Guess where the jobs are coming back? The Rust Belt

WASHINGTON — The economic recovery may have stalled in parts of the South and West hit hard by the housing bubble, but Rust Belt states, buoyed by a manufacturing comeback, have seen a steady decline in their jobless rates over the last year.

Of the 10 states where unemployment rates dipped the most from May 2010 to May 2011, Rust Belt states — Michigan, Indiana, Ohio, Pennsylvania and Illinois — account for half, according to Labor Department figures.

Locally, metropolitan areas in the five Rust Belt states accounted for 30 of the top 34 declines in regional unemployment rates since last year, as well.

While these industrial Midwest states and towns have made the biggest strides in reducing their jobless rates, their progress is limited. Many had some of the nation's highest jobless rates during the recession, so their declines reflect not only more people finding jobs, but also the labor-market loss of older manufacturing workers who gave up the job search.

While the national unemployment rate was 9.1 percent in May, jobless rates vary by region and state. While some areas flourish, others continue to falter.

The economy is strongest and unemployment is lowest in the nation's central core, stretching north from Texas and Oklahoma, where the oil and gas industries are thriving, all the way up through Nebraska, North Dakota and South Dakota, which are benefiting from high farm commodity prices and low population growth, which keeps unemployment down.

But among the Gulf of Mexico states of Louisiana, Alabama and Mississippi, unemployment rates either have risen or barely moved since last year. And in California, 11 metro areas have unemployment rates of 15 percent or more, including El Centro, which has the nation's highest jobless rate, 27.9 percent.

From June 2009, when the recession officially ended, to May of this year, 29 states and the District of Columbia saw their non-farm payrolls increase, while 20 others declined. West Virginia's numbers didn't change.

Nevada, which had nation's highest state unemployment rate in May 2010 at 14.9 percent, sliced its jobless rate by a national-best 2.8 percentage points over the last year. But it still owns the nation's highest state unemployment rate at 12.1 percent.

A recent national survey of 18,000 employers by the workforce consulting company ManpowerGroup found that 20 percent plan to hire in the third quarter of this year, while only 8 percent expect to cut jobs.

But a whopping 69 percent expect to make no changes at all in their payrolls, suggesting "a level of caution not seen among employers in the last 30 years of data," said a statement by Jonas Prising, ManpowerGroup president of the Americas. "This fact, along with many clouds still on the economic horizon, may explain the tepid labor market growth we have seen so far."

Ironically, it's the long-troubled manufacturing sector that's fueling the nation's anemic economic recovery. For years, industrial decline and globalization eliminated thousands of well-paying manufacturing jobs in the industrial Midwest. The recession doubled the pain as demand for manufactured goods plummeted, driving even more people out of work.

But as America's auto industry rebounds and export demand for industrial and agricultural equipment remains strong, Rust Belt states are slowly coming back.

"That's a huge change from '06, '07 and '08, when the automobile industry was in big trouble and shrinking," said Steven Cochrane, the managing director of Moody's Analytics in West Chester, Pa.

Cochrane said the excess of factory and building space, a skilled labor force and lower labor costs due to union concessions had made the Rust Belt attractive to companies looking to expand. "It's no longer a no-brainer to look elsewhere," he said.

In Elkhart, Ind., where production of recreational vehicles accounts for about half of the area's economy, unemployment spiked at 18.9 percent in March 2009.

But over the last year, RV manufacturers and their suppliers began adding workers and hours in Elkhart, which posted the nation's largest one-year decline in its area jobless rate, going from 14.1 percent in April 2010 to 10.1 percent in April 2011.

An electric car manufacturer from Norway, THINK, opened its North American assembly plant in Elkhart last year and plans to build 2,500 vehicles this year. The plant, in a former RV parts factory that went out of business, has more than 100 employees and is expected to create more than 400 area jobs by 2013.

"Elkhart hasn't fully recovered by any stretch, but the rate of change" is promising, said Jim Diffley, senior director and chief regional economist at IHS Global Insight in Philadelphia.

In Oklahoma and Texas, the booming oil and gas industry has helped insulate residents from the full wrath of the Great Recession.

High oil prices and high profits are fueling new drilling projects around the world, and the search for talent is hot and heavy., an oil and gas industry job-search website, saw nearly 12,000 new vacant job postings in May, up 37 percent from May 2010. Online applications likewise have spiked, with nearly 97,000 online applications in May, up 25 percent from May of last year.

Engineers are the most in-demand job, accounting for nearly half of online postings, said company spokesman Joe Jones. He said the vast majority of job listings were in Texas.

But the neighboring Gulf States of Louisiana, Alabama and Mississippi continue to struggle. Hurricane Katrina, the BP oil spill and a recent round of deadly tornadoes have sapped much of the economy's energy. The growth in Louisiana's jobless rate led all states, increasing nearly a full percentage point to 8.2 percent since May 2010.

Alabama's unemployment is up to 9.6 percent as the number of jobless workers jumped from nearly 200,000 in April to roughly 207,000 in May. The increase reflects more people looking for jobs and the impact of the tornadoes that ravaged the state on April 27.

A study by the Center for Business and Economic Research at the University of Alabama estimated that the tornadoes would eliminate anywhere from 5,600 to more than 13,000 jobs, resulting in a statewide jobless-rate hike of two-tenths to half a percentage point. That's bad news for Wilcox and Perry counties especially, which have Alabama's highest unemployment rates, at 21.7 percent and 17.3 percent, respectively.


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