The impacts of the economic crisis continue to be felt
unevenly across the country. I've previously looked at the factors
associated with higher rates of regional unemployment. But which places
have seen the biggest jumps in unemployment since the crisis hit?
To get at this, my colleague Charlotta Mellander conducted a
straightforward statistical exercise called a "residual analysis." It's
a simple way to track how a location performs relative to the
performance of all other locations. Basically, the analysis examines to
what extent the initial unemployment rate in May 2008 seems to have had
an impact on the change in unemployment over the last year. Technically
speaking, Mellander ran a regression analysis predicting change in
unemployment over this last year (May 2008 to May 2009) as a function
of the initial level of unemployment at the beginning of the period
(May 2008). She then compared the predicted values to the actual values.
The first graph shows the pattern for U.S. states.
The hardest hit states are ones that were doing badly even before
the crisis hit. The fitted line is steep; the correlation between the
two is 0.59 and significant; and the R2, 0.345. States below the line
experienced a smaller than predicted increase in unemployment levels,
while those above the line saw a larger than predicted increase.
Michigan has the highest unemployment rate, but Oregon (+3.0) has
taken the biggest relative hit. Alabama (+1.8), Indiana (+1.6), South
Carolina (+1.6), and Wisconsin (+1.4) have also taken bigger than
expected hits. North Dakota has the lowest rate of unemployment but
Alaska (-2.8), Mississippi (-2.1), Arkansas (-1.2), Connecticut (-1.2),
Iowa (-1.1), and Nebraska (-1.2) have done better than expected.
The second graph repeats the analysis for U.S. metropolitan regions.
It excludes two extreme outliers in California - Yuma and El Centro -
which started the period with 20 percent plus rates of unemployment.
The hardest hit metros are also those that were doing badly before
the crisis. The fitted line is again steep; the correlation coefficient
is high, 0.59; and the R2, 0.351.
The crisis has hit hardest at smaller Rustbelt metros, especially
those in Indiana: Elkhart-Goshen, IN; (+7.3); Kokomo, IN (+7.2);
Decatur, GA (+