THE AVENUE APRIL 29, 2011
The jobs report released earlier this month revealed that the unemployment rate had fallen a full percentage point since a year earlier, from 10.2 percent in March 2010 to 9.2 percent in March 2011 (seasonally unadjusted). However, numbers released Wednesday suggest that the pace of the jobs recovery remains highly uneven among the nation’s largest metropolitan areas, and for a variety of reasons.
During the recession unemployment was most severe in the metros most exposed to the housing bust and in those most dependent on the auto industry. But two years into the national recovery, these regions’ economies are diverging. High unemployment remains persistent in the housing-bust metros, like those of Florida and inland California. Meanwhile, unemployment rates in the auto-dependent metros of the Great Lakes and Midwest have dropped nearly 2 percentage points on average over the past year--double the national decline (see map after the jump).
Two facets of the recovery seem to be influencing these disparate experiences. First, the jobs situation may be improving more quickly in metros that make things than in metros that don’t. Employment in auto-dependent areas grew by 1.6 percent during the past year, buoyed by a strong initial rebound in manufacturing. It shrunk in California, Nevada, and a few Florida metros--places where consumer spending is a large economic driver. Second, the work force seems to be shrinking with the number of available job opportunities. Discouraged job seekers are giving up looking for work or moving on, artificially lowering local unemployment rates.
Around the Great Lakes, a recovering auto industry and rising global demand have helped stabilize labor markets. Moody’s estimates that new manufacturing jobs accounted for a fifth of the nation’s total job growth during the past year. And the large metros of the Great Lakes reaped an outsized portion of the benefits, having generated 20 percent of those new manufacturing jobs. These expanding job opportunities in manufacturing and in other parts of the economy are moving workers out of unemployment lines and onto production lines. Job growth in the region accounted for three quarters of its declining unemployment rate. But a shrinking work force, a sign of the region’s ongoing troubles, claimed the other quarter.
But job opportunities are not expanding everywhere. Some metros are haunted by the housing bust and have struggled to find their footing in the recovery. Unemployment rates in Modesto, Stockton, and Fresno all topped 18 percent in March and were little changed from a year earlier. Las Vegas’s unemployment rate fell 1.8 percentage points. But like many of its neighbors, the metro’s labor force shrank faster than unemployment. If its work force had remained the same size as a year earlier Las Vegas’s unemployment rate would have actually increased 0.3 percentage points. Sacramento, Stockton, Riverside, and Cape Coral--among others--have all experienced similar trends.The recovery is spreading unevenly. As the national economy finds its new “normal”, it will have to also find a way forward for these beleaguered places if the robust job recovery it needs is to take hold.