High Unemployment Could Plague Midwest for 10 Years
June 22, 2011 -- With experts predicting it may take as long as a decade to rebuild the job base in key pockets of the U.S., it appears increasingly likely that the economy will be the number one issue in the 2012 election.
Swing states like Michigan and Florida are still plagued by high unemployment, so the trend of recovery over the next year could be a make-or-break statistic for the president's re-election.
A U.S. Metro Economies Report released this week by the U.S. Conference of Mayors had bleak predictions for 48 metro areas in which the report said it will take more than 10 years for unemployment to fall to pre-recession levels. Six of those metro areas are from Arizona and California, which were hit hard by the collapse of the housing market in 2008.
Eighteen of these metro areas are in the Rust Belt states of Ohio, Michigan and Indiana whose economies are largely based on manufacturing and were slammed by the decline of the auto industry during the 2008-2009 recession.
"We are anticipating a very slow return to full employment," said Jim Diffley, the chief regional economist at IHS Global Insight, who prepared the report.
Not all economists agree with Diffley's dismal predictions.
"I think clearly those numbers are pretty much overblown," said Christopher Thornburg, a principal economist with Beacon Economics. "This idea that unemployment is going to stay high is just not right."
Thornburg said the bleak predictions are unrealistic because if there are no jobs in an area, people will either move or drop out of the labor force.
"That they can see out to what's going to happen in 10 years is just lying to everybody in sight because things change. There have been multiple cities that have been sort of declared dead that have come back to life," he said.
Florida, which carries 29 electoral votes, had the fourth-highest unemployment rate in the country in May 2011 at 10.6 percent. Only Nevada, California and Rhode Island had higher rates, according the Bureau of Labor Statistics. Michigan, with 17 electoral votes up for grabs, had 10.3 percent unemployment.
"Certainly [unemployment rates] will affect the elections," said Herb Asher, a political science professor at the Ohio State University. "But the key question is not whether these metropolitan areas have gotten back to where they are in the past. The key question is the direction their local economies are going."
Asher said unemployment numbers can be a guide to how much improvement is being made.
"People will be watching the unemployment rate and whether it is above or below 8 percent," he said. "If employment is above that it will reflect badly on the president."
A dip below that level would be a symbolic and would likely shift people's perceptions, Asher added.
"Everybody knows that unemployment cannot be at 5 percent by next year. If it gets down to 7 percent that's still too high, but you will probably have more people perceiving that we've turned the corner," he said.
The national unemployment rate is currently 9.1 percent. The metro economies report predicted it would not fall below 8 percent until 2013.
Steve Herwat, the deputy mayor of operations in Toledo, Ohio, said he does not agree with the report's predictions that Toledo will be one of the slowest metro areas to reboot its labor market.
