Midwest in 2014: GOP victories, union worries, fracking, racial strife

Looking back on the events of a busy year soon gone, and trying to spot the trends they reveal, for the Midwest and the wider world:

Manufacturing is more important than ever, both for output and exports. This sector, more than any other, has rebounded fast from the Recession. Reshoring of industries that fled abroad is part of this.

But if this is good for the industries, it doesn’t mean much for workers. There’s been an uptick in jobs, but this appears to be a rebound from the rock-bottom levels of the Recession. Both growing and reshoring industries are using technology, not manpower. There’ll be no return to the job levels of 2007, let alone the glory days of the last century.

This year, inequality in income and wealth finally became a political and labor issue. Campaigns for higher minimum wages are growing and may succeed. While manufacturing unions are accepting lower wages, unions representing “service” workers — especially in tourism — are signing up members and fighting the new battles.

If anyone thought racial divides in Midwestern cities had healed, 2014 was a disillusioning year. The inner city violence in Chicago provided vivid proof of the agony of people and neighborhoods left behind by the global economy. And the protests in Ferguson, Missouri, following the killing of an unarmed black youth by a white policeman, made it clear that, in too many cities, black-white relations, and especially relations between African-Americans and the police, are just short of warfare.

In Midwestern politics as in the nation, it was a great year for Republicans. Republican governors now control every Midwest statehouse except those in Missouri (where the Democrat governor didn’t face reelection) and in reliably blue Minnesota. At the least, this sweep gives the GOP wind in its sails for the 2016 presidential election. It also positions some of these governors, such as Wisconsin’s Scott Walker and Indiana’s Mike Pence, as potential GOP presidential candidates.

This could mean more battles with labor. Many of the victorious governors, especially Walker, fought and won bitter battles against unions, especially public sector unions. The scars haven’t begun to heal and the victories may be pyrrhic, but the governors’ success so far could lead to more anti-union campaigns, perhaps in Illinois, which has a new Republican governor, Bruce Rauner.

Rauner’s victory also could lead to some tri-state cooperation between the battling leaders of Indiana, Illinois, and Wisconsin. These attempts to steal business from each other have created no jobs and cost a lot of tax money, but the fact that the three states now have governors from the same party may produce some unique harmony. Don’t bet on it. A little electoral brotherliness is unlikely to overcome the habitual neighbor-baiting by the Midwest’s balkanized states.

But if governors can’t see beyond state lines, some mayors and county officials have realized that collaboration is their only weapon in the global economy. Cleveland and its neighbors in northeast Ohio are working together. So are the Quad Cities (Davenport, Bettendorf, Rock Island, and Moline.) So are Grand Rapids and its neighbors in western Michigan. The global economy isn’t going to go away, so we can expect more collaborative examples in the new year.

One of them might even be the Chicago tri-state region, from Milwaukee through northern Indiana. The Alliance for Regional Development is doing some impressive work across state lines in such areas as green growth, workforce development, and transport. Teams of local officials and business leaders are on board and working hard.

Otherwise, it was an interesting but inconclusive year for Midwestern cities. Cleveland regained LeBron James and some of its mojo. Detroit went through bankruptcy. St. Louis had race riots. Smaller cities, such as Des Moines and Columbus, suffered less from the Recession and recovered more quickly.

The past year saw rising debt and falling incomes across the farm belt. Record corn and soybeans prices in recent years led big farmers to borrow heavily to buy more land, also at record prices. Bumper crops and other factors have since cut corn futures prices in half. Both farmers and banks say the farmers have plenty of money to pay for their loans but, from here, it’s beginning to look like a bubble.

Falling oil prices are already forcing scaling back production and planned production for ethanol, the corn-based fuel additive. To be economically viable, ethanol relies on high global prices for oil. Ethanol prices and profits will fall with oil prices. This will reduce demand for corn, putting an even greater squeeze on those indebted farmers.

Otherwise, energy was a big Midwestern story in 2015. Fracking led to booms in shale oil and natural gas, from Pennsylvania to North Dakota. The oil and gas fields produced plenty of jobs and investment on their own. Cheap energy made Midwestern industry newly competitive. Falling global oil prices may trim plans for expansion of these fields. But so much infrastructure is already in place that present production levels, at least, are likely to continue.

The year also saw a Midwestern boom in books, both fiction and non-fiction. Two novels — Lila by Marilynne Robinson and Some Luck by Jane Smiley — won rave reviews. Edward McClellan’s Nothin’ But Blue Skies is the best non-fiction portrayal yet of deindustrialization’s human impact on the Rust Belt. At year’s end came a new book (to be reviewed here soon) by University of Chicago scholar Chad Broughton, called Boom, Bust, Exodus. It’s a tale of two cities — Galesburg, Illinois, and Reynosa, in Mexico — and what happened to them and their people when Whirlpool bought Maytag and moved its production from the former to the latter.

In all, the Midwest survived another year and looks forward to an exciting and rewarding 2015.

Richard Longworth is a senior fellow at the Chicago Council on Global Affairs. He is the author of the book, Caught in the Middle: America’s Heartland in the Age of Globalism, published in 2008 by Bloomsbury USA. He writes and hosts the blog, “The Midwesterner,” on the website of the Chicago Council’s Global Midwest Initiative, at www.globalchicago.org.