Archive for Saturday, January 10, 2009

States with high jobless rates share root causes

January 10, 2009


Unlike the last recession, today’s unemployment hot spots are all over the map.

The five states with the highest unemployment rates — Michigan, Rhode Island, South Carolina, California and Oregon — all have something in common, though: a heightened exposure to the root causes of this downward spiral.

The collapse of housing. The implosion of the auto industry. The meltdown of financial services. The exodus of manufacturing.

Multiple troubles

All states are feeling the pain, but the worst are getting hammered on multiple fronts:

• The rotten housing market has punished California lenders and builders, taken an ax to Oregon’s timber industry and soured the prospects for construction workers in Rhode Island, where buyers from neighboring states helped drive up home prices.

• The steady decline of the manufacturing sector has punished Rhode Island and South Carolina, where laid-off factory workers lack the training and job opportunities in an increasingly high-tech economy.

• The auto industry’s pain is Michigan’s above all. But it is also being felt in states like South Carolina, where German automaker BMW has cut 500 temporary workers, and in California, where many of dealerships have shut down.

“What makes this a different recession,” said Rebecca Blank, an economist at the Brookings Institution, “is that it is so widespread.”

During the 2001 recession, which was largely tied to the dot-com collapse, the West had a disproportionate amount of the jobless burden: Oregon, Washington, Alaska and California had the highest unemployment rates. (Mississippi and Washington, D.C. were tied with California.)

Housing bust

For the majority of the country, the air has come out of a decade-long housing bubble, with home prices falling an average of 20 percent in the past year and almost one in ten mortgages either overdue or in foreclosure.

A wide swath of industries is feeling the pain, including real estate agents, bankers, builders, lumber companies and furniture makers.

The real estate bust is at the heart of mounting job losses in California, which has seen its unemployment rate reach 8.4 percent, the third-highest in the nation. In the year ending in November, 71 percent of the nonfarm jobs lost in California were housing-related.

Many of the nation’s leading mortgage lenders — Countrywide Financial, New Century Financial, IndyMac Bancorp, and Fremont General Corp. — were based in California and have since been bought by larger banks or gone bankrupt.

The recently unemployed in California include Filemon Galvan, 41, of Buena Park, Calif., who was laid off from his job as a carpenter for a housing subcontractor in August.

“It’s been a long time since we had a nice family outing,” Galvan said in Spanish.

As the country’s leading lumber producer, Oregon has also taken a direct hit from housing, with sawmills producing sharply less than a year ago.

The slump has cost Oregon about 1,000 logging jobs in the past two years and more than 7,000 jobs in wood manufacturing, which includes plywood mills and the production of door and window frames, said David Cooke, an economist in Oregon’s employment department.

Effect on individual states

Not even tiny Rhode Island, which has the nation’s second-highest unemployment rate at 9.3 percent, has been exempt.

The slide has cost Rhode Island more than 3,000 construction jobs in the past year, according to the U.S. Labor Department.

From a combination of high energy prices, a strong dollar and competition from overseas, manufacturers have been manhandled for most of this decade — and ground zero for the loss of factory jobs is Michigan.

Its crumbling auto industry explains a large part of the state’s nation-leading unemployment rate of 9.6 percent.

But the manufacturing slowdown has gone far beyond the industrial Midwest. South Carolina’s jobless rate has reached 8.4 percent, the third-highest, as it struggles to replace lost textile and apparel manufacturing jobs with the type of high-tech industries that North Carolina has been able to attract.

And Rhode Island, not generally known as a manufacturing hub, has suffered.

The industrial conglomerate Textron Inc., which is based in Providence and makes Cessna jets and Bell helicopters, laid off 2,200 of its 43,000 workers last year.

Like South Carolina, the state hasn’t yet made a successful transformation from manufacturing to newer-economy industries such as biotech or computing.


jayhawklawrence 9 years, 5 months ago

The last sentence of this article explains a lot about a big problem in this country. Where is this stuff coming from? If you are a teacher teaching this stuff you are seriously uninformed.What successful transformation? There is no road from manufacturing to Nirvana. Manufacturing is fundamental to a country's economy.We are not going to be raptured into the Kingdom of Heavenly Biotech and computing jobs. Yet, these writers for a major media publication are under the assumption that manufacturing is like the stone age and we have to advance to the iron age.It is wrong to view the current problems in the auto industry as an epitaph to manufacturing in America. Not only is it wrong it is stupid.

Godot 9 years, 5 months ago

This is pure, unaldurated, disinformation. What a crock.

SMe 9 years, 5 months ago

You can't "service" money you must "make" (as in manufacture) it and America no longer does that. You want to get out of the depression start buying anything and everything labeled "made in USA" but make sure it actually was before handing over that hard earned cash.No "Made in USA" doesn't include BMW, Honda or Toyota as they employ only a small percentage of American auto workers and the profits from those sales still go overseas. Tell those credit card and computer companies you're tired of dealing with a foreigner to get assistance on your account. Close an account or two citing that as justification. Then maybe some of those jobs will start coming back - instead of being outsourced from India to America because they're so busy they can't handle all the workload!Yes, you go ahead and tell me how you only buy the best (that's your opinion - not mine) and how it's your "right" to buy whatever you want - then you sit down and consider what your ignorance is doing to your children's children!

Clint Church 9 years, 5 months ago

Finally, some people that actually understand what is wrong with this country and the economy. Now if we could just convince the millions of people(and my wife) what buying crap made in foreign countries does to the US economy we would be in much better shape.

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