The Bureau of Labor Statistics has produced its latest report of unemployment statistics and, as you might expect, unemployment has grown sharply:
WASHINGTON (Reuters) – California lost the most jobs of all the states, 79,300, in January, while Michigan registered the highest unemployment rate at 11.6 percent, the Labor Department said on Wednesday.
South Carolina followed Michigan with an unemployment rate of 10.4 percent. Rhode Island, which had its highest unemployment rate on record, was third at 10.3 percent.
Besides losing more jobs than any other state, California had an unemployment rate of 10.1 percent, compared to the national rate of 7.6 percent that month.
However, when the numbers are examined more closely the problem they reveal isn’t consistent with the prevailing narrative about employment but rather support the point I’ve been making here for some time: unemployment is a local problem, concentrated in a handful of areas.
Just two states, California and Michigan, account for 20% of the unemployed but only 15% of the country’s population. They, along with South Carolina and Rhode Island, mentioned above, are the only states already burdened with double-digit unemployment.
I don’t mean by this to dismiss in any way the pain that people who’ve become unemployed feel or to suggest that we should just look the other way while California and Michigan suffer. Far from it. I think that the solutions to the problem need to be tailored to the problem at hand in order to be effective and, frankly, trying to treat this as a national problem with a national solution will be ruinous.
I think that something analogous to the TVA should be considered, the 1930’s program intended to alleviate the endemic poverty in the rural South by connecting the region more closely to the rest of the country and providing the energy to help industry grow there.
The problems of California and Michigan are similar but different. Michigan isn’t unlike a statewide company town. It’s overly dependent on the automobile industry and I think we’ve got to be brutal and frank: however much we might want it to be different the glory days of the American automobile industry will never return and the industry will never be concentrated in Michigan the way it once was. California has historically been dependent on a handful of industries: agriculture, real estate development, and tourism leading the list and even the quickest consideration of the situation will reveal that those interests are at loggerheads. Now real estate development has dropped off a cliff and may never return to its previous heights.
Neither state’s economy is enough to support its population. We’ve got to boost both states’ economic outlook while encouraging their populations to seek jobs elsewhere. There are quite a few states with very low levels of unemployment, notably Nebraska, New Hampshire, North Dakota, Oklahoma, South Dakota, Utah, and West Virginia.
I suspect that California’s and Michigan’s state and local governments are complicit in producing high levels of unemployment in those states. We’ve got to arrive at a formula for discouraging that while raising the states’ fortunes.
But most of all we’ve got to stop treating what are manifestly local problems with national implications as though they were a national ones with a national solution. That direction will produce frustration rather than jobs.
Yeah but I don’t see how this helps me. I know it sounds selfish but I lost a 6 figure position, can’t find another job and have a house and three young children. I’m getting a little sick and tired of all the talk and lack of action the governments should be taking.
Thanks,
Chuck LaPenta
Lapantz Workforce
“Go Marching One By One”
Work From Home
This is a probably silly question, but why should that stop me?
Is it possible that Californians often held second jobs, or had a working spouse holding an essentially superfluous job, just to compensate for the high cost of real estate? With housing prices dropping (gas prices as well) isn’t it possible that the effect of some of those job losses is effectively a wash?
I continue to be struck by the number of people in restaurants here in Orange County, CA. (I eat out a lot, so it’s a convenient gauge for me.) Morton’s last night, not exactly a bargain restaurant, was doing decent but not spectacular business. On a Tuesday. Average check has to be at least $50 a head. I realize that’s anecdotal and rather vague at that, but restaurants are an interesting stress point: if you’re broke or really scared you’re at McDonalds or the grocery store. You’re not at Morton’s.
California realistically needs both economic help and a Constitutional Convention.
I see the reasoning here, but aren’t there implications for surrounding states when one state’s economy goes belly-up? I should think that job losses would affect a surrounding area as both individuals and state governments are forced to make more conservative consuming choices.
Isn’t there an intrastate effect after a prolonged period of economic stress in one state?
Kelly, judging by the numbers from the BLS cited in the post, conditions local to individual states appear to be more significant than the regional effects. So, for example, Arizona has a substantially smaller unemployment rate than California, Nevada and Oregon marginally so. Indiana, Illinois, and Ohio’s unemployment rates are all notably smaller than Michigan’s. Massachusetts and Connecticut have considerably lower unemployment rates than Rhode Island;North Carolina’s unemployment rate is almost half that of South Carolina.
To my mind that means the regional effects justify intensive efforts in the states that have the biggest problems.
The analogy I made yesterday was that when one house in a neighborhood catches fire, the fire department should devote more attention to the house that’s on fire rather than the houses in the rest of the neighborhood.