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Regional Variations in Employment and Unemployment During 1970-82

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Regional Variations in Employment and Unemployment During 1970-82 Regional variations in employment and unemployment during 1970-82 Even when the jobless rate was relatively low, 5.8 percent in 1979, wide differences in rates for local areas existed, ranging from a high of 40 percent to a low of less than 1 percent RICHARD J. ROSEN National economic events often mask developments at the industry level, one is provided insight into which sectors of State and local area level which together make up national the local economy are expanding and which are stable or changes. The United States is actually composed of many contracting. Growth rates in area employment can be com- distinct economic regions with their own industrial concen- pared, and the relative concentration of industries can be trations. This regional specialization results in unequal growth analyzed . rates among different areas of the country and explains why As in the case of national unemployment rates, State and regions may be more (or less) susceptible to short-term local unemployment rates represent the number of unem- cyclical fluctuations . ployed persons expressed as a percentage of the resident This article focuses on employment and unemployment civilian labor force . The civilian labor force, in turn, is the developments at the subnational level, using data from two sum of total civilian employment and the number of un- Bureau of Labor Statistics' Federal-State cooperative pro- employed . Consequently, the unemployment rate is affected grams . The Local Area Unemployment Statistics Program by changes in the size of the labor force and in the number (LAUS) provides State and county unemployment rates, and of unemployed . The unemployed can be categorized as fol- the Current Employment Statistics Program (CES) provides lows: (1) job losers; (2) job leavers; (3) reentrants; and (4) new employment estimates by industry and State. The data are entrants. analyzed over two periods-1970 to 1980, to provide a Job losers are persons whose employment ended invo- background perspective-and 1979 to 1982, to show recent luntarily and who immediately began looking for work, trends . including those on layoff. Job leavers are persons who quit or otherwise terminated their employment voluntarily and Comparison measures immediately began looking for work. Reentrants are persons Measures of employment and unemployment are key ba- who previously worked at a full-time job lasting 2 weeks rometers of the economic well-being of an area. The State or longer or had looked for work before dropping out of the employment figures from the Current Employment Statistics labor force. New entrants are persons who never worked at program provide a count of the number of nonagricultural a full-time job lasting 2 weeks or longer. jobs. When changes in employment are analyzed at the The following tabulation shows unemployment among these components during a prerecession year, 1979, and a recession year, 1982. The percent change between the 2 Richard J. Rosen is an economist in the Office of Employment and Un- employment Statistics, Bureau of Labor Statistics . Special editorial assis- years is also shown. Job losers, both those on layoff and tance was provided by the Monthly Labor Review staff. other terminations, increased dramatically-more than 100 38 percent . By contrast, the number of job leavers was rela- would have little impact in Idaho, while a drop in the de- tively stable, and the number of new entrants and reentrants mand for lumber would not materially affect Michigan . rose by about a third, as seen below (numbers in thousands) : The ability of a State or region to adapt to changes in demand depends on many factors, including the rate of Percent population and labor force growth, the degree of diversi- 1979 1982 change fication of the region's industrial structure, the concentration Total . 6,137 10,678 74.0 of "secondary" or "feeder" industries dependent on "pri- industries, and whether industries affected by changes Job losers . 2,653 6 .268 137 .9 mary" Layoffs . 851 2,127 153 .5 in demand have significant multiplier effects . Other . 1,784 4,141 132 .1 California and Oregon provide a good comparison of the effect of industry diversification . Each State accounts for Job leavers . 880 840 -4 .5 Nation's employment in the Reentrants . 1,806 2,384 32 .0 roughly the same share of the New entrants . 817 1,185 45 .0 lumber and wood products industry-about 10 percent . Yet, changes in demand for the products of the industry affects Thus, it is changes in the number of job losers which the overall employment situation in California far less than account for most of the rise in unemployment during recent they do in Oregon ; less than I percent of California's em- as well as historic economic downturns. Movements in this ployment is in this industry, compared with nearly 8 percent group are the result of an employer terminating a worker of Oregon's. This was the case in 1979-82, when the cur- (as opposed to the more voluntary act of leaving or deciding tailment of construction resulted in a sharp decline in de- to enter or reenter the labor market) . Therefore, areas ex- mand for lumber . Both States began the period with nearly periencing rising joblessness during recent recessions should identical unemployment rates (6 .2 percent in California and coincide with areas having employment losses. 6.4 percent in Oregon in July 1979) . However, by February 1981, Oregon's jobless rate topped 10 percent, while Cal- Regional specialization ifornia's stood at 8 percent . It was not until mid-1982, when Changes in aggregate demand, such as the recent decline employment dropped in a broad range of industries-such in sales of automobiles or an increasing need for domestic as construction, numerous manufacturing industries (nota- energy supplies, do not impact all regions in the same man- bly, aircraft), transportation, and public utilities, trade and ner. Industries or particular types of natural resources are government-that California's rate rose above 10 percent . often concentrated in particular areas . For example, the Ohio provides a good example of the effect of substantial contiguous North Central States of Michigan, Indiana, Ohio, "feeder" industries on State employment changes . While and Wisconsin account for about 14 percent of the Nation's it has approximately 5 percent of all nonfarm jobs in the nonagricultural employment, but 62 percent of employment Nation, it accounts for 12 percent of all motor vehicle man- in motor vehicle manufacturing . Michigan alone has nearly ufacturing jobs . However, Ohio also accounts for approx- 40 percent of motor vehicle manufacturing jobs-10 times imately 10 percent of jobs in several related industries (primary its share of all jobs in the nonfarm economy . By contrast, and fabricated metals), and nearly 25 percent of employment six contiguous States (Texas, Oklahoma, Louisiana, New in tire and rubber manufacturing (another industry largely Mexico, Colorado, and Wyoming) account for more than dependent on automobile production) . Thus, a change in three-fourths of U .S . employment in oil and gas extraction, auto production has an impact on Ohio's employment far but only 11 percent of all nonfarm jobs . beyond what would be expected by looking at motor vehicle Table 1 shows the regional concentration of these indus- manufacturing alone . When the slump in domestic auto- tries, and two other "key" industries which are highly con- mobile production began in the second half of 1979, the centrated-lumber and textiles. The table's last column shows unemployment rate in Ohio rose rapidly from 6 .6 percent the "concentration ratio" of a State ; the ratio is derived by in July 1979 to 10.3 percent a year later. As the slump dividing the State's share of national employment in an continued, the State's jobless rate rose further-to 12 .2 industry by its share of total nonfarm jobs . For example, percent in mid-1982 . textile employment in North Carolina accounts for 28.6 State joblessness percent of nationwide textile employment and 2.6 percent County and of all U .S. nonfarm jobs. Thus, the relative concentration During 1979, the national average unemployment rate of textile jobs is 11 .0 (28 .6 - 2.6 = 11 .0) . This means was 5 .8 percent, but county unemployment rates ranged that North Carolina has I 1 times more jobs in textiles than from a high of 40 percent in Menominee County, Wisconsin it would have if its textile employment matched its share to less than 1 percent in Sioux County, Nebraska . Even of total nonfarm employment . during a period of relatively low unemployment, 89 counties Regional specialization in terms of industries causes spe- had rates of 12 percent or more, and 107 had rates between cific changes in demand to affect geographic areas quite 10 and 11 .9 percent . (See chart 1 .) These areas are apt to differently . For example, a decline in textile employment have certain "structural" problems retarding economic 39 MONTHLY LABOR REVIEW February 1984 " Regional Employment and Unemployment Table 1 . Examples of key industry employment impact,' 1979 Key industry employment as a State Key industry Total nonagricultural percent of: nonagricultural Key i n d us t ry an d State employment employment as Concentr ation (in thousands) em plo yment ratio (in thousands) State total U.S . industry percent of U. S. total total Motor vehicles : Michigan . 392.7 3,637.1 10 .8 39 .7 4.0 9.9 Indiana . 64 .6 2,236.3 2.9 6.5 2.5 2.6 Ohio . 120.1 4,484.7 2.7 12 .1 5.0 2.4 Wisconsin . 33 .4 1,960.2 1 .7 3.4 2.2 1 .5 Lumber and wood products : California .
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