Five American Cities Back From the Dead
The Great Recession was hard on most of the country, but few areas were hit harder than the rust belt. Since the end of the recession, however, many of the region’s cities have rallied, adding jobs as their economies improve.
Based on a review of data published by the Bureau of Labor Statistics, 24/7 Wall St. identified five cities that had some of the worst unemployment rates before and during the recession but also some of the most dramatic recoveries in recent years.
As recently as 2010, the unemployment rates in these five cities were exceptionally high, even when compared to the national unemployment rate of nearly 10%. In Muskegon, Michigan, for example, 13.5% of the workforce was unemployed in 2010, among the worst rates in the nation. In Kokomo, Indiana, the unemployment rate exceeded 12%.
As of August, however, the unemployment rates of all of these cities were less than or equal to the national unemployment rate of 6.1%. In Kokomo, the unemployment rate was 5.7%, or 8.8 percentage points lower than its former peak rate. Similarly, the unemployment rate in Indianapolis fell from a high of 11.3% in 2010 to just 6.1% this August.
These metro areas have also had a broad resurgence in economic activity. Nationwide, economic output fell by 1.9% between 2006 and 2009 and rebounded by 8.2% from 2009 through last year. By comparison, real gross metropolitan product (GMP) in Toledo, Ohio fell by 6.5% from 2006 through 2009, and rose by 9.4% in the four years that followed. No metro area has had larger swings in economic output than Kokomo. From 2006 to 2009, Kokomo’s GMP shrank at a compounded annual rate of more than 15%, or by a total of more than 40% in that time. From 2009 to 2013, however, Kokomo’s GMP rose at a compounded annual rate of roughly 12.7% — for a total increase of more than 61%.
One major reason for the resurgence in these areas has been a growth in manufacturing jobs. From 2009 to 2013, manufacturing employment in Toledo and Indianapolis rose by more than 9%. In Kokomo, employment in the sector was up 7% in that time. A number of developments in recent years have contributed to manufacturing growth. For one, President Barack Obama has championed manufacturing through the White House’s Advanced Manufacturing Partnership, which aims to foster innovation and improve the business climate for manufacturers. Another development was the drop in natural gas prices, which has lowered manufacturing costs for a broad range of products.
The revitalization of the car industry has also been a boon to most of these cities. Each of the five metro areas reviewed is located in one of three states: Indiana, Michigan, or Ohio. All of these states are home to a large number of automotive industry jobs. According to the Alliance of Automobile Manufacturers, a trade group representing some of the largest carmakers in the industry, nearly 22% of Michigan’s job force works for an automaker, supplier, or dealer. In Ohio and Indiana, 12.4% and 13.9% of workers do, respectively. These three states alone account for nearly a third of all automotive sector jobs in the U.S.
To determine the five metro areas that are back from the dead, 24/7 Wall St. looked at unemployment rates from the Bureau of Labor Statistics (BLS). To be considered, a metro area had to have an unemployment rate of at least 6.0% in 2006, or roughly 30% above the national average. By 2010, unemployment must have risen to at least 11% before recovering to an unemployment rate equal to or below the national average of 6.1% in August. The labor force also could not have contracted more than 2.8% between 2010 and 2014. We reviewed average weekly wages by metro area through August 2014. For job growth data, we used three month moving averages.
In addition to BLS figures, we reviewed annual economic output data from the Bureau of Economic Analysis through 2013. From the U.S. Census Bureau, we looked at median home values, educational attainment, poverty rates, and the percent of employees by industry. Census Bureau data are as of 2013.
Here are five cities that are back from the dead.