4.7% January
4.8% February
5.0% March
4.7% April
5.4% May
5.3% June
5.5% July
5.5% August
5.6% September
5.7% October
6.3% November
7.0% December
The five states with the highest December unemployment rates were Michigan (10.6%), Rhode Island (10%), South Carolina (9.5%), California (9.3%) and Nevada (9.1%). The full list with a link to historical data can be seen at the US Department of Labor site.
Nationally, more than half a million jobs were lost in December.
And the official US unemployment figures do not tell the full story. Economists argue that the rate should be adjusted to include those who want a full-time job but who can only find a part-time job and include jobless workers who want a job but are not actively seeking employment or not searching through the bureaus that report unemployment. With that adjustment, the "real" US unemployment rate in October would have been 11% and 14% in December.
In November, the New England Economic Partnership projected that Maine's unemployment rate could be 8.7% by mid 2010. I make no prediction other than to note that 1) with today's jump, Maine is much closer to 8.7% than we were in October, and, 2) the Federal government did not foresee the rapid unemployment jump as recently as October.
Are these jobs coming back?
Bruce Springsteen sang in My Home Town: "... foreman says these jobs are going boys and they ain't coming back."
The reason many of the jobs can't come back to a state or even to the US is that once the work has been shifted elsewhere, it is very hard to shift the work back.
The second reason many jobs can't come back is that many are lost when the company closes down for good. When that happens, the company's machinery, inventory, etc is sold, often at fire sale prices, and again the work goes elsewhere in the US or overseas.
For example, the 28 year old Brewer auto parts manufacturer ZF Lemforder has announced that it will close next year and 127 will lose their jobs. Production of those auto parts, if ever needed, will be done elsewhere in the US or the world.
Let's assume the Maine economy turns around by December. Any company that went out of business cannot easily come back because the machinery and the plant, which may have been purchased years ago and is now completely paid for, is now gone. The hurdles to restart that or any new business are 1) to find financing, if possible, for plant, machinery, etc that then will cost much more, 2) to find and train a staff, and 3) to find a buyer for the product in an economy that has since shrunk.
This recession is different
This recession is different than all those recessions since the 30s. There are now many fewer good economic or business reasons for a company to be located in Maine, Michigan, Georgia, or even in the US. This has become a global economy with a global workforce.
For example, with a large part of Wal-mart's goods being made overseas, and with Americans being willing to pay the salaries of those overseas workers because the goods they produce are cheaper, the recession and the unemployment cannot be turned around by consumption of foreign goods.
Second, many economists believe there has been a paradigm shift over the last 8 months. Americans have started to fear for their economic well-being and have started to save when they can. Much of President Bush's stimulus rebate payments went directly into savings or went to pay down credit card debt. Americans have also started to save by cutting back on spending. 2008 holiday sales plummeted, resulting in the worst holiday sales period in decades. Apparently people were husbanding their money in case they lost their jobs.
Can spending on infrastructure turn this recession around?
It is a widely held belief that the infrastructure job programs of the Roosevelt era helped turn around the nation's unemployment problem and helped pull the US out of the depression. Forgotten is the fact that, by late 1936, economic indices were back at pre-depression levels while unemployment was still at 14%. Then in 1937, the economy tanked again and unemployment soared to 19%.
The US depression finally eased in 1940 with the massive government military spending and when the government subsidized the wages of workers in those industries. Thus, those industries were encouraged to hire and train even more workers and actually made a profit by doing so.
President Obama has pointed to President Eisenhower's construction of the interstate highway system in the 50s as an example of the way to turn around the economy and its unemployment problems.
What those touting infrastructure forget is that the building of the interstate system in the 50s was largely a shovel job. Millions of less unskilled workers were hired to do much of the work. For example, 2,000 people worked 23 months to extend the Maine turnpike 66 miles from Portland to Augusta in 1954/55.
In contrast, major infrastructure work, such as the rebuilding of the southbound portion of I-295 or the building of the Waldo-Hancock Bridge are accomplished by highly skilled workers in much smaller numbers using high technology machinery.
You simply cannot put the average unemployed worker behind a 50 ton paving machine. Even with extensive training, that now-trained person would stand in line behind 100s of workers with extensive construction and heavy machinery experience.
How do we get out of the recession?
The key to getting out of this recession before it turns into a depression is to put people into jobs that give them new skills and into jobs that will last. Construction jobs do not last. Construction jobs do not produce goods that others can buy. Companies that produce goods are the key to the turn around, and training people to occupy those jobs is part of the answer.
Technology infrastructure such as immediately running fiber (not cable or wire) to every part of Maine is a good first step. Massively upgrading Maine's cell networks, especially the GSM side, is a good second step since companies and employees need dependable communications across the entire state and not just along I-95 and the coast. We simply cannot depend on the GSM providers to do this given 1) their infighting and 2) the penalties the national carriers put on their own customers for extensively roaming on towers other than their own.
Finally, Maine needs to seriously consider creating a business tax free zone in southern Maine adjacent to I-95. It is true that arguments could be made for placing this zone in the County or Hancock/Washington, but the simple fact is that businesses will not haul raw material that deep into Maine, only to ship it out again. Such zones, if created in the County or Hancock/Washington, might be created with tax incentives favorable to attract businesses and work from Canada.
Finally, this recession simply CANNOT be turned around quickly. Careful thought must be put into what we want the nation (and Maine) to look like in 2010 or 2011, and we must do the spade work now, no matter how painful it may be, to get there from here.
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