How work on the West Side was lost

Two reports, decades apart, shed light on massive jobs decline

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By Michael Romain

Editor

A report released last month by the University of Illinois at Chicago's Great Cities Institute puts the West Side's steep private sector job loss over the last several decades in stark, harrowing perspective.

The report was produced for the Alternative Schools Network and is designed to supplement the Jan. 30 hearing on youth unemployment held at the Chicago Urban League and co-sponsored by numerous nonprofits and institutions, including the Westside Health Authority and Mount Sinai Medical Center, among others.

A year ago, the Great Cities Institute released a report showing that Chicago had the "highest total percent, and highest percentage of Black (non-Hispanic or Latino) 16 to 19 and 20 to 24-year-olds who were out of work and out of school." According to 2014 U.S. Census data, nearly half of Chicago's black men, ages 20 to 24, "were neither working nor in school."

This year's report shows that in 2015, 39 percent of black 20- to 24-year-olds in Chicago were out of work and out of school, compared to nearly 21 percent of Hispanics, and around 7 percent of whites, in that age group.

In predominantly black and Hispanic areas of Chicago — such as Austin, North Lawndale, East Garfield Park and West Garfield Park — the proportion of 20- to 24-year-olds who were out of work and out of school in 2015 was 60 percent, 66 percent, 58 percent and 73 percent, respectively.

Unlike last year's Great Cities report, however, this year's report also included information on the location of jobs within Chicago using different sources of employment data from 1960 to 2015. The report's conclusion: "Jobs are gone from where they used to exist."

Since 1970, according to data provided by the Illinois Department of Employment Security, manufacturing jobs in Chicago have virtually disappeared while retail jobs — once concentrated on the South and West Sides — are now concentrated near the Loop.

Between 1957 and 2015, total private sector jobs in the city "were concentrated across the central portion of Chicago near road, rail, and water transportation infrastructure and in the Loop," the report states.

"By 2015, jobs are less decentralized and more concentrated in the Loop and areas north of the Loop with noticeably more jobs on the North Side and Southwest Sides of Chicago compared to South, parts of the West Side, and Far North West Side."

Between 1970 and 2015, according to the state employment data, the number of manufacturing jobs within the handful of zip codes encompassing Austin, East and West Garfield Park, and North Lawndale declined by nearly 90 percent, from nearly 121,000 to roughly 16,000.

During that period, the number of retail jobs within that West Side area declined by 75 percent, from nearly 35,000 to just over 8,600.

The total number of private sector jobs between 1957 and 2015 in that area declined by nearly 60 percent, from around 235,000 to roughly 97,000.

Look at "Map 11" in the Great Cities report. A sea of reddish hues indicating jobless rates over 45 percent dominate the very communities colored deep blue (indicating high shooting rates) in the map of "Where Shootings Occur" that's generated by the Chicago Tribune.

In Austin, where 69 shooting victims have been logged since the start of 2017, total private sector employment has plummeted by around 90 percent over the last half-century.

A case study in decline

There was a time, however, when the dire present wasn't always a foregone conclusion. In May 1994, the Midwest Center for Labor Research published a paper called "E.J. Brach: A Misadventure in Candy Land" that today reads like prophecy. It's also a case study of economic decay — one shuttered manufacturing plant at a time.

The MCLR had been approached by the Garfield Austin Interfaith Action Network (GAIN) and employees of the famous E.J. Brach candy factory who wanted to know why the company had been hemorrhaging workers for the last several years.

At the time, the 2.2 million-square-foot plant that dominated the corner of Kinzie and Cicero in Austin, was the largest candy manufacturing plant in the world, the MCLR report noted. From its base on the West Side, the company produced sweets that at one point were staples of drug stores across the country: starlight mints, candy corn and chocolate-covered raisins, among other offerings.

But between 1988 and 1994, the factory had shed nearly 42 percent of its workforce, going from 2,117 employees to 1,235. It had also shed market share and customers, cycled through 9 different CEOs and endured increasing hostility between workers and management.

