U.S. Markets close in 2 hrs 41 mins

Why Double-Digit Unemployment Persists in Pockets

Douglas A. McIntyre

Based on recent national unemployment rates, it would appear that job creation has improved sharply from when the economy was shedding half a million jobs a month and the jobless rate rose to more than 10%. For much of the country that is true. However, some geographic pockets of unemployment remain in double-digit percentages. Most are in regions of the country with no economic reasons for much positive change. These areas are black holes for people seeking work, even to the extent that these would-be workers have no funds to relocate or the skills to find better work.

The government reported:

Unemployment rates were lower in July than a year earlier in 320 of the 372 metropolitan areas, higher in 38 areas, and unchanged in 14 areas, the U.S. Bureau of Labor Statistics reported today. Forty-one areas had jobless rates of at least 10.0 percent.

Among the most troubled:

Yuma, Ariz., and El Centro, Calif., had the highest unemployment rates in July, 34.5 percent and 26.1 percent, respectively.

Some of these cities are adjacent to others where the trouble is nearly as bad. In the central part of California, which sits in from the coast, unemployment is above 10% in Stockton, Fresno, Madera, Merced, Modesto, Visalia and Yuba City. Among those seeking work in these cities are a high percentage of Hispanic or Latino adults. Literacy rates are low, crime rates high and real estate values have cratered. Much of the former jobs base was with the state and local governments. California has had to slash many of these positions to balance its budget.

Similar problems exist in cities that were part of the manufacturing belt in the Midwest. Many of the factory jobs there will never reappear as work has been shipped overseas, or some of the largest employers have lost so many customers that their ability to add jobs is gone. Unemployment remains in the double digits in Muncie and Terre Haute in Indiana, Decatur and Rockford in Illinois, and Detroit, Flint and Saginaw in Michigan. The Michigan cities all sit in a line that used to include car factories and where auto manufacturers were the largest employers.

It is not reasonable to say that the jobs problems in these cities and regions will never improve, but it will take years before their situations get better.