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Associate Vice President, NIU Outreach
As printed in the Rockford Register Star, 7/15/07
The recent survey of companies in the Rock River Valley provides confirmation that the region continues to experience steady economic growth. Employment continues to increase and unemployment continues to decline. Survey results also indicate that employers anticipate this trend to continue for the next two quarters.
While the regional economy continues to grow, its reliance on manufacturing continues to exceed that of other regions. Depending on what data source is used, manufacturing employment in the Rock River Valley is about 20 % of total employment compared to 10% to 12% in other regions and Illinois as a whole. This is good for the regional economy since employee compensation for manufacturing workers is typically double that of workers in other industries. However, the international, national, state, and regional trend has been and continues to be declining manufacturing employment. Thus, while the region continues to place emphasis on maintaining manufacturing employment, attention also need to be given to a more diverse employment base that would assure the continued growth and stability of the regional economy.
One area for consideration is professional and business services. This usually includes industry sectors like professional, scientific and technical services, management of companies, and administrative and support services. These sectors include sub-sectors like: legal and accounting services, computer systems design, scientific research and development services, business support services, employment services, etc. Targeting these sectors can have several positive impacts on the regional economy.
Professional and business services are necessary for the growth of manufacturing and other industry sectors. A healthy professional and business service sector would include financial services, legal services, advertising firms and information technology companies. The presence of these professional services companies is necessary for the retention and attraction of manufacturing and other high value added industry sectors, like the aerospace industry which is a target for the region.
There is also some evidence that the presence of professional and business service companies fosters innovation. Recent research has found that these companies serve a catalytic role in advising, providing expert knowledge, and organizing projects that result in innovation. Other research has found that the growth in the professional and business service sector is related to increased productivity in manufacturing and has a positive impact on growth in wages. Professional and business services also provide the coordination and support services that result in the development of integrated industry clusters that serve as growth engines for regional economies.
Lastly, the professional and business services sector includes occupations that are typically viewed as creative class occupations. These are the types of employment that has been identified as “positive employment” by Rebecca Ryan in her recent analysis of the Rockford region.
The Rock River Valley already has a relative strong presence of professional and business service companies. This sector accounts for about 11 percent of regional employment compared to 14 percent for Illinois, 9 percent for the Peoria region, 15 percent for Chicago and 13 percent for Milwaukee.
The Rock River Valley has a real opportunity to experience growth in the professional and business service sector. An industry cluster is already present and expansion through growth and attraction of companies is possible. While employee compensation is less than for manufacturing, it is still 15 percent above average compensation for the region and 50% higher that other non manufacturing employment. In addition, expansion of the professional and business service sector could assist in maintaining the strength in the manufacturing sector and support the regions desire to become one of the nation’s innovation hot spots.
John L. Lewis, Ph.D.
Director, Regional Development Institute
Associate Vice President, Administration and Outreach
Northern Illinois University