According to recent data, though unemployment rates are dropping, there are several cities that are losing record numbers of jobs. The study by 24/7 Wall St., a financial news and opinion content provider, found that 10 metro areas nationwide had at least a 5 percent decrease in the number of employed people since the summer of 2009, when national unemployment was close to its worst point.
Of the 10 metro areas on the 24/7 Wall St. list, most are in the southwest (Arizona, Utah or Nevada). “Unemployment in Nevada has increased from 11.8% in June 2009 to 11.9% in June 2012, going from third worst in the country to the worst,” according to the 24/7 Wall St. report. The cities losing the most jobs are Dalton, Ga.; Brunswick, Ga; Champaign-Urbana, Ill.; Prescott, Ariz.; Michigan City-LaPorte, Ind.; Flagstaff, Ariz.; Chowchilla, Calif.; Alexandra, La.; Carson City, Neveda; St. George, Utah.
There is a reason California made the list, explains Laer Pearce, author of Crazifornia: Tales from the Tarnished State – How California is Destroying Itself and Why It Matters to America. “In all California counties, including Madera, which is listed in the recent top 10, there is a new rise in unemployment caused by the state pushing its debt down to counties and cities. A typical example is prisons. When a federal judge determined that overcrowding in California’s prisons constituted cruel and unusual punishment, the state responded by pushing prisoners to the counties, making them county expenses rather than state expenses. One result is layoffs at the local level to free up money to pay the additional jail expenses. The state did the same with parolees, he points out. “Over all of this is California’s continuing housing crisis. California’s recovery is slower than most states because its regulatory environment is so strict. Here, it can take three years or more – much, much more – to get a project approved and begin construction.
Experian just released its third-annual State of Credit report and came to the same conclusions as 24/7 Wall St. The State of Credit looks at credit scores and other financial data in cities across the country. “Nine of the 10 highest-scoring cities have an unemployment rate below the national average (8.2 percent). Of the bottom-scoring cities, only two have unemployment rates below the national average,” Maxine Sweet, vice president of Public Education for Experian points out. “Unemployment and foreclosure are major life events that can negatively affect a person’s credit. While we do not have data that shows a direct correlation between employment and credit scores, when unemployment is down, consumers may have more income at their disposal to stay on top of payments and cut back on how often they turn to credit to cover their expenses.”
Career counselor and executive coach Roy Cohen feels, too, there is no surprise some of these cities are on the list, pointing to the lack of innovation many metros are suffering from. “It is inevitable that, at some point or another, all cities that rely, in large part, on a single industry to support the local economy will be vulnerable to market downturns, job loss, and exodus. Unless cities and their industries are committed to innovation and to creating new avenues for prosperity, these cities and companies will shrink and in some cases, even disappear,” he says.
But says, Cohen, cities can be prepared for changes in technology, market indiscretion, or global crises. He uses Rochester, NY as an example. “Eastman Kodak was the principal employer for generations of Rochester residents. The company was not proactive in anticipating and responding to changes in technology and as a result the company has all but disappeared,” says Cohen. “The city, however, was smart. Rochester made a commitment to supporting local entrepreneurship and as a result small businesses are now supporting a thriving local economy.”
But how can you as an individual be ready for downturns? “Anticipate emerging trends,” advises Cohen, author of The Wall Street Professional’s Survival Guide. “For example, in N.Y.C., Wall Street professionals would be wise to immerse themselves in regulatory reform and compliance matters. As one significant part of the industry shrinks due to regulatory reform (these are the high rolling risk takers), another part expands in response to the demand for skilled credit and compliance professionals. These are the folks who monitor financial institutions and transactions for irregularities and maintain orderly markets to protect investors.”
A city in crisis may actually offer other types of business opportunities. “In cities where companies are failing, there are great opportunities for individuals who can skillfully cut away the diseased sectors to maximize opportunities and to identify potential areas of growth, explains Cohen. “There are real advantages to living in a city in decline or at least in a city where major employers are shrinking but not disappearing. Detroit is a great example. Housing stock is cheap and so is the cost of living in general. Individuals who work virtually, and who are highly compensated, like management consultants and technology professionals, enjoy a great quality of life.”