacturing jobs in 1995 than it did in 1979. Nonmanufacturing jobs are expected to increase by 500,000. This economic shift spells trouble for semiskilled workers, who will likely find it harder with a factory job to stay in the middle class. Workers with needed skills will fare much better. Mr. Knight expects that a dearth of new workers will keep incomes high.

No boom, no bust. Some Wisconsin economic and demographic specialists even argue that slow growth may be just the ticket for Wisconsin, Knight says: "The future doesn't look bad at all."