Troubled U.S. Cities Still Face Jobs Problems

Douglas A. McIntyre

New data from Gallup show that some cities that suffered the worst jobs losses during the recession have the lowest job creation now. The five metropolitan areas at the bottom of the Gallup Job Creation Index for 2011 are Providence, R.I.; Riverside, Calif.; New York City; Sacramento, and Buffalo. Each has jobs problems that cannot be solved readily, so each likely will suffer through another rough year in 2012.

Riverside and Sacramento are part of the large geographic area east and inland from the California coast. This entire region has suffered crushing job losses, well into double digits, as well as home price falloffs of nearly 40%. These two cities, and others close by, grew at phenomenal rates from the early twentieth century until just a few years ago. Among their largest employers were the state of California itself, local governments and hospital systems. As the California economy collapsed, many of these jobs went away. The deficit problem in California has made the state desperate for money. The jobs lost in Sacramento and Riverside will not come back. People in these cities have no home equity to tap for cash. The spiral downward of real estate prices and job losses is unstoppable.

Buffalo and Providence are in trouble for other reasons. Each was a large industrial center. The populations in theses cities have decreased since the 1960s as industries such as steel, textiles and jewelry have gone away. People have fled the downtown areas as crime has risen. Each city has financial problems, and they are severe. Central Falls, not far from Providence, went into bankruptcy last year.

One thing that these four cities have in common is that there are no solutions to their employment problems — really none. No state or federal program will bring jobs back to these areas. Incentives from the cities cannot be too financially aggressive, because each cannot afford to subsidize new businesses as it suffers from a falling tax base.

The notion that government — at the municipal, state or federal level — can solve most problems is history. Too many at each level are too low on money.

Douglas A. McIntyre