The US unemployment rate is 4.4% but unemployment varies widely among the nation’s 388 metro areas.
Let’s check out the winners and losers as noted by the Brooking Institute in its report Metro area unemployment trends buck the national narrative: A story of convergence, not divergence.
In May 2017, the U.S. unemployment rate dipped to 4.3 percent. That rate varied considerably across the nation’s 388 metropolitan areas, from a low of 1.7 percent in Ames, Iowa to a high of 19.2 percent in El Centro, Calif. (those figures are for April 2017, the latest data available).
[Mish comment: May metro data is now available (June Nationally) and the Smoothed Unemployment rate for El Centro is 21.6% down from 30% in November 2010]
The last two times the national unemployment rate was that low were in the late 1990s, and just before the Great Recession in 2007. Compared to those two business cycles, metro areas today are actually more similar in their unemployment rates.
In April 2017, when the U.S. unemployment rate was 4.4 percent, 226 of 388 metro areas had unemployment rates within one percentage point of that benchmark. 100 metro areas had rates below 3.4 percent, and 62 had rates exceeding 5.4 percent.
In April 2007, when the U.S. unemployment rate was 4.5 percent, slightly fewer (217) metro areas had rates around the national average.But in April 1998, when the U.S. unemployment rate was 4.3 percent, only 153 metro areas had rates within one percentage point of that figure. Many more (159) had rates well below the national average, and several more (76) had rates well above the national average.
Most strikingly, metro areas across the industrial Midwest—in Ohio, Indiana, Michigan, and Wisconsin—have unemployment rates today at least one percentage point lower than in April 2007. In the Milwaukee metro area, the unemployment rate stands at 3.2 percent today, versus 5.3 percent in April 2007. In the Battle Creek, Mich. metro area, it is 3.6 percent, down from 6.8 percent a decade ago. And in the Fort Wayne, Ind., metro area, the unemployment rate has fallen to 2.5 percent, well below its 4.5 percent level in April 2007.
Metro Areas 1998
Metro Areas 2007
Metro Areas 2017
Spotlight Illinois
- Illinois has 12 metro areas, none of which have unemployment rates below the national average.
- Illinois worsened between 1998 and 2007 and then again from 2007 to 2017.
- Neighboring states are all now better than Illinois
Illinois vs Neighboring States
With each passing decade, the unemployment situation in Illinois has gotten worse. Indiana and Michigan recovered from the rust belt blowout but Illinois didn’t.
This is not surprising. The state passed its first budget in three fiscal years, complete with massive tax hikes. The budget is required by Constitution to be balanced, but it isn’t.
An exodus of businesses and private citizens is underway. Reforms are desperately needed but none came with the passage of the budget.
Rauner 0-44
Governor Rauner is 0 for 44 in reforms he set out to accomplish. In fact, the corporate and personal tax hikes put the true score at -2 out of 44.
Cash-strapped cities suffer under prevailing wage laws and untenable pension promises.
Corporations suffer under the worst workers’ compensation laws in the nation.
Citizens suffer from the highest property taxes in the nation.
It is too late to save Illinois from insolvency. Rather than fix the problem, the new tax hikes will make matters worse.
Five Desperately Needed Reforms
- Municipal bankruptcy legislation
- Pension reform
- Right-to-Work legislation
- End of prevailing wage laws
- Workers’ compensation reform
Number one on my list of Illinois reforms is bankruptcy legislation. It is the only way out for numerous Illinois cities whose hands are tied by union-sponsored prevailing wage laws and pension plans.
Moody’s held off for now downgrading Illinois to junk status, but junk is baked into the cake sooner or later. The budget fixes nothing.
Related Articles
- Too Much, Too Little, Too Late: Junk Status for Illinois Coming Up
- Illinois Budget: What it Does and Doesn’t Do (Surprise Giveaway to Muni Bondholders?)
Mike “Mish” Shedlock
Most business owners I know in Dallas are begging for help, but there seems to be no lack of people, just a shortage of willingness, especially when there are so many non-work opportunities available. Automation???
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How many people are willing to do “some” work, but don’t have the skills?
Leaving the work ethic issue aside (agree with you that its a problem) — many of the alleged “college graduates” my company has interviewed simply don’t have the needed skills. Lots of social justice warriors in various forms, but show me someone who can sell a product without sending the customer on a made-up guilt trip (which sometimes gets one sale, at the cost of the customer never allowing the next salesman back).
People who can do math (essentially word problems) are very hard to find. People who can generalize the problems and write software to do the math — millennials are just useless at this. They spend weeks arguing about whether it should be written in java or C++ or javascript … but even if they resolve that debate, they are simply unable to translate the business problem into useful code.
Every employer has to do on the job training, but when the labor pool doesn’t have basic skill sets to build on…
I hope “generation Z” (whatever comes after millenials?) has an education. Every company needs some junior employees — one gets promoted by training the person behind you, but millenials were politically indoctrinated and lack even the most basic skills.
