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  • Glaeser on High Unemployment and the 'Flo-Mi-Ca Recession'

    Edward Glaeser , economics professor at Harvard, points out that of the 65 US metropolitan areas with unemployment above 12%, 39 are in Michigan, Florida, or California. Those three states may seem to have little in common, but, as Glaeser writes at the New York Times Economix Blo g, their current economic struggle may be a "hangover of past success and a reflection of an abundance of people relative to economic activity." The story of Michigan has been told frequently. Big boom for the first half of the Twentieth Century with the rise of the auto industry. Big decline later in the Twentieth Century as factories moved elsewhere, leaving large cities with fewer well paying jobs. Glaeser: California and Florida experienced bigger booms than Michigan ever did, but for different reasons. Between 1940 and 1990, California’s population increased by 330 percent, while the United States population grew by less than 100 percent. Florida’s population was 4.95 million in 1940 and is expected to be 18.77 million in 2010, a 279 percent increase. Some areas in California, like San Francisco, are among the most productive in the world, but other areas in both states are “ consumer cities ” that attract people primarily by providing a pleasant climate or a high quality of life. Florida also has some metropolitan areas that follow the recent Sun Belt pattern of attracting people by building abundant, inexpensive housing. The consumer city works well if the area attracts well-educated, entrepreneurial people who make the local economy hum and protect it from extreme unemployment. But without those educated entrepreneurs, amenity-based places can end up with a lot of people relative to economic activity, just like the Rust Belt. Read A Tale of Three States here .

  • California Nightmare: The Golden State Budget and Unemployment Struggles

    The Guardian's Paul Harris looks at California's predicament--climbing unemployment that is already the worst in 7 decades, a teetering state budget, huge cuts in education and health care--and asks whether the Golden State might be America's first failed state. Harris writes: Some of the state's leading intellectuals believe this collapse is a disaster that will harm Californians for years to come. "It will take a while for this self-destructive behaviour to do its worst damage," says Robert Hass, a professor at Berkeley and a former US poet laureate, whose work has often been suffused with the imagery of the Californian way of life. Now, incredibly, California, which has been a natural target for immigration throughout its history, is losing people. Between 2004 and 2008, half a million residents upped sticks and headed elsewhere. By 2010, California could lose a congressman because its population will have fallen so much – an astonishing prospect for a state that is currently the biggest single political entity in America. Neighbouring Nevada has launched a mocking campaign to entice businesses away, portraying Californian politicians as monkeys, and with a tag-line jingle that runs: "Kiss your assets goodbye!" You know you have a problem when Nevada – famed for nothing more than Las Vegas, casinos and desert – is laughing at you. This matters, too. Much has been made globally of the problems of Ireland and Iceland. Yet California dwarfs both. It is the eighth largest economy in the world, with a population of 37 million. If it was an independent country it would be in the G8. And if it were a company, it would likely be declared bankrupt. That prospect might surprise many, but it does not come as news to Tuua, as she glances nervously into the warming sky, hoping her parents will not have to wait in the car through the heat of the day just to see a doctor. "It is so depressing. They both worked hard all their lives in this state and this is where they have ended up. It should not have to be this way," she says. The article is not all doom and gloom. Some think the economic downturn could force California to become a leader in sustainable communities, and with its history as an innovation center, this is not hard to imagine. Read Will California become America's first failed state? here .

  • Hard-Hit Half Dozen

    Kai Fallon and Kathryn Edwards of the Economic Policy Institute point out that there are six states that are among the top 10 in unemployment, percentage point change in unemployment since 2007, and job loss since 2007. The hard-hit half dozen: California, Indiana, Michigan, North Carolina, Nevada, and Oregon. California, Indiana, Michigan, Nevada, North Carolina, and Oregon. A common theme in many of these states is that manufacturing represents a large part of the state economy. Before the recession began, four of these states (Indiana, Michigan, North Carolina, and Oregon) were well above the national average in terms of manufacturing jobs. As that industry declined, these state economies were unable to shift gears quickly enough and move workers to other jobs. As evidence of this, in these four states manufacturing jobs made up 14.6% of the total jobs, yet represent 41.2% of the total jobs lost since the recession began. Look at EPI's comparison of unemployment in these six states to the national average: Read the full post from Fallon and Edwards here .