Unemployment Rebounds In Industrial States

March unemployment in Michigan went to 10.3% this year from 13.3% in the same period a year ago. In Illinois, the figure moved to 8.8% from 11%. In Indiana, the improvement was from 10.6% to 8.5%. In Ohio, the rate moved from 10.5% to 8.9%.

All of these states have large populations, so as a group they must account from much of last month’s rebound in national unemployment figures.

The jobless may have left these states or may have stopped looking for work. But, it takes money to move and it takes patience to sell a house. It is more likely that people in these states have simply walked away from the job market. That would almost certainly happen over time and at a rate faster than the national one. It is a possible explanation, but not plausible. The rate of “drop-outs” in the region would need to be an order of magnitude higher than the rate for the entire nation.

Another possible explanation is that Midwest-based companies have begun to hire again. The drop in automotive jobs has begun to reverse itself, albeit only modestly. That means that car parts suppliers have added workers, and parts companies have about three times the number of workers as auto companies themselves do.

The most encouraging reason for the improvement may be if Midwest states were able to attract new businesses. That is not as far-fetched as it might seem. States have offered incentives to firms which are willing to relocate. There are a great many unemployed or under-employed engineers and other professional workers in the region. Most are willing to work for competitive wages because job opportunities are limited.

The Midwest might be the weakest region financially in the country if California and Nevada are set aside. An improvement in the job market in the old industrial belt would show that the rebound in the national economy is for real.

Douglas A. McIntyre