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Hullabaloo


Monday, September 26, 2011

 
Right to Work
by David Atkins ("thereisnospoon")

One of the favored conservative talking points during this prolonged recession (and yes, it is one long continuous downturn for most Americans, regardless of how GDP-obsessed economists cook the growth numbers) has been that unemployment in mostly Southern, so-called "right to work" states has been stronger, while unemployment in more progressive states has been higher. These talking points, of course, have totally ignored the myriad factors involved in creating those statistics, including that most of those jobs tend to be near minimum wage; that low real estate prices, not business-friendly and jobs-friendly policies, are often driving growth in those areas; that many of the gains in these states are due to energy-related booms rather than core economic successes; and that the comparative lack of social safety nets in many of those states often makes life more difficult even for those who have been lucky enough duckies to get one of those low-wage jobs.

But even with those advantages, it looks like the "economic miracle" in the right-to-work states won't be a conservative talking point much longer:

When the unemployment rate rose in most states last month, it underscored the extent to which the deep recession, the anemic recovery and the lingering crisis of joblessness are beginning to reshape the nation’s economic map.

The once-booming South, which entered the recession with the lowest unemployment rate in the nation, is now struggling with some of the highest rates, recent data from the Bureau of Labor Statistics show.

Several Southern states — including South Carolina, whose 11.1 percent unemployment rate is the fourth highest in the nation — have higher unemployment rates than they did a year ago. Unemployment in the South is now higher than it is in the Northeast and the Midwest, which include Rust Belt states that were struggling even before the recession.

For decades, the nation’s economic landscape consisted of a prospering Sun Belt and a struggling Rust Belt. Since the recession hit, though, that is no longer the case. Unemployment remains high across much of the country — the national rate is 9.1 percent — but the regions have recovered at different speeds.

Now, with the concentration of the highest unemployment rates in the South and the West, some economists and researchers wonder if it is an anomaly of the uneven recovery or a harbinger of things to come.

“Because the recovery is so painfully slow, people may begin to think of the trends established during the recovery as normal,” said Howard Wial, a fellow at the Brookings Institution’s Metropolitan Policy Program who recently co-wrote an economic analysis of the nation’s 100 largest metropolitan areas. “Will people think of Florida, California, Nevada and Arizona as more or less permanently depressed? Think of the Great Lakes as being a renaissance region? I don’t know. It’s possible.”

The West has the highest unemployment in the nation. The collapse of the housing bubble left Nevada with the highest jobless rate, 13.4 percent, followed by California with 12.1 percent. Michigan has the third-highest rate, 11.2 percent, as a result of the longstanding woes of the American auto industry.

Now, though, of the states with the 10 highest unemployment rates, six are in the South. The region, which relied heavily on manufacturing and construction, was hit hard by the downturn.


In a sense, this is what happens when societies try to give away the store to corporate interests in the hopes of driving massive growth. When times are good, times can be very very good. When things start to crash, the growth times during the boom can tend to buoy a society for a little while. But when things start to really go south, things go very, very badly--to say nothing of the fact that handing communities entirely over to the whims of the "free market" increases the likelihood and frequency of major downturns. And worst of all, when things do go sour, those societies have hollowed or nearly destroyed the social supports that allow their economies to weather the economic storm. As economist Richard Kaglic says in the same article:

So what happened in South Carolina? Richard Kaglic, a regional economist with the Federal Reserve Bank of Richmond, Va., said the state’s lingering troubles reflect what happened when its once-thriving construction and manufacturing industries were hit hard by the recession. Mr. Kaglic, who is also a pilot, used an aviation metaphor to explain what he meant.

“If your nose is high, if you’re climbing faster and your engine cuts out, you fall farther and it takes you a longer time to recover,” he said. “The conditions we experienced in late 2008, 2009, are as close as you come to an engine-out situation in the economy.”

It's a similar phenomenon to the storied Baltic Tiger and Celtic Tiger economies (to say nothing of the Icelandic Tiger) that the Right harped on so much throughout the aughts, but about which they are now eerily silent. Those nations used regressive tax policies and anti-regulation policies to artificially inflate themselves during the boom, and they're now suffering economic calamity.

The fact is that slow, steady, equitable, sustainable and broad-based growth outside the financial and housing sectors, with a good safety net to help the unemployed stay on their feet is far preferable economically (to say nothing of environmentally) to rapid growth in volatile industries followed by major economic shocks, with few social supports for the unemployed. The former helps almost everyone, while in the long run the latter is beneficial only to the top 1% and their friends.

It's an old story that proves once again just how bad for the economy conservative policies are. But it seems that humanity is destined to forget that lesson time and time again.


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