Chicago Reverses The Factory Exodus But Not the Job Loss

FOR blue-collar workers in Chicago and many large United States cities, the sweetest economic expansion in a decade is leaving behind a bitter aftertaste.

Robust economic growth last year helped reverse a four-year flight of manufacturers from Chicago, bringing 80 more manufacturing companies here than were operating at the end of 1993.

But for urban laborers, more factories doesn't mean that there are more jobs available. The rise in new factories has been countered by a sharper decline in overall jobs at existing factories. As the number of manufacturing companies in Chicago rose by 1.7 percent last year to 4,700, the number of people employed in such firms fell by 4.2 percent to 206,299, according to a recent report by Manufacturers' News Inc.

``The older big cities are losing a lot of manufacturing jobs; it's bad news for your average blue-collar factory worker,'' says Thomas Lubin, president of Manufacturers' News in Evanston, Ill. In Chicago, many displaced workers must accept lower pay in retailing service jobs, or leave the city altogether, he says.

The job loss ``is a two-edged sword: If the firms that have survived hadn't gotten rid of some workers they might not have survived and the workers who are still there would have lost their jobs,'' says Greg Longhini, spokesman for the Chicago Department of Planning and Development.

Although many new, small manufacturers are flourishing and hiring, they have not made up for the job loss as older, larger companies replace staff with computers, robots, and other forms of automation.

As a result, United States manufacturing has scrapped more than 3 million jobs since its employment peaked at 21.4 million in 1979, according to the National Association of Manufacturers (NAM) in Washington.

The anomoly of increasing factories and decreasing jobs is especially disturbing in Chicago. Like many cities, Chicago has relied on the booming economy to help reverse the flight of manufacturers and middle-class residents to the suburbs.

Many cities in the East, Midwest, and California have suffered from the decline in manufacturing employment in recent years as jobs have gone to areas in the South and Southeast, says Michael Smith, executive director of the NAM's manufacturing institute.

Meanwhile, total US manufacturing employment fell by 4 percent over the same period, according to a recently released US Census Bureau survey conducted every five years.

The steady drain of manufacturing jobs denies a city of one of its surest sources of vitality. Such work offers comparatively high pay for middle-class residents at the foundation of the tax base. Manufacturing helps power economic growth. Each manufacturing job creates more than two other positions in services, transportation, and other related sectors, according to the NAM.

In Chicago, the number of manufacturers declined 11.2 percent from 1988 until the turnaround last year, according to Manufacturers' News. High taxes were largely to blame for driving out the jobs. Until recently, Cook County, which encompasses Chicago, was the only county in the state that assessed commercial properties at a higher level than residential property, Lubin says.

Chicago has tried to stanch the loss of jobs in the past several months through aggressive tax incentives, the designation and renewal of industrial zones, and ambitious programs in job training. In December, the city designated certain areas as federal Empowerment Zones, which will receive some $100 million for social services, business investment, and housing improvements. The zones will offer tax incentives for private investment and job creation valued at an estimated $250 million over a decade.