In addition, the MCLR report states, management had illustrated "a refusal or inability to communicate and work with a concerned local community." This latter observation, if accurate, would not have been unique to Brach's management.

In 1984, in response to a wave of job losses in Chicago, particularly on the city's West Side, Mayor Harold Washington's administration created the West Side Early Warning Project (EWP).

The project, which was organized by MCLR and the University of Illinois at Chicago's Center for Urban Economic Development, relied on factory workers and community residents to provide the city with early warning signs that a factory was getting ready to close, according to Elaine Charpentier, the MCLR's staff attorney at the time.

Fifty manufacturing plants on the West Side were "designated as a test group to survey employees about their awareness of early warning sings," Charpentier wrote in a 1986 paper about the process.

Employees and community residents "were asked to watch for deterioration in the upkeep of the plant; layoffs, especially of sales or maintenance staff; transfers of management; few spare parts; difficulty in getting repairs, or slipshod and temporary corrections being made," among possible signs that a plant was on the brink of closing.

City officials believed that, if they caught the signs of a plant's possible exit soon enough, they would be able to implement proactive measures, such as offering financial incentives and technical assistance, which would keep the plant from shuttering.

Charpentier, however, pointed out that "in all three cases when management was confronted with the evidence of their intent to leave, they denied that a closing was planned. Assurances that they wanted to keep operations in the city continued up to the moment of the closing announcements."

Management's denial of their intentions "restricted the city's response" and the city's offers to provide assistance "were refused." And despite the EWP's attempts to "uncover the reasons for the closings" and to explore "alternatives to keep the plants open," companies simply would not "discuss their plans or rationale for closing" with city officials, workers or other community members.

According to the 1994 MCLR report, Brach management argued that high labor costs were to blame for the company's financial problems. But MCLR researchers found that the company's labor costs were in line with industry standards.

The researchers argued that the company's woes were much more likely caused by bad decisions made by Swiss chocolate and coffee conglomerate Jacobs Suchard Limited, which bought E.J. Brach in 1987 for $730 million.

After they acquired the company, the new owners decided to change the name of Brach's popular bulk candy line to Jacobs Suchard Inc., "a name that few retailers or consumers recognized," among other marketing and sales mistakes made by management that the MCLR report highlighted.

By the early 1990s, Brach had reduced its sales personnel and its product lines in order to cut costs. Its candy production and sales had dropped dramatically despite the fact that, since 1988, America's candy consumption had increased by 25 percent. Brach had also been placed in a holding company and was gradually leaking profits. In 1993, according to the report, the company lost at least $18 million.

The MCLR report projected that if the Brach plant closed, over 2,000 jobs would be lost — which was the number of workers the plant had employed in 1992, "many of whom are currently laid off" — and thenumber of indirect jobs lost (the so-called "ripple effect" jobs) would be around 4,700.

The report projected that the total costs to the government incurred by Brach's closing (accounting for lost revenue taxes, federal income taxes, social security taxes, unemployment compensation and the cost of welfare assistance, among other factors), would total more than $91 million.

"Among the social costs to the community and the city are the following," the report stated, before listing those social costs. They included increased rates of crime, domestic violence, suicide and drug abuse, among other costs. It also named the "loss of participation in civic activities, such as church attendance" and voting, as potential consequences of Brach's closure.

In 2001, Brach's announced that it would eliminate the remaining 1,100 workers at its West Side plant over three years before closing the plant completely. The company cited the pressures of competition and the mounting costs of maintaining the old, sprawling facility. In 2014, the factory was demolished to make way for a mixed use industrial development. The jobs, however, have not returned. 

Contact:
Email: michael@austinweeklynews.com Twitter: AustinWeeklyChi

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Lehner Panalls from Austin  

Posted: February 25th, 2017 9:55 AM

This is fantastic, thorough, crucial reporting. Thank you so much for this history. Keep it up AWN!

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