Editorial

MSA reclassification sets GR on path to success

November 24, 2017
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Two reports in the Business Journal are emphasized, as the community leans into a new year and business owners close the fourth quarter. The report from the U.S. Bureau of Economic Analysis shows per capita income for West Michigan is weak, measuring a 2.2 percent increase for 2016, exactly the reported rate of inflation in the U.S. There is some better news provided by The Employers’ Association, based on HR pay administration plans for Kent, Ottawa, Muskegon and Allegan: employers are projecting increases of 2.8 to 3.2 percent for 2018.

The Business Journal also notes the report on the cumulative impact of The Right Place economic development agency over the past 30 years and finds some parallels that have increased the competitiveness of the Grand Rapids region for continued growth in business attraction and jobs. The Right Place gives witness to a 30-year period of multipliers reflecting additional “legs in the region’s economic stool,” including the continued advancement of the Medical Mile and is marked by increases in agriculture products (think beer) and food-related manufacturing and distributors, as well as unpredicted growth in the tech sector. Such successes provided opportunities for developers and the number and size of new projects providing new landmarks and lifestyle enhancements.

But one of the most far-reaching and important changes of the past 30 years was the pleading of several area economic development groups (and the Business Journal) to the federal Office of Management and Budget to change the geographic boundaries of the Metropolitan Statistical Area. That change finally came but after the 2010 U.S. Census. The MSA includes Kent, Ottawa, Montcalm and Barry counties. Previously, Ottawa and Montcalm were not counted but, instead, included Ionia and Newaygo counties.

Reclassification has more accurately reflected the size of the area’s labor market, strength of the supplier base, depth of the service sector and purchasing power of residents. Businesses looking to expand in certain regions of the country use the MSA to define a market area and make comparisons. In 2010, even the Gerald R. Ford International Airport had complete dismissals from major airlines, particularly the discount airlines, which use the MSA data to define service areas. That losing scenario finally changed with the MSA designation. The realignment has impacted federal statistical agencies, regulatory agencies, Medicare and many of the government funding programs that are based on MSA data. It affects Medicare payment rates. MSAs also are used to allocate funds in some federal community development programs and in calculations for federal employee locality pay, among other uses.

It certainly was a factor that brought Grand Rapids up on the dashboard of Switch and its resulting location, building and regional economic impact in technology. A 30-year retrospective is incomplete without considering the hard-fought MSA change and certainly underpins the ability of this region to continue business, income and population growth.

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