State unemployment trends — spinning our wheels and spinning the data

There is a striking set of graphics in yesterday’s New York Times that explores “The Nation’s Unemployment Landscape.” A series of three maps of the United States shows state level unemployment rates when the recession began in Dec. 2007, when it ended (according to the Business Cycle Dating Committee, National Bureau of Economic Research) in June 2009, and the most recent state unemployment data, showing state unemployment rates in Aug. 2011. Accompanying the maps are a series of line graphs showing the unemployment rates in the 11 states with the highest current unemployment rates (from Illinois’ 9.9 percent unemployment rate to Nevada’s crippling 13.4 percent unemployment rate).

There are several noteworthy stories to highlight in these maps and graphs, and some important caveats that may not be readily apparent from these visual aids. The first story is that for most states, there has been very little change – positive or negative, since the end of the recession over two years ago. This simple fact alone highlights the fact that the “recovery” has been very weak, and from the perspective of working families, essentially non-existent. As one would expect given that national unemployment rates have improved very little since the end of the recession (from 9.5 percent in June 2009 to 9.1 percent in Aug. 2011), some states are doing slightly better, others slightly worse than in June 2009.

Of the 11 states with the highest current unemployment rates, Michigan alone has a generally positive story to tell (and even that story comes with a cautionary footnote).  Since June 2009, Michigan’s unemployment rate has fallen from 13.8 percent to 11.2 percent (still two percentage points above the national average). What accounts for this relatively positive news for Michigan, transitioning from being the state hardest hit by the recession to a state experiencing a relatively successful recovery? The successful bailout of the auto industry by the Obama administration and specifically, the turnaround by General Motors, which deserves considerable credit for boosting the Michigan economy while showing that government intervention, and even dabbling in what could properly be considered industrial policy, actually works to improve the well-being of working Americans.

Unfortunately, even Michigan’s story is tainted by a recent, though widespread upward blip in unemployment rates. Of the 11 states highlighted in the Times piece, eight show a clear recent increase, in most cases erasing much of the progress made since the end of the recession. In approximately half of the 11 states, unemployment rates in Aug. 2011 were clearly higher than they had been in June 2009. Among the 11 states, only Michigan’s rate is clearly an improvement over the June 2009 rate (the balance showing little change).

The focus on unemployment rates rather than job growth in the Times piece is a wise one, discouraging political grandstanding based on selective cherry-picking of economic data. Texas Governor Rick Perry has been outspoken, touting the so-called Texas Miracle.  State unemployment data show one way in which this mythical economic tale is misleading. In Aug. 2011, Texas’ unemployment rate of 8.5 percent stands nearly double the Dec. 2007 rate of 4.4 percent, and also above the June 2009 rate of 7.7 percent. While it’s true that over this time period the Texas economy has added many new jobs, the rate of job growth has only just begun to keep up with the growth in population over this time. The Texas based Center on Public Policy Priorities notes that the Aug. 2011 unemployment rate of 8.5 percent marks the 24th consecutive month of unemployment at 8 percent or higher. Moreover, they provide data showing a jobs shortfall – the number of jobs needed to return to pre-recession unemployment rates – of over 633,000.

The other dimension lacking from the story of job creation concerns the quality of jobs created, a topic on which I’ll focus greater attention in my next post.

Click figure to enlarge


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