Newspaper headlines focus on the national unemployment rate. But the effects of joblessness are often very local as towns and cities lose tax revenue and have to care for those out of work. Unemployment at the city level worsened in most cases in June, putting more and more pressure on local supports.
“Unemployment rates were lower in June than a year earlier in 224 of the 372 metropolitan areas, higher in 127 areas, and unchanged in 21 areas,” the Census Bureau reported.
The most troubled areas are those that have been troubled since the start of the recession. With each passing month, the intransigence of joblessness in these areas makes it more likely that employment may not improve much there for years. These cities and towns are black holes where few businesses operate any longer, leaving locals to fend for themselves. As is true in many places where jobs are scarce, unemployment benefits have disappeared for the longer-term unemployed, which means many are destitute. Municipal governments are swamped by their needs, even as joblessness has sapped their tax bases.
“El Centro, Calif., and Yuma, Ariz., recorded the highest unemployment rates in June 2011, at 28.5 and 26.9 percent, respectively,” the Bureau said. It added that “All of the remaining 10 areas with jobless rates of at least 15.0 percent were located in California.”
At least some portions of the country have begun to emerge from extremely depressed jobless rates. Michigan, Florida, and South Carolina were not on the list of the states with the hardest hit metropolitan areas.
The data show something else that has become clearer as each month passes. Unemployment and housing depression match up almost city by city. It is impossible to determine which is the cause and which the effect. But each contributes to a death spiral as people who need to sell homes cannot, and those without work eventually default on mortgages and drive real estate prices lower.
It is odd that the federal government has not approached the unemployment problem locally. If joblessness could be improved in half a dozen large states, such as California, Florida, Michigan, and South Carolina, the national rate would move lower by a percentage point or more. These states have a large percentage of the entire U.S. population. The other way to view the problem is that without help in these regions national jobless rates cannot improve much.
Those states that have not recovered economically at all will leave a national economy operating only on a few of its cylinders. That kind of engine ceases to work quickly.
Douglas A. McIntyre