Photo: USA Today
Some states could be nearly a decade behind others in returning to the peak number of jobs they had before the recession, according to a new analysis from IHS Global Insight, an economics information and forecasting firm.Alaska, North Dakota, Texas, and Louisiana have all returned to their peaks, while Arizona, Florida, Michigan, and Nevada are all 9 per cent or more away from hitting that milestone. According to the analysis, Nevada, Michigan, and Rhode Island may have the longest to wait before recovery, with their returns to their former job levels expected after 2017.
North Dakota, Alaska, Texas, and Louisiana may not seem to have much in common geographically or culturally, but they all are boosted by a booming oil industry.
Energy is responsible for these states’ job recoveries “to a very large degree,” says Jim Diffley, senior director of U.S. regional services at IHS Global Insight. “In North Dakota and Alaska, [the energy sector] is predominately very much the single most important factor.”
Meanwhile, states at the less fortunate end of the spectrum tend to have their own commonalities: continuing problems in their housing markets, meaning depressed construction employment. IHS’s analysis predicts that states in the West and Southeast will largely have to wait until 2014 or later before their jobs figures recover, with some states, like Arizona, Florida, and Nevada, having to wait until at least 2016.
Not surprisingly, states that are expected to take a long time to recover also are still in the post-housing crisis doldrums. Florida, Georgia, and states in the Southwest are also among the places with the highest foreclosure rates in the country, according to housing market research firm RealtyTrac. The hit that the housing crisis delivered to the construction industry is one of the chief reasons that jobless rates remain elevated, particularly in these regions, says Diffley.
Of course, oil and housing are far the only factors at work. For example, “when the recession hit, casino spending dropped like a rock,” says Diffley, helping to push up Nevada’s jobless rate. Meanwhile, he adds, reconstruction after Hurricane Katrina helped to bolster that state’s growth even years after the storm hit.
For every state, two factors are at work in determining when jobs will recover; how far they fell during the recession and how quickly their economies will grow.
“Everybody’s got a different story here. Some states have underlying growth that is smaller,” says Diffley.
States that lost a lot of jobs can have a lot of excess capacity in their labour force—people ready and willing to go back to work when jobs do come back. But because those states have so much ground to cover in getting back to pre-recession levels of employment, it could still be several years to reach that point.
There is one major caveat to considering when these states will fully bounce back: returning to a pre-recession number of jobs still does not imply a fully recovered labour market. That is because of population growth. A larger labour force means that just reaching former job levels will also make for a higher unemployment rate. So even by 2017, some states will still have jobless rates higher than their pre-recession levels—another distressing sign of an impossibly slow crawl back to full economic recovery.