Job outlook: Midwest told 'wait a while'

Does the Midwest really have a job future? Once the humming hub of the nation's auto, steel, and rubber industries, the North Central states now are hit harder by unemployment than any other region of the country. The Midwest, as a Bureau of Labor Statistics spokesman puts it, has been "taking it on the chin."

Some economists here say that even if the auto and related industries fully recover from the current slump, as many as one-third to one-half of the laid-off workers may never be recalled because of increased automation.The Midwest, they say, may never bounce back as strongly as it has in the past. Accordingly, most of its unemployed, they reason, face the tough but inevitable choice of taking lower-paying jobs, retraining in a more needed category, or moving to the South or West, where jobs still beg for people.

Some workers are already moving out. Oilmen report scores of auto industry workers arriving in the Rocky Mountain states, where they are taking jobs in the booming petroleum industry.

Concern that this solution may be the only one possible increased here recently when the President's Commission for a National Agenda for the '80s suggested that Washington not try to stem the decline of older cities in the Northeast and Midwest but encourage migration of those searching for job opportunities in the Sunbelt.

But a number of economic analysts insist there is no need -- at least over the long term -- for those in the Midwest without jobs to step down or move out.

Once troubled industries retool and again become competitive internationally, these analysts say, the Midwest is sure to be a key gainer. Indeed, some private forecasts for job growth over the next 20 years list Michigan, Ohio, and Illinois, now the three states in the region hardest hit by unemployment, as potentially among the top six growth states.

"The Midwest will benefit dramatically from the reindustrialization of America over the long term," says Larry Wachtel, vice- president and market analysts for the investment firm of Bache Halsey Stuart Shields Inc. But he concedes that over the short term the picture is far less rosy and solutions more complex.

Most veteran industry analysts agree that in the near future many of the unemployed who want jobs here are going to have to make some major adjustments. There are no signs as yet, they say, that any "miracle" industry lies on the horizon waiting to rescue the region as the electronics industry did for New England when its shoe and textile manufacturers came upon hard times 10 or 15 years ago.

While manufacturing is expected to continue as the basis of the region's economy, that slow-growth industry has been growing at an even less swift pace in the Midwest than nationally. Although a rise in the number of lower-paying service jobs has made up for some of the manufacturing jobs lost, this sector, too, has been growing at a slower pace than service jobs nationally.

"We're at the same competitive disadvantage," confirms Robert Schnorbus, an economist with the Federal Reserve Bank of Cleveland.

For many of the Midwest's unemployed, early 1981 marks a crucial decision time. Their state and federal unemployment benefits are running out. Some are hoping for an extension by applying for retraining opportunities, but not all are expected to qualify.

Some unemployed auto workers are taking lower-paying mechanic and gas station attendant jobs, says Michael Yerigian, assistant manager of the Michigan Employment Security Commission office in Livonia, just outside Detroit. Placement director Margaret Davis of the same office confirms that some of the area's laid-off auto workers are taking mid-level jobs, such as lathe operators at $5 or more an hour. Those with minimum skills for the latter jobs are then forced to the job openings at the minimum-wage level.

"It takes several months for a person to realize they're going to have to change their sights," she says. "It's not an easy adjustment."

Although many of the Midwest's jobless have insisted they cannot and will not move to other states, economists say much depends on just how bad enemployment here gets. Several state employment services in the Midwest have been serving as intermediaries for out-of-state employers and report that the response has been getting steadily warmer. Aircraft companies and the US State Department (with an eye to clerical and technical communications posts overseas) have been courting Michigan's unemployed with fair success, according to Margaret Davis.

The Baltimore and Houston police departments have been looking to several Indiana cities for job recruits.But, according to David Selby of the Indiana Employment Security office, most of the receptive are young people without jobs rather than the more experienced unemployed. "I think the auto workers are doggedly determined to sit tight as long as there's a faint glimmer of hope; you can't blame them," he says.

For the moment, most of the job openings in the Midwest are for highly skilled or professional work. Some observers see hope for the entire region's future in the current shortages here of tool and dye makers, machinists, and engineers. Most state employment bureaus say all government, retailing, and health service jobs are expected to increase.

Many states have been revamping their tax structures to more aggressively court economic development. Still, Mr. Schnorbus point out that Ohio has the lowest tax structure of any state in the country yet is below the national average in attracting new residents or business. "It may be slowing the exodus, " he says, "but it's not contributing to any mass infux."

Experts here agree that, in the end, much may depend on the strength of the auto industry's recovery and the ripple effect that would have. The sale next fall of 1982 models is expected to be strong.

"Over the short term, things look very gloomy," admits Carol Greenburg, a regional economist with Chase Econometrics in Pennsylvania. "But we see the Midwestern states catching up with others in growth rat es by the middle of the decade."