June 5, 2012 |
Over the last six months, reports of the faltering U.S.
jobs market have inundated the media. Last Friday's bleak numbers showed
unemployment ticking up a tenth of a point, from 8.1 percent to 8.2
percent. But largely absent from the discussion are the American cities
where the jobs crisis is nothing new -- areas that have been
experiencing an ongoing unemployment nightmare since well before the
financial crash.
We can call them America’s "
dead zones"
—metropolitan and micropolitan areas where the unemployment rate has
been at least 2 percentage points higher than the national average for
five, 10 or 20 years.
Conventional wisdom assumes that economically distressed areas exist
only in inner-city slums or rural backwaters. But dead zones, although
plagued by persistent high unemployment, rarely fit those stereotypes.
Rather, they come in all shapes and sizes; these cities are not
necessarily crime-ridden or poverty-stricken. In fact, many dead zones
have median incomes at or even above the national average. Instead, they
share sustained, and in many cases are begrudgingly resigned to, high
unemployment rates regardless of the national business cycle.
In general, between 25-35 percent of their residents’ incomes are
provided by government aid, compared to 17 percent nationwide. Between
25-40 percent live on $30,000 a year or less. The workforce in most dead
zones has a low education level, with more than 50 percent possessing
just a high-school degree or less. Most jobs in dead zones are in
low-end service industries, especially retail. Such jobs offer few
prospects for upward mobility or skill enhancement.
A few dead zones are on the right track, while others are clearly headed
down the wrong track. Shining a spotlight on five specific cases gives
us clues to the scope of the predicament, and also potential
solutions. We'll compare Henderson, North Carolina; Seneca, South
Carolina; and Kokomo, Indiana with dead zones that seem doomed to
further stagnation – Hanford, California and Natchez, Mississippi.
Inside Jobless America
1. Henderson, North Carolina
For more than 20 years, Henderson, population 43,000, has watched
jobs vanish. The tobacco, cotton and textile industries once made it a
thriving community, but for the last few decades the city’s main
industries have been in distributional warehousing, low-end
manufacturing and retail trade. Henderson’s median income has plunged
by 9 percent over the past decade to stand at $45,000, the national
average. Because of its poorly educated work force, Henderson sends few
workers to nearby higher-education institutions like the University of
North Carolina and Duke, or to Research Triangle Park, the high-tech hub
located between Chapel Hill, Durham and Raleigh.
2. Natchez, Mississippi
Natchez has a lot in common with Henderson. Hugging the border with
Louisiana along the Mississippi River, it was once a center for cotton,
trade and textiles. Old South wealth settled in the area, and even
today more than 200 antebellum structures remain standing. But today's
Natchez has experienced high joblessness levels for 20 years. The 49,000
residents have a median income of $29,000, which is 11 percent less
than a decade ago. In 2003, the already struggling city suffered a
major loss when three companies shut down: International Paper Plant,
Armstrong Tire and Johns Manville, a construction-supplies producer.
Natchez now promotes itself as a retirement community and relies mainly
on tourism, medical and retail industries, as well as a local casino and
prisons.
3. Hanford, California
With 148,000 permanent residents, Hanford has had high unemployment
for over two decades. The city’s median income is right at the national
average, about the same as it was 10 years ago. Here, the primary
employers are prisons, seasonal agriculture, the Lemoore Naval Base, a
small Indian casino (located about 10 miles away), and two large firms:
Del Monte (a canning plant) and Marquez Brothers (a cheese producer).
As with other dead zones in the Southwest, Hanford’s economy depends on
migrant workers. One area of strength is that Hanford provides the only
major shopping center within 40 miles. Here again, however, low-paying
retail work is the norm, with few opportunities for upward mobility.
4. Seneca, South Carolina
This very rural community of 71,000 residents has seen high levels of
unemployment over the last decade. Its median household income is
$41,000, down 13 percent from 10 years ago. Similar to Natchez and
Henderson, Seneca was originally a textile town. Here, the influence of
the textile industry was considerable—residents relied on the mills for
everything from running schools to maintaining stores. The
construction of Hartwell Dam in 1962 created two artificial lakes, which
have made the area a self-described haven for retirees and recreational
tourism. These lakes also led to the construction of the Oconee Nuclear
Station in 1974. Small to midsize factories producing automotive and
industrial parts comprise the rest of the local economy.
