Job Markets: The Trends of 2010 Continue

Unemployment is not a national problem. It is a regional one. The jobs troubles have been in regions hardest hit by the collapse in real estate prices and layoffs in the older industrial states. That was the trend during the depth of the recession. Nothing has changed, based on new Gallup data. “Gallup’s Job Creation Index shows that Washington, D.C., as well as energy- and commodity-producing states, continue to dominate the 10 best job markets during the first half of 2011, as they did over the same period in 2010,” the company said about new research results.

The federal government has continued to treat the unemployment situation as if all cities, all states and all regions are the same. That is clearly not true. The traditional programs to reduce payroll taxes and give businesses modest incentives to hire workers will not change the employment situation in Nevada, California, Rhode Island or parts of New York and New Jersey.

A look at the “map” of regions where job creation has disappeared shows that these areas are almost entirely the same as where the housing markets have been the worst. These pockets are also in areas where industries badly damaged by the recession are located.

The concentrations of joblessness in these regions are 50% or more higher than the national average. One such area is in middle California, around Sacramento and Stockton. Another is across the norther tier of New York State from Albany to Buffalo. Yet another runs from Carson City, Nevada, to Reno and Las Vegas. Data show that there are nearly a dozen such pockets across the country.

The federal government is not structured well to address local unemployment and housing problems. Each congressperson wants help for his or her own district, whether that area has unemployment of 7% or 17%. There are few incentives for the federal legislature to pull together to solve the jobs trouble. That is too bad, because if the hardest hit regions could be pulled from the economic malaise, national unemployment could drop well below 8% and consumer spending could rise considerably. The populations in the problem regions are large enough for their renewed health to have those effects.

There are no signs that the economies along the Atlantic coast will recover or that cities in Texas along the Mexican boarder will get better financially. Real estate prices in these areas may never recover. The federal and state governments will spend inordinate sums for unemployment insurance and other benefits in these places — that is, until austerity measures wash any support away.

The U.S. economy will recover eventually. It may even get over the current rough patch, which appears to have begun in the spring. The regions where jobs are scarce and home prices have fallen by 70% or more have no recovery prospects. There are no programs in place to change that.

Unemployment and consumer activity may be only modest problems across the northern tier of states, in some areas of the South and around Washington, DC. Those areas need only modest government economic support, if they need any at all. Areas at the other end of the spectrum are desperate.

Douglas A. McIntyre