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Few U.S. Cities Recoup Jobs as Economy Arises From Recession

Few U.S. Cities Recoup Jobs in Recovery
A worker inspects a vehicle on the production line at the Bayerische Motoren Werke AG (BMW) manufacturing plant in Spartanburg, South Carolina on Jan. 11, 2012. Photographer: Ariana Lindquist/Bloomberg

More than 90 percent of U.S. metropolitan areas have failed to recoup the jobs lost during the recession that ended in 2009, a report found, underscoring the slow pace of recovery by urban economies.

Only 26 of 363 U.S. metropolitan areas have seen employment rebound to pre-recession peaks, according to the report, prepared by forecaster IHS Global Insight and released by the U.S. Conference of Mayors today. Nearly 80 areas aren’t expected to see such a recovery for more than five years.

“It’s very clear that there is a great deal of economic malaise throughout the country,” Los Angeles Mayor Antonio Villaraigosa, a Democrat who is president of the mayors’ group, told reporters in Washington. “Most of our cities will be struggling with their economies for another five years.”

The spotty pace of recovery has left many cities still struggling two-and-a-half years after the end of the recession, which reduced tax collections and forced mayors to fire workers, scuttle public-works projects and raise fees to eliminate deficits. Even with revenue rebounding, local governments have eliminated 533,000 workers since their payrolls peaked in 2008, Labor Department data show.

Rebound Seen

Among cities where payrolls are forecast to rebound to pre-recession peaks by year-end are New Orleans; Burlington, Vermont; Pittsburgh; Madison, Wisconsin; and Dallas, according to the report. Those with the smallest amount of jobs recovered include some regions hit hardest by the housing market’s collapse, such as Reno, Nevada; Tallahassee, Florida; and Santa Rosa, California.

Mesa, Arizona, Mayor Scott Smith, a Republican, said the city is boosting employment, though the report predicts that the metropolitan Phoenix area will have recovered fewer than a third of its lost jobs by year-end.

“We are creating jobs, but not nearly as fast as we need to,” he said in an interview. “But I think the good news is that we’re not getting worse. After three years of uncertainty, it seems we have bottomed out.”

The U.S. mayors said political paralysis in Washington has stymied recovery. They pressed for Congress to approve funding for transportation and avoid deeper cuts to programs that foster urban development, such as Community Development Block Grants.

Unemployment Slides

The national jobless rate fell to 8.5 percent in December, the lowest since February 2009. It is down from 10 percent in October 2009, four months after the 18-month recession ended. The rate was 5 percent at the end of 2007.

“The prospects of doing anything in this Congress are small,” Villaraigosa said. “That doesn’t mean that we can’t keep on knocking on the door and demanding that these people do their jobs.”

Last year, the Democratic president’s proposed $447 billion economic-stimulus plan, including funds to prevent further job cuts by local governments, failed to win enough support in Congress, where officials are focused on curbing the nation’s budget deficit. Congress has also reduced the block grant program by $1 billion, which the mayors’ report estimates may have cost 35,000 possible jobs.

IHS said it anticipates that spending reductions at federal, state and local levels will lower economic growth by half a percentage point in 2012.

Cities Ignored

Columbus, Ohio, Mayor Michael Coleman said he’s frustrated by the failure of Congress to approve transportation bill that could help create jobs in his city.

“We’re being ignored,” he said in an interview. “Congress has jumped ship.”

The report does point to some regional improvement. Cities with economies tied to international trade, transportation and utilities will benefit this year, with those industries expected to create 563,000 jobs in 2012.

In the industrial Midwest, manufacturing is driving employment growth in parts of Michigan and Ohio. Booming energy production is also helping areas such as Pittsburgh, whose employment grew as a result of moves to tap natural gas reserves, according to the report released by the mayors group.

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