California's Desperate Jobs Market And Worse: All Unemployment Is Local

The California jobs market is as bad as it has been for six decades. But, its plight is better than that of many smaller regions, as measured by both unemployment and housing. One problem in the nation’s most populous state is such that jobless figures may not return to pre-recession levels for another ten years. Areas which include south Texas, the most populated area of Nevada, the auto manufacturing regions of Michigan, the east coast of Florida, and parts of middle New Jersey have a future of less hope. Most are not near large cities which usually have a diversity of jobs. The last federal stimulus expenditures did not help these troubled regions. Based on their locations and the compositions of their work forces, these areas may never reach the financial health they enjoyed from 2004 to 2007 when the nation’s economy was growing

The California Budget Project released a new report in which it states, “A record low share of working-age Californians have jobs; nearly a record high share of the state’s unemployed have been looking for work for more than half a year; and the typical California worker’s hourly wage has lower purchasing power than at any point in the past 10 years.” The CBP points out that when unemployed and under-employed people are taken together this number totals much higher than the 18% national rate.

California’s problems are caused to a large extent by a deeply damaged housing market, and by the budget austerity measures which were triggered partially by that injury. California has lost tens of thousands of construction jobs and an erosion of the property values which support state income.

The problem in regions around the nation with jobless numbers even worse than California’s will not be helped by the recovery of the fortunes of the states where they are located–at least not in the foreseeable future. They will remain as terribly depressed regions for years.

The joblessness problem in McAllen, Texas appears to be based mostly on the composition of the population, but that is not the whole story. Ninety-one percent of the population is Hispanic. Unemployment among Hispanics is 12% nationwide. It must be much greater than that in McAllen. Total unemployment in the McAllen metropolitan area is 13.2%. Nearly 24% of the people in the area live below the poverty line. It is simplistic to blame the metropolitan area’s problems on the high number of immigrants and rapid growth in the overall population, but McAllen suffers from troubles similar to other high unemployment centers. It is not close to any really large cities where McAllen metro residents could work. And, many of the medium sized cities close by also have frighteningly high unemployment. Brownsville has an unemployment rate of 12.2%. And, Houston, Austin, Dallas, and San Antonia are too far away to support a manageable commute from McAllen.

Stockton, in central California shares some of McAllen’s unemployment problems, and lack of solutions. The Stockton metropolitan area is near other state inland cities which include Modesto, Bakersfield, and Fresno. Bakersfield’s unemployment rate is 15.5%. Stockton’s is 17.5%. Modesto’s is 17.5%. This is another region where the Hispanic population is large. That is not a complete reason for the joblessness problem in the region. Many of those employed in these areas work on farms. This employment is rarely permanent and provides no benefits. And these cities are, notably, not near any of the largest cities in the state–Los Angeles, San Francisco, San Jose, or San Diego. Many of those out of work in central California cannot reach any job on the coast

The Detroit, Flint, Jackson, and Monroe manufacturing corridor in Michigan has high unemployment rates for different reasons than the most troubled parts of Texas or inland California. Jobs were once abundant in the auto industry. Hundreds of thousands of jobs have been lost. There is no way to replace these jobs. Once again, it would be convenient to blame the presence of a large minority population. In Detroit, blacks are 23% of the population. But, with the collapse of an industry which dominated job creation for 80 years in Detroit, it is not a question of race when it comes to the reasons that people have no jobs.

The unemployment problem along the Atlantic Coast of Florida to Palm Beach cannot be related to racial mix at all. Port St Lucie, Sebastian-Vero Beach, Palm Coast, and Cape Coral-Fort Myers all have double digit unemployment. The unemployment rate is 14.7% in Palm Coast. And, seventy-eight percent of the population in Palm Coast is white. That number is 75% in Cape Coral. The construction industry in these areas, driven by a real estate bubble based on the belief that there would be a huge migration to Florida from the northern states, fell apart. And, none of these metro areas are close to Orlando, Jacksonville, Tampa, Fort Lauderdale, or Miami. Each of these cities has its own economic problems, but as larger metro areas they, at least, have relative industry diversity. This diversity is an important basis for the recovery of any large city, and a factor in why smaller metro areas will struggle for years.

America’s biggest cities usually offer a diversity of employment opportunities which keeps joblessness relatively low, particularly as GDP growth recovers. Among the biggest cities in the US, Detroit has the highest unemployment rate. But, in most of the largest metro areas in America, joblessness is much lower than Detroit’s. In Texas, Austin’s unemployment rate is 7.6%. San Antonia’s is 8.2%. Dallas’s is 8.6%. Outside this region, the jobless rate is below 9% in large cities which include New Orleans, Albuquerque, Salt Lake City, Minneapolis, Boston, Houston, St Louis, New York, Dallas, Cleveland, and Chicago. Many of these cities have populations in which non-whites are in a majority, but their jobless rates are moderate because no single industry dominates the employment base.

The pockets of joblessness in parts of the country dominated by a small number of industries and far from big cities is additional proof that unemployment in America is as much a local problem as a national one. Most of these depressed regions are too far from a large urban area for the diverse jobs market in these cities to make a difference. So, they remain isolated and will stay that way indefinitely.

Douglas A. McIntyre