Where Jobs Are (and Aren't) Growing

Manufacturing has given a boost to the Midwest, while housing continues to weigh a lot of cities down.

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The Rust Belt may be shaking off the rust caused by the Great Recession.

Unemployment rates have fallen in a vast majority of U.S. cities, says the Labor Department, with rates having declined in 345 of 372 metropolitan areas from January 2011 to January 2012. Among the biggest winners are cities in Michigan and Ohio, while upstate New York continues to struggle.

These figures say much more than that the recovery is uneven. They show where the labor market's weaknesses are more precisely than the national job report that makes headlines each month. For example, while housing continues to drag down many western cities, a recent resurgence in manufacturing has boosted some Rust Belt cities' payroll figures.

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But even more promising data underlie some of these improvements. The unemployment rate is calculated as a percentage of the labor force, so as people give up the job search and drop out of the labor force altogether, the jobless rate does not reflect the true number of unemployed.,. Encouragingly, these figures do not indicate that is what's happening in cities with improving unemployment rates, says Freedman.

"What's more reassuring is if you dig a little bit deeper into reports by the [Bureau of Labor Statistics], you see that ... in Rust Belt cities in particular like Detroit, Kansas City, and others, the more recent drops were not driven by simply by a contraction in the labor force but rather were driven by actual declines in the number of people who were unemployed," says Matthew Freedman, assistant professor in economics at Cornell University.

Of the metropolitan areas analyzed in the Labor Department's latest release (not counting Puerto Rico), the following cities saw the largest decline in their jobless rates over the last year.

Metro Area Jan. 2011 Unemp. Rate Jan. 2012 Unemp. Rate (preliminary) Year-over-year Change
1. Decatur, Ala. 11.5% 8.3% -3.2
2. Monroe, Mich. 11.8 9.0 -2.8
3. Flint, Mich. 12.6 10.0 -2.6
3. Redding, Calif. 16.9 14.3 -2.6
5. Jackson, Mich. 11.4 9.0 -2.4
5. Yuba City, Calif. 21.2 18.8 -2.4
7. Steubenville-Weirton, Ohio 13.6 11.3 -2.3
7. Holland-Grand Haven, Mich. 9.7 7.4 -2.3
9. Waterbury, Conn. 13.3 11.1 -2.2
9. St. Joseph, Mo. 8.3 6.1 -2.2
9. Wheeling, W.V. 10.6 8.4 -2.2
9. St. George, Utah 10.5 8.3 -2.2
9. Muskegon-Norton Shores, Mich. 11.7 9.5 -2.2

Source: Bureau of Labor Statistics

Meanwhile, smaller cities in Illinois and upstate New York account for a majority of places that have seen the biggest upticks in unemployment over the last year.

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In upstate New York, as well as some other hard-hit areas, the jobless rate is still growing due to economic factors that can be particularly slow to change, Freedman says. One such factor is housing. Many experts believe that housing prices will decline through 2012, with no sure sign of when the market will bottom out.

Declining employment in state and local government could also be to blame for some of the nation's sluggish job markets. State and local government can be slow to feel the effects of a recession, as it can take time for governments to feel the effects of declining tax revenue.

Metro Area Jan. 2011 Unemp. Rate Jan. 2012 Unemp. Rate, preliminary) Year-over-year Change
1. Lawton, Okla. 6.8% 7.8% 1.0
1. Yuma, Ariz. 23.5 24.5 1.0
3. Kennewick-Pasco-Richland, Wash. 9.1 10.0 0.9
4. New York City, N.Y. 9.4 10.0 0.6
5. Ithaca, N.Y. 6.4 6.9 0.5
5. Springfield, Ill. 8.3 8.8 0.5
5. Bloomington-Normal, Ill. 7.7 8.2 0.5
8. Hinesville-Fort Stewart, Ga. 8.9 9.3 0.4
9. Elmira, N.Y. 8.7 9.0 0.3
9. Champaign-Urbana, Ill. 9.0 9.3 0.3

Source: Bureau of Labor Statistics

*Note: "New York City" refers to the city's five boroughs, not the greater metropolitan area.

Of course, the unemployment rate's trajectory isn't everything. Freedman points out that many cities in California, Nevada and Arizona—regardless of the directions in which their jobless rates are moving—still have double-digit unemployment in part due to the housing crisis.

It's also important to note that, like the nation as a whole, it's hard to know what a full recovery will look like in any given city.

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Two extreme examples can be found in Arizona and North Dakota. Since January 2002, Yuma, Arizona's lowest annual jobless rate was 13.8 percent. The city had only six months during that period in which unemployment was below 10 percent. Meanwhile, the jobless rate in Grand Forks, N.D. is on the low end of the spectrum. Since January 2002, the monthly jobless rate there has never climbed above 5.6 percent, and the annual jobless rate hit a high of 4.7 percent in 2009.

A mix of factors, like a city's unique industries and demographics, can mean that a city is predisposed toward a higher or lower unemployment rate.

For example, "younger people have weaker attachments to the labor force and a lot more job mobility and, as a result, pass in and out of employment more frequently," points out Freedman. "We shouldn't expect all metro areas to converge to the same unemployment rate."