Unrealistic Unemployment Numbers


California, Connecticut, Illinois, Michigan, Nevada, New Jersey, North Carolina and Rhode Island have 23% of the U.S. population. Each also has an unemployment rate above 8.6% in November. With the national unemployment rate at 7.7%, it is hard to deny how uneven the recovery has been, or how hard it will be to jump-start it in some parts of the country.

The most notable thing about state unemployment is how little many of these places have in common. While the employment trouble in Michigan and Illinois have to do with the industrial base, Nevada's troubles are rooted in gambling and construction. Financial service industry problems have contributed to the high rate in Connecticut. Some of North Carolina's lag is due to agriculture. Almost every one of these states has had its jobs problems made worse by layoffs in government and nonprofits, like universities and medical facilities.

California is in a world unto itself. The state is so huge and its economy so diverse that the trouble ranges from the public sector to agriculture, to industry, shipping and construction. The state could have employment harmed further when its large industrial contractors are hit by cuts in the defense budget, which fiscal cliff budget programs could cause as early as next month.

The data show that all jobs problems are local. No one federal stimulus package will help most industries, which means many states will lag. Similarly, there are no single solutions to poverty, health care or housing problems by state.

No dollars for stimulus may be forthcoming if Congress and the White House cannot agree on anything other than tax hikes and austerity. Even modest stimulus dollars are not likely to do much for local economic trouble, if austerity is part of a final legislative package.

Unemployment in six or seven states will remain high for the indefinite future, because the root causes will remain unaddressed.

Douglas A. McIntyre

Filed under: 24/7 Wall St. Wire, Economy, Research Tagged: featured