5. Kokomo, Indiana
The 98,000 people who live in Kokomo have historically relied on the
automotive industry to provide good jobs. Chrysler operated four plants,
and several suppliers of auto parts and materials also had factories in
the area. For many years, young people who graduated high school could
look forward to jobs at these local plants. So they had little incentive
to pursue higher education, even though the city boasts four
universities (Indiana University Kokomo, Purdue School of Technology,
Indiana Wesleyan University, and Ivy Tech Community College). Though
Kokomo’s median income is right around the national average, it is down
16 percent from a decade earlier. The city’s workforce was hit hard by
the recession of 2008 and the subsequent Chrysler plant closings. Over
the last five-plus years, unemployment has climbed steadily.
These cities illustrate the economic diversity of the over 200 dead
zones in the U.S. But they also suggest that distressed areas have more
similarities than differences. For example, many dead zones present
themselves as destinations for tourists and retirees, and like Natchez,
hope to create an image of this sector as a “renewable industry.” But
tourism remains extremely sensitive to changes in tastes and
macroeconomic conditions (as is the case in Las Vegas, where high
unemployment has recently become the norm). It also tends to create
low-skilled service jobs that offer almost no prospect for upward
mobility.
Dead zones are often home to military bases, casinos and
prisons—industries that demand very little skilled labor, and like
retail and government work, offer few opportunities for workforce
advancement and job growth. The single industry commonly found in dead
zones that provides opportunities for advancement is medical services.
But even here, the jobs in greatest demand tend to be in lower-paying
occupations.
The overwhelming majority of dead zones have been economically
distressed for decades. But in the cases of Henderson, Kokomo and
Seneca, they have started to work with economic development
organizations on programs that focus on improving local job prospects.
What Goes Right
Henderson, for example, created Triangle Park North in 2005 with three
surrounding counties. This initiative includes sharing the costs of
developing and marketing industrial parks in each of the counties. The
hope is to provide manufacturing services for the nearby Research
Triangle. The effort has begun to pay off, as a solar-panel
manufacturer and an EMS-vehicle firm have recently announced plans to
move to the area.
Dead zones differ in their approach to education and workforce training.
In Kokomo, the days of 24-hour production and 15,000-plant workers are
gone. A new business model has emerged that focuses on encouraging
advanced, specialized manufacturers to relocate to the area. To that
end, the Greater Kokomo Economic Development Alliance started working
with local colleges and technical schools to retrain workers. This
initiative has led to record enrollments, supporting the area’s
education industry while simultaneously creating a more skilled
workforce.
Seneca faces a very different challenge: a general lack of
infrastructure. Here the Oconee County Economic Development Group has
tried to attract businesses by highlighting its strengths: a stable
local workforce and very low costs. In addition, a program was started
that reaches out to students as early as eighth grade to begin career
planning. Older workers who have recently lost their jobs are also
attending classes at the local community college and enrolling in
retraining programs in new fields.
Rodney Hollingsworth was laid off after more than 30 years of working in
the construction industry in the Seneca area. With construction jobs
scare, he decided to return to school and applied to the Goodwill and
Tri-County certified nurse aide (CNA) program. After completing 92 hours
of training plus an additional CPR class, and passing the CNA state
certification exam, he was offered an interview for a part-time job by
the head nurse at Clemson Downs Retirement Center. Having already cared
for both his father and mother-in-law, who had recently succumbed to
cancer, he knew this was the career path for him. Within three months,
he was working full-time.
Rodney’s story is an example of local businesses and non-profits
partnering up to tailor educational programs for specific needs. In
Seneca, the plant manager for auto-parts manufacturer BorgWarner has
been working with the superintendent of public schools as well as the
directors of the local technical colleges to design programs that will
enhance students’ employment prospects in advanced manufacturing. In
fact, Seneca was recently honored at South Carolina's 20th Annual
Industry Appreciation Week for its business-government partnerships.
