Many States Are Playing Catch-Up in Jobs Recovery

Subtract Texas’ hiring gains, and the U.S. is still down from 2008

Kevin Yearout has added about 80 jobs at his Albuquerque contracting company since July 2013. That still leaves him with fewer than half the 750 workers he employed in 2009. “The economy went very south very quickly,” says the co-owner of Yearout Mechanical. “It has been a very slow climb back.”

The U.S. economy achieved a milestone in May with employment exceeding the all-time high in January 2008. Yet 29 states have not recovered all the jobs they lost in the recession, according to U.S. Department of Labor data. “This is not like any other recovery,” says John Herrmann, director of interest rate strategy at Mitsubishi UFJ Securities (USA). “There is a tremendous disparity, with the performance of the economy much more skewed on a regional basis.”

The weakest employment rebound has been in the states worst hit by the bursting of the 2002-06 housing bubble. Arizona, Florida, and Nevada each remain more than 50,000 jobs short of the employment highs they logged from December 2007 to June 2009. (For the country as a whole, the peak came one month after the economy was technically in recession.)

New Jersey has been hurt by the loss of casino and pharmaceutical industry jobs, Alabama by weakness in manufacturing, and Michigan by the southward shift of the auto industry. Economists at IHS Global Insight project that it could take until 2019 for all states to recover all the jobs lost.

New Mexico still has 4 percent fewer employed workers, in part because of the ripple effects of last year’s federal government shutdown, which forced many businesses that contract with federal agencies to shed workers. The public sector employs 24 percent of all workers in the state, which is home to three Air Force bases and the Los Alamos National Laboratory. “Government has been a drag,” says Michael O’Donnell, a research scientist with the Bureau of Business and Economic Research at the University of New Mexico. “Many of the private-sector jobs rely on government funds and grants.”

Nationwide, the jobs picture wouldn’t look as good if it weren’t for the energy industry. Take out the 1.1 million jobs created in Texas, the state that has led in job creation, and the country would be 350,000 below the 2008 peak, according to research by the Federal Reserve Bank of Dallas. Gary Burtless, a senior fellow at the Brookings Institution and a former Labor Department official, points to data on job mobility as further evidence “that local job markets have been basically lousy almost everywhere” except for a few areas benefiting from the energy boom. Young adults 25 to 34, who are most likely to relocate for employment reasons, have been moving at decreasing rates even after the recession ended, notes a Brookings analysis.

    BOTTOM LINE -

    The bottom line: The U.S. exceeded its prior employment peak in May, but 29 states have not recovered all the jobs lost in the recession.

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