Wide Gap in State Jobless Rates
August data ranged from 2.5 percent in Hawaii to 10.5 percent in West Virginia. UNITED STATES ECONOMY
LIKE pressure zones outlined by isobars on a weatherman's map, high and low employment zones are apparent in an economic map of the United States.Ten states boasted an unemployment rate below 5 percent in August. Hawaii had the nation's lowest rate, 2.5 percent, data released Oct. 14 by the Bureau of Labor Statistics show. The other nine states are a contiguous mass stretching from the upper Midwest to the Rockies. Nebraska had a 2.6 percent unemployment rate, while Kansas and Minnesota tied at the high end with 4.8 percent. Those cloudless economic skies were enjoyed by one in 10 Americans, while half the population lived in 16 states where unemployment exceeded 7 percent during August. California and Michigan were isolated from three other high-unemployment areas: New Jersey, New York, and four New England states; Arkansas plus four Gulf Coast states; and Illinois, Kentucky, and West Virginia. Like weather, the economy is shaped both by national and local forces. Factors at work across the country when the recession began include the Persian Gulf crisis, federal and state tax increases, and a high level of government, business, and consumer debt. But the business inventory overload of the last recession wasn't a factor this time.
Factors state by state Beyond that, different states tell different stories. "In a recession, it doesn't hurt to be an agricultural state," says Tom Doering at the Nebraska Department of Economic Development. "People eat, good times and bad." Nebraska's manufacturing sector has prospered, too. Some, like food processing and irrigation equipment, is agriculture-related. Pharmaceuticals, printing and publishing, and electronic equipment industries are also growing. Telecommunications has enabled companies to take advantage of Nebraska's location in the central time zone to open such back-office operations as insurance claims processing, hotel reservations services, and catalog company telephone sales. Mr. Doering notes that business failures are declining, which runs against the national trend. Nebraska's job-creation rate, 5.4 percent, led the nation in August. On the other hand, the state ranked only 24th last year in per capita income, with $17,549 vs. the national average of $18,691. But it also has some of the country's lowest cost auto insurance, health care, housing, utilities, and of course, locally produced food. Nebraska and three other low-unemployment states - Colorado, Wyoming, and Kansas - are in the 10th Federal Reserve District, headquartered in Kansas City. The district has always done well during recessions because it lacks cyclical durables manufacturing, says Fed assistant economist Tim Sheesley. In fact, during eight previous recessions, employment in the district fell only 1.2 percent compared to 2.6 percent nationally. Colorado actually had continued growth. But these states experience less of a rebound when the economy turns up, Mr. Sheesley says. West Virginia trailed the country in August with a 10.5 percent unemployment rate. But that is nothing new. In fact, says Steve Shackelford in the state's Bureau of Employment Programs, "West Virginia did not have much to lose" in the current recession. Problems there began earlier in the decade with the loss of blue-collar manufacturing and mining jobs. And it lacks the service and retail trade jobs that employ women in other states. As a result, the labor participation rate for both men and women is about the lowest in the country, he says. The 1989 earthquake, a five-year drought, and the end of the cold war have been tough on California, says Chris Cochran, an economist with the state's department of commerce. Even though the earthquake was two years ago, rebuilding continues in the San Francisco Bay area, which accounts for 25 percent of the state's economy. In the aerospace industry, 40,000 to 60,000 jobs have been lost. National defense spending peaked in 1987, but it wasn't felt until late last year when no new contracts followed ones that were winding down, Mr. Cochran says.
'Close to the bottom' In New England, "I truly do believe we're close to the bottom," says Wayne Ayers, chief economist at the Bank of Boston. He's encouraged by an increase in manufacturing orders that parallels the national trend. And the pace of job loss has decelerated. Employment in the construction industry has stabilized after falling by half, to the level of 1984. But not all industries have finished shedding jobs, he warns. The US and especially New England were heavily overbanked, so more consolidations are in order. The service sector of the economy was largely unscathed in the last recession, but it "has taken a pretty hefty hit" this time, Mr. Ayers says. Florida's 8.3 percent unemployment rate wouldn't be so bad if 800 people a day hadn't continued to move there from elsewhere in the US during the recession, a state economist says. Other than that, the state lacks a diverse economic base. Growth in tourism slowed to under 1 percent in the recession's first year, the economist says. In normal years it grows 3 to 5 percent.