Madison Aument
With 91.9 KVCR News, I'm Madison Aument. This is Economics IE, where we talk to economists from the Inland Empire to help take the temperature of the region's economic situation. Today I'm speaking to Dr. Manfred Kyle, who's an associate director with the Lowe Institute at Claremont McKenna College. Thanks for being here, Manfred.
Manfred Keil
It's a pleasure to be here as well.
Madison Aument
Last month, UC Riverside published a report on the state of work in the Inland Empire, it outlines some of the challenges and opportunities the warehousing and logistics industry presents for the region. Let's start with the challenges.
Manfred Keil
So the challenge is really centered around the environmental impact. So logistics had seen an immense increase in the share of employment in the Inland Empire. Right. So to the point where several cities now have asked for a moratorium on warehouse expansion, and the reason that is given is that these warehouses are coming very close to schools and other sensitive areas. And if diesel trucks move up to them in large numbers, then of course, the pollution is there, and it will have health problems. That is no doubt. And that is a fact that no one denies. So the employment that we have had is tricky, because let's face it in the Inland Empire, the percent of people with a bachelor's degree or higher is only 24%. If we want to approach an MSA, metropolitan statistical area, like let's say, Phoenix, in that place, there are 38% who have a bachelor's degree or higher. So the problem is we need to be able to attract firms to come to our area. And that would so much take care of our problems. It would take care of commuting, right. No one in their right mind likes to commute. If they could have a similar job here in the Inland Empire, there is no doubt that they would not commute. Right. So that is where I think the problem is we have to find alternatives to the logistics industry in terms of employment.
Madison Aument
So I'm hearing you say that we need to diversify how people are employed in the Inland Empire.
Manfred Keil
Absolutely. So that is the magic word. It's diversification, right? The Inland Empire has always suffered from being one of the least diversified areas. If you're not diversified enough, if that sector gets hit. That area suffers immensely, right. And so now, to identify the problem is easy. It's harder to find ways to get jobs to come out here. But to make it really look very drastically clear. The Inland Empire has become the 12th largest MSA in the United States. We are big, we're important in terms of people who live here. Now you calculate the GDP that is produced in our area, the value of goods and services that is produced only by firms in our area, and you divide by the number of people or here that's called per capita GDP. It's a measure of wealth of an area. We fall to… get this… 302 out of 380 MSA is in the United States. We're sitting next to Waco, Texas. Right. So that's the dramatic part. We have an industry that employs a large number of people, but the jobs are not particularly well paying and that will not change in the logistics industry.
Madison Aument
Can you talk about the threat of automation on warehousing jobs?
Manfred Keil
So anytime you go to Ontario airport and I went to Ontario Airport to look at the cargo facilities, right. It is scary if you see the amount of automation that there is already and you can even increase that by going to a major warehouse to see sort of the little robots running around or driving around and just picking up things off the shelves. Right? So the logistics industry is one that is really bound for automation, and it will come so when that arrives. We better be ready to replace logistics with another sector.
Madison Aument
Thank you for joining me today, Manfred.
Manfred Keil
It's a pleasure as always.
Madison Aument
Join us again next Monday for Economics IE. You can find this segment and others on our website at kvcrnews.org/econie. Support for this segment comes from the Nowak Family. For KVCR News, I’m Madison Aument.