In Kokomo, Chrysler recently announced a $1 billion investment plan to
make the city the center for manufacturing certain car parts. The city
has partnered with local colleges and even high-school career centers to
ensure a steady supply of qualified electrical engineers and other
technical workers.
In Henderson, when a new company moves to the area, the Henderson-Vance
County Economic Development Commission schedules a meeting with
representatives from local community colleges to determine what programs
might be needed to support the enterprise. At Vance Granville Community
College, administrators work on instituting and implementing
customizable training services for the company’s workforce; they also
created a new five-year program in which students can earn a high-school
degree and an associate degree simultaneously. As a result, high
school drop-out rates have fallen and new bio-tech labs have been
established.
Business-government partnerships are only one part of what needs to be
done to reduce the staggering number of dead zones. In Kokomo, even
with a new business model, the economy remains heavily dependent on
automotive manufacturing, so city leaders are now focusing on
diversifying production to other industries; recently they have
attracted a cabinet-making firm from Kansas.
Moreover, the city has created a commercial incubator, Inventrek, to
nurture small businesses. After the automotive-electronics firm Delphi
laid off 300 of its lowest-skilled engineers in Kokomo in 2008, the
Economic Development Alliance partnered with a venture-capital firm,
Purdue and Indiana Universities, Inventrek and the local community to
create an engineering contract company, Neupath, which farms these
workers out to different projects. Funded in part by a WIRED (Workforce
Innovation in Regional Economic Development) grant from the U.S.
Department of Labor, this new company enables qualified and experienced
engineers to continue working in their fields without having to
relocate. Not only does Neupath provide work for recently laid-off
laborers, it also serves as a database for future employers looking to
hire full-time. Kokomo’s mayor, Greg Goodnight, recently said,
"Private-public partnerships are what move this community forward."
What Goes Wrong
Unfortunately, Henderson, Kokomo and Seneca are the exception rather
than the rule among dead zones. Too many places, from Atlantic City to
Branson, Missouri rely heavily on tourism as their major industry. Some
places, like Hanford, still have not put in place a proactive
economic-development program. Too many others have weak or nonexistent
chambers of commerce (they mostly serve as directories for local
businesses) and political leaders who lack the wherewithal to develop
and promote programs to reduce unemployment. Other cities, such as
Natchez, lack developmental resources—their local economic-development
group, Natchez Inc., has only three staff members, all hired in 2010.
They have had some success, attracting businesses like Elevance
Renewable Sciences and InterSteel, but they have failed to put in place a
comprehensive vision for Natchez’s future. They are now trying to
promote industries as varied as tourism, forestry and chemical
manufacturing.
Developmental initiatives take time to plan, implement and realize
results. It is unlikely that outside resources—particularly from the
federal government—will be available to boost employment in the near
future. As evidenced by Kokomo and Seneca, economic-development
programs can have a major impact. Both areas have seen significant
reductions in unemployment since 2009 when they implemented such
programs: from 14.7 percent to 9.9 percent in 2011 in Kokomo, and from
13.4 percent to 10.2 percent over the same time period in Seneca.
Natchez and Henderson, on the other hand, have had proactive initiatives
in place for a year and have not yet seen significant changes.
Hanford, where the jobless rate sits at 16 percent, clearly shows that
when no initiatives are taken, unemployment will remain high.
All dead zones, however, still face large obstacles. In Kokomo’s case,
nothing could have prepared it for the mass layoffs of 2008-'09, nor
could anything have saved it short of a full-fledged government bailout
of Chrysler. But WIRED grants, plus local commitments, can make a
difference. It remains the case, however, that state and federal aid is
often both too slow and too scattered, minimizing its impact. Thus the
onus for action falls to the local level, precisely where the fewest
resources are available. Initiatives such as the workforce-retraining
programs in Seneca and Henderson provide one potential model. Proactive
business-government partnerships, education and training programs geared
to specific labor force needs, and diversifying local economies hold
the key to an America free of dead zones.
Louis A. Ferleger is a
professor of history and director of the graduate program at Boston
University. Jacob M. Magid is completing his master's degree in
economics at Boston University.
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