Some of the blue collar trades are doing a push to apprentice younger people — telling them to skip 4yr degree college, and get on the job training plus a few community courses.
I have to wonder if white collar won’t go the same way. The best software people at my company are self taught “hackers” that learned what customers needed, instead of learning what professors wanted to talk about.
Customers need actual problems solved, and ultimately that determines who is really employed versus who is just clocking time.
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The only jobs that pay decent wages are those that require THINKING, the requirement for all problem solving.
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I’ve been (in and out of) the software business for decades, and what you say to a large extent echoes my experience from an end user perspective as well. It’s not that there are no good developers/problem solvers amongst millennials. But rather that the good ones are hired by pure software companies, not the “IT” (goodness, no wonder….) departments at non software companies.
Due to stupid loose money, there are so many pure play software companies out there seeking to hire the best, that anybody good, has plenty of opportunities to never bother with growing up and getting out in the real world, but can instead live forever in a college atmosphere. Which is an atmosphere that most brainiacs tend to thrive in, hence prefer to stay in.
Never mind very few of those companies ever creating much of any value, hence make any money. As long as money is loose enough, there are always punters willing to throw more at them, on the offhand chance that one of the big guys see a decent fit, and buy them at windfall valuations.
Given the option of “working”, hanging out and playing Guitar Hero in an environment of like mindeds, while investors provide them with fancy hip-city downtown digs, free food, free beer, and a carte blanche to do pretty much as they please, for fear of “losing top talent” if they don’t, why the heck would any of them bother going to work for some “boring” manufacturer in the Mid West? Heck, they don’t even want to work for boring old tech companies in San Jose anymore. The only thing attractive enough, is startups in the latest hype field, smack in the middle of San Francisco or Palo Alto proper. With the occasional east coast grad perhaps content with settling for playing completely useless zero sum games on Wall Street,if the money is good enough.
As long as the money is loose, and the hype train rolls on, this can give the illusion of working, heck even of being “innovative,” but the end result of everyone doing greenfield startups (the ambulance chasers tell them to only do greenfield, lest VCs worry they can get sued by former employers….), is that noone sees farther by standing on others’ shoulders anymore. Every company start from scratch, with nothing more to build on, than what the 20 somethings who work there learned in college. While the companies that does have deep knowledge wells built up over decades, like Intel and IBM, are struggling in the hiring race, against a startup developing an app that allows one to “click every time one disapproves of something Trump says,” or something equally inane.
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The unions and their Democrat puppets have a death grip on the economy there just like here in California. They will lie, cheat, and deny math until there is no other option. Then they will cry foul, say who could have known, and ask for a bailout. Personal integrity accountability is dead in this country and that is the end of the republic.
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The new Detroit Red Wings hockey arena began construction a year ago, and progress has been been shut down on several occassions due to one standard clause in the contracts. A certain percentage of workers have to be black. Some companies have chosen to pay the fine rather than keep hunting. You can fill in the rest of the blanks from there.
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Isn’t requiring employers to hire certain races – racist?
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It depends on who you ask.
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Ask?
Are you suggesting being able to discriminate out those who require employees to hire certain races?
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No, they just don’t get applicant of blacks so they are forced to tap other sources to keep on schedule. Most young people cannot afford a car and xannot get to the job, for one thing. Other reasons too. I think contractors just build the penalty cost into the bid now.
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There was a double meaning to my comment, as in :
Should you, as worker, not be allowed to discriminate out a supremacist business owner, but instead have to work for him/her because state requires it?
Not a job someone might want, so maybe the scheme is just a way to fine and label, that is discriminate against, any business not meeting PC, even if through no fault of own.
Bureaucracy sucks.
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Today in Connecticut, governor Malloy made a big stink about getting Indeed dot com (online job listing website) to “create” 500 jobs in the state — in exchange for big tax breaks of course.
GE left the state. Aetna left the state. Gun manufacturers fled. Pharmacueticals fled. Hedge funds shrunk and then fled. Thousands of jobs that paid six figures left the state. Even the people working the lathes and drill presses at gun manufacturers (a “blue collar” job) were making high five figures; the jobs required skills that not everyone has.
The 500 website jobs at Indeed are essentially data entry jobs. Even the IT jobs are just pulling in a file, simple parsing and loading a database — entry level IT work. Talking with smaller local employers to get job listings that can be posted manually is data entry. Even if the data entry jobs paid enough to move out of your parents basement, what is the career path for these jobs? At McDonalds, you might become a shift supervisor — data entry doesn’t have the career upside. Any monkey can do data entry (assuming the data entry doesn’t get automated, which is happening more and more).
The quality of the thousands of jobs eliminated was much much much higher than the 500 jobs “created” via unsustainable tax breaks.
This sort of political propaganda is happening all over the country. Its not job creation at all, but even if these jobs were being created the pay levels don’t cover the cost of living in the area.
