The States That Have Already Recovered From the Great Recession—and the States That Won't Until 2018
Decades are a terrible thing to lose. But that might be exactly what Nevada, Michigan, and Rhode Island will lose if the recovery doesn't pick up for them. Indeed, as the Wall Street Journal reports, private forecaster IHS Global Insight doesn't expect total employment in those states to get back to its pre-Great Recession peak until ... 2018. If you live in one of these states, it might be a good time to move to Texas or New York.
Now, as you can see in the chart below, it's not all doom, gloom, and Michael Bay-style disaster. Resource-rich states like Texas and North Dakota have already bounced back above where they were in 2007. And another 10 or so will by the end of this year. But it is going to be a longer slog for most states.
Okay, this is obviously horrible for Nevada, Michigan, and Rhode Island — but so what? It's good when people move from where the jobs aren't to where they are. It's part of what makes a currency union work. See, we don't usually think of it this way, but we live in something called the dollar zone. We have 50 states that share the same language and fiscal policy — and monetary policy too. But, as the euro zone amply shows, the monetary policy that makes sense for one member of a currency union might not make sense for others. So what do you do if one country (or state) is stuck in a depression, and the other is booming? Well, in Europe, nothing. Or, more accurately, blame the country stuck in a depression for being stuck in a depression — and demand that it cut spending like you'd always wanted it to.
But, in the U.S., states have a few escape hatches from a slump. Or, more accurately, the people do. People can more readily move from a depressed state to a booming one than people can move from, say, Portugal to Germany (although that has happened to an extent). And, remember, the federal government will keep sending out Social Security checks to retirees in Nevada regardless of how many young workers leave the state. That isn't true when young Portuguese workers leave; that just makes its pension picture uglier. It's actually the same problem that U.S. state and municipalities face over state and municipal pensions — losing too many people for too long can leave state and municipal governments staring into too deep budget holes. But, again, at least people don't have to worry about their federal benefits.
Now, it'd be nice if Nevada had more jobs than it did in 2007 some time before 2018. That it might not shows just how weak this recovery has been, and how long a shadow the housing bust has cast over the economy. But what matters isn't how many jobs there are in Nevada; it's how many jobs there are, period. That's where we're failing.
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