Gallup released its 2009 job creation index today. The results are interesting, though not altogether surprising. Most of the states doing the best specialize in two the most recession-proof industries: energy and government. The states doing the worst were largely those struck by the housing bubble's pop and financial crisis. What does this mean for an employment recovery?
Here's Gallup's best and worst:
And here's what the broader map looks like:
Looking at the best states, the influence of energy is obvious. You've got coal producers like West Virginia and oil producers like Texas all doing well. And they should be: although energy is somewhat affected by a recession, it's not really as easy to cut back substantially on electricity and driving to work as it is, say, wine or movies.
Virginia and Maryland show that the federal government is also thriving. DC isn't on this top list, but its index score was positive as well. As the unemployment reports have clearly shown, if any industry has held up well during the recession, it's the federal government.
But what recession-proof industry is noticeably absent? Health care. But again, this makes sense. Health care isn't really concentrated in any state or states: it's spread out. So even though it has done comparably well, most states benefit equally.
How about the bad states? Long-suffering Michigan leads the list. Others in the west mostly have the housing bust to blame. Their economies were heavily dependent upon real estate, and those jobs continued to suffer in 2009.
The states listed in the northeast mostly felt the burn of the financial crisis. Even though the big banks have largely recovered, thousands of jobs were lost in financial services during the recession. The companies that remain aren't in a hurry to ramp up their hiring yet.
I think you can learn a few things from this. First, don't count on the industries that have done well to pull us out of recession. Government can only grow so large. Energy jobs also have no reason to grow any faster than at their normal rate over the next few years.
And unfortunately, the industries that suffered the most -- real estate and finance -- probably won't add many more jobs in the near-term either. The housing and commercial real estate markets are still trying to gain their footing. And even when they do begin to recover, it's crazy to expect the quantity of jobs to come back that existed during the boom. Some finance jobs could return, but a lot of banks and finance companies no longer exist. Meanwhile, Wall Street isn't seeing much reason to grow very quickly: Main Street continues to flounder and financial regulation is still an unknown.
All of this points to the hypothesis that the employment recovery will be a lot slower than its quick decline.
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