Saying the unemployment rate is 4.4% is worse than meaningless — its deceptive bordering on fraud. Its more like 20% unemployment, but out of that 15.6% are jobs that don’t cover the cost of living and have no career prospects.
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Unbeknownst to economists, not all jobs are created equal, especially when you need two to replace one. An not when you are competing against government subsidized labor. It seems the only competition we see in the labor force is how little you can do, and how poor in quality, before you get fired.
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There were many sportscasters from ESPN who got let go this spring. One real estate agent with whom I spoke said home sales were down 30% y-o-y in the Hartford burbs, yet home sales were UP 30% in the Springfield MA area.
I do know for a fact that United Technologies has made early retirement offers this spring as plane sales slow down. Those who are within a couple years of retiring can’t wait to leave Connecticut.
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Similar stories of executives leaving Aetna…
The “old line” business (paper insurance) apparently is staying behind in Hartford — but no one believes this side of the business has any future. Its being run to generate cash for the viable businesses that moved to NYC. As the old paper line people quit or retire — there is no point in replacing them. There is no point in paying them bonuses or giving them raises (the paper business is dying anyway, and Aetna has other processing groups outside CT). As they quit, Aetna can sublease and/or sell off their real estate in Hartford. That won’t be good for Hartford money suburbs like West Hartford and Avon, and it will get worse over time.
GE’s former headquarters were given — oops “leased” to Sacred Heart University which is tax exempt. Malloy promised that taxpayers will pay Sacred Heart “training fees” for state employees that (stunning coincidence) completely covers the lease costs. So basically Malloy gave the former headquarters to a tax exempt entity for free. Guess who will have to pay extra property taxes on the now tax exempt land?
Sikorsky effectively left Connecticut. They have a telephone help desk in Milford / Bridgeport (not sure which side of town line it is on). The executives with the big paychecks were moved to Maryland.
The firearms manufacturers decamped for other states — those were good paying, high skill, blue collar jobs. Whatever one’s feelings about guns (Malloy only wants his personal security detail to have them) — Malloy destroyed jobs paying $70K per year plus good benefits, and replaced them with nothing.
Its nice that Moody’s and S&P finally pulled their heads out of their back ends — acknowledging that Connecticut is in deep trouble. Those credit agencies still think CT muni bonds are money good — which tells you how absolutely worthless their credit ratings are.
The problem is: the pound foolish, penny-wise socialism that Malloy imposed on the state of Connecticut isn’t an isolated event. A lot of states have the same problem, and too many voters simply refuse to connect the dots and admit socialism is causing economic suffering.
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“Pension reform”
…
How many drawing pensions have fled the state … due to high taxes?
I love my afternoon irony
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Illinois and Indiana look almost identical on those maps in 1998 and 2007, and then by 2017 it’s like night and day.
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~ Because Indiana became a Right to Work state. Look at Mish’s employment rate map, R. to W. states Michigan and Indiana are way better off than Illinois, which has a government completely controlled by unions. I don’t see any hope for The State Where the Governors Make the License Plates.
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“Governor Rauner is 0 for 44 in reforms he set out to accomplish.”
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“Governor Rauner is 0 for 44 in reforms he set out to accomplish.”
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El Centro? Ha!
Let’s just say that being “unemployed” in these border towns can be financially lucrative,,,especially when compared to life on the other side of the border. Kinda like a semi retirement plan.
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Since drug dealers cannot claim dealing as a job, they probably collect welfare in addition to their lucrative “business”. Is this a great country, or what?
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Mish, Why headline an obvious falsity: 4.4% unemployment?
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It’s not called Illnoise for nothing…
Mish, when are you going to leave that h#ll hole?
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The numbers of residents of Illinois moving to Florida and Texas will greatly increase.
The number abandoning their property will increase as well.
The “window” to leave Illinois is closing fast as “required” tax increases will cripple real estate prices quickly.
The State of Illinois will become the owner of much real estate via foreclosure as well.
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If foreclosed, the lender (usually banks) end up with the property. If the real estate taxes are not paid, the state ends up with it. Then the state usually tries to auction it off. The starting bid is usually the amount of taxes owed, plus penalties and interest of course.
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Perhaps the Illinois residents who wish to leave, should consider Canada. I believe they are looking for highly skilled immigrants. They also speak English and have a fabulous Health Care System. You might have to learn to put up with longer winters and extremely friendly people.
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As a follow up to the Amazon selling products at a loss subsidized by taxpayers (via the post office) — Citibank did an “analysis” and found Amazon gets $1.46 per package subsidy… and lets be honest enough to admit this subsidy comes from competitors and mom/pop retailers, it doesn’t come from “uncle sam”.
https://www.wsj.com/articles/why-the-post-office-gives-amazon-special-delivery-1499987531
Why should competitors, including mom and pop retailers, be forced to subsidize Amazon?
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