August 4, 2009 / 2:33 PM / 10 years ago

Southern states an epicenter for U.S. job losses

MIAMI (Reuters) - America’s worsening job woes come with a southern drawl. States in America’s South, such as Florida, Georgia and the Carolinas, have flipped during the recession from putting up robust employment numbers envied by other regions to posting many of America’s most painful rates.

Stephen Battaglia (L) of West Palm Beach, Florida searches for jobs on a computer at Workforce Alliance in West Palm Beach, Florida July 2, 2009. REUTERS/Joe Skipper

Seven southern states now have double-digit unemployment rates, an unusual concentration in a country with a national rate in June of 9.5 percent. The list includes Florida, which two years earlier had one of the lowest jobless rates, at 4 percent.

“This recession has walloped the Sun Belt in ways that previous recessions have not,” said economist James Diffley, managing director for regional services at IHS Global Insight in Philadelphia.

Georgia, where unemployment punched into double digits for the first time ever in June with a 10.1 percent rate, two years earlier had a jobless reading of 4.5 percent, according to data from the U.S. Bureau of Labor Statistics.

Now with an 11 percent rate, North Carolina in June 2007 had a jobless rate of 4.7 percent. Neighboring South Carolina reported unemployment in June 2007 of 5.5 percent; last month it held the region’s highest unemployment level, 12.1 percent.

The pace of job losses in the region has been startling, with jumps in unemployment rates in southern states of 4 and even 5 percentage points in the year through June, even as the national unemployment rate rose 3.9 percentage points.

Even southern states short of the 10 percent level, such as Mississippi at 9 percent, West Virginia at 9.2 percent and Arkansas at 7.1, have endured big jumps in unemployment.

Alabama’s jobless rate doubled in the year through June to 10.1 percent.

Other states scattered throughout the country, such as Michigan, California, Nevada and Rhode Island, have also posted unemployment rates over 10 percent.


Economists blame America’s housing crisis for much of the South’s severe jobs downturn, a trend that has sharply lowered tax collections just as cities, counties and states in the region wrestle with higher spending for healthcare, unemployment insurance and other services.

Legislators in fiscally conservative North Carolina, a state with a sparkling reputation among credit agencies, are weeks behind in passing a state budget as they scramble to fill a budget gap of more than $4 billion.

“It was the excessive building that precipitated this in Florida, Georgia and, to some extent, the Carolinas,” Diffley said. “The very rapid rise in unemployment is tied to this.”

Eye-popping declines in home construction also hurt building materials firms in southern states such as Florida and Georgia. Manufacturing cutbacks, including those at car plants in Kentucky and Alabama, also hit the region’s employment rolls.

“Traditionally in Alabama not much happens in a recession because not much happened in growth periods,” said economist John Robertson of the Federal Reserve of Atlanta. “In the last decade, there has been an industrial transformation as textiles went offshore and were replaced by auto manufacturing. You have stronger growth in expansions, but you are more cyclical.”

Florida, whose labor officials in the mid-2000s boasted that the fourth-most populous state added jobs at a faster rate than any other big state, is also bedeviled by weak tourism.

Florida’s Orange County, a tourist mecca with theme parks such as Walt Disney World and 112,000 hotel rooms, on Monday reported a 16 percent year-over-year drop in tourism development-tax revenue for fiscal 2009.

That drop is more severe than the falloff in Orange County tourism after the September 11 attacks in 2001 and contrasts with typical tourist-tax revenue increases of 11.1 percent a year.

“Vacationers are fewer, and they are spending less,” Robertson said.

Despite some misgivings about the region’s relatively low level of educated workers, economists generally forecast that the South will recover in line with the rest of the United States.

Florida is the exception, however.

“We are going to lag behind the nation as a whole,” said Sean Snaith, director of the Institute for Economic Competitiveness at the University of Central Florida in Orlando. “Just the challenge of absorbing all the excess (homes) inventory and the credit scarcity will do that.”

Editing by Jane Sutton and Padraic Cassidy

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