Unemployment Rate in Different States - Term Paper Example

?Unemployment Rate in Different s 12/13 ECON 3331 This paper is a study of the current unemployment rates in various states, with a sampling of the comparative statistics of the various regions of the country – industrial North, rural South, high-tech West, etc. What part does the economic downturn of the last three years play in this area, and what factor does industry have to do with joblessness? Or is it simply the normal economic adjustments occasionally required from a capitalitisic society? Also we will look at what part the nation’s defense plays in the budget and whether defense spending affects the United States. I. Introduction At first glance it is very easy to blame the 2008 economic downturn on the likes of people like Bernard Madoff and Federal Reserve Chairman Alan Greenspan. A lot of people even speak of the availability of “subprime” mortgages given to those who might not otherwise qualify for them. The housing bubble then burst, putting millions out of work in the domino theory. Another reason given is the United States fighting the Global War on Terror in two separate countries. Pouring money into two countries for what was deemed unwinnable conflicts struck many as a recipe for economic disaster. Whatever the reason, the entire planet began to suffer the effects of a “downturn” in 2008 that it has yet to recover from. Why and what the differences are between the different states are covered on the following pages. II. Worldwide Impact People cannot even agree what to call this crisis. The official name is a “downturn”, while there are many people, economists included, who call it a recession. There are even those who hint of the word depression, even though politicians and economists alike vehemently deny the nation is in a depression. The memories of bread lines and political losses of 1929 are way too fresh in people’s minds for that term to probably ever be used again. Yet whatever one chooses to call it, this crisis seems to be unlike any felt since the end of World War II. As the table below shows, the economy of several selected countries has suffered greatly. Even those like China which did not go into the negative still endured losses of growth. GDP GROWTH 2008-09 SELECTED REGIONS (WTO) (PERCENTAGE) COUNTRY 2008 2009 USA 0.1 -2.8 EUROPEAN UNION 0.5 -4.0 CHINA 9.6 9.1 JAPAN -1.2 -6.3 DEVELOPED COUNTRIES AVG 0.2 -3.7 DEVELOPING COUNTRIES AVG 5.7 2.1 So it is evident a worldwide financial crisis cannot be blamed on any one man. Also since it has been well touted that in the rest of the world, mortgages are difficult if not impossible to obtain, the housing crisis is not the problem elsewhere. Also since many countries (such as China, Russia, and India) have historically always spent a large portion of their national budget on what Americans term defense, that should not pose a problem internationally either. But this paper is on unemployment in the United States and will therefore be the basis of the remainder of this paper. This introductory piece was just to show that this country has plenty of company in its misery and a Herculean effort will be required to make us feel safer monetarily. Yet it is also true that diversity plays a key in a region’s growth or failure. For instance, the WTO points out that most of the major powers in the European Union (like Germany and France) actually saw growth during the period listed in the table but statistically the entire Union endured losses, largely due to such countries as Ireland and Greece. The same can be said for the fifty states. While the United State’s unemployment rate rose five percentage points from 2007-10 (4.6 to 9.6 per cent), certain states underwent either far less rise in unemployment. For example, between 2008 and 2009, data from the Bureau of Labor Statistics shows some states such as New York, Michigan, and California shot to double digit figures. It is interesting to note that most of the jumps in unemployment were in the so-called industrialized states, while during the same period some of the poorer states like Arkansas and the Dakotas only rose two per cent or less (Izzo). III. US Unemployment Statistics Granted it could also be argued that economic slowdown affected the industrialized states more, as industry shutdowns were felt drastically in those areas. However, certain states and different regions were touched by unemployment in vastly different ways, due to the nature of their economy. For example, tourist dependent Nevada has the highest unemployment in the nation at a staggering 14.1 per cent in the spring of 2010. No economy, no tourists (Robison). Likewise its competitor for the dubious title of highest unemployment, Michigan, also has double digit unemployment rates due largely to the economic woes of the American auto industry (Grand Rapids). The table below lists the five highest and lowest states for unemployment. STATES WITH LOWEST AND HIGHEST UNEMPLOYMENT AND CHANGE SINCE 2007 (Indeed & US DOL) State 2007 2011 Change Nevada 8.0 13.4 +5.4 California 8.4 11.7 +3.3 Michigan 9.6 10.6 +1 Mississippi 7.2 10.6 +3.4 South Carolina 8.4 10.5 +2.1 North Dakota 3.3 3.5 +0.2 Nebraska 3.7 4.2 +0.5 South Dakota 3.5 4.5 +1.0 New Hampshire 4.3 5.3 +1.0 Vermont 5.7 5.5 -0.2 USA AVG 4.6 9.6 +5 So as can be seen by the table, with the exception of Mississippi, the states with heavy industry lost the most. Mississippi can probably argue a lot of its woes were caused by the BP spill although its neighbors did not fare as badly. Also, Nevada’s claim of loss of tourism cannot be proved by equally tourism oriented Vermont, which actually saw a loss in unemployment rates. IV. The Military and the Economy There is another reason the states with double digit unemployment can claim which will only get worse in the coming months. It is a whispered truth but Dwight Eisenhower said it best about the military industrial complex. Nobody wants to think about young peoples’ lives literally running the economy yet it is a sad fact that war is a driving force behind some of our livelihoods. The five states above with the highest unemployment rate are also heavily invested in the military, from giant bases with hundreds of employees to Mississippi with its Naval shipyards to Michigan with its automotive plants. The table below shows the unemployment rate during the height of various recent US conflicts and immediately after (US DOL [2]). US Unemployment Rate During and After Selected Conflicts Conflict Rate Change Korea (1948) 3.8 Korea (1954) 5.5 +1.7 Vietnam (1969) 3.5 Vietnam (1975) 7.5 +4.0 Gulf War (1989) 5.3 Gulf War (1992) 7.5 +2.2 GWOT (2000) 4.0 GWOT (2010) 9.6 +5.6 V. Conclusion So it is not necessarily the Defense budget that arbitrarily drives the American economy but the trickle-down theory that furnishes many of the country’s workers with employment. With the Army Times headlining the loss of close to 150,000 troops in the coming months and the press heralding the current withdrawal of forces from Iraq, it stands to reason the economy will only get worse. The rumor mill has the actual US unemployment average above ten per cent and it may get that way before long. References World Trade Organization (WTO), “Trade growth to ease in 2011 but despite 2010 record surge, crisis hangover persists”, 7 April 2011, Web http://www.wto.org/english/news_e/pres11_e/pr628_e.htm Izzo, Phil, The Wall Street Journal Blogs, “Labor Market Pain Spreads: Unemployment Rates, by State”, 18 September 2009, Web, http://blogs.wsj.com/economics/2009/09/18/labor-market-pain-spreads-unemployment-rates-by-state/. Robison, Jennifer, LAS VEGAS REVIEW-JOURNAL, “Nevada leads the nation in unemployment”, June 18, 2010, http://www.lvrj.com/business/nevada-_x92-s-unemployment-rate-tops-in-nation-96647594.html. The Grand Rapids Press, Michigan unemployment rate highest in nearly 26 years, expected to get worse even if economy improves, June 17, 2009, http://www.mlive.com/business/index.ssf/2009/06/michigan_unemployment_rate_hig.html. Indeed.com, UNEMPLOYMENT RATE PER STATE - NOVEMBER 2007, accessed 13 December 2011, http://www.indeed.com/forum/job/legal-assistant/UNEMPLOYMENT-RATE-PER-STATE-NOVEMBER-2007/t108589. US DOL, Bureau of Labor Statistics, Local Area Unemployment Statistics, accessed 13 December 2011, http://www.bls.gov/web/laus/lauhsthl.htm. US DOL, Bureau of Labor Statistics, Annual average unemployment rate, civilian labor force 16 years and over (percent), accessed 13 December 2011, http://www.bls.gov/cps/prev_yrs.htm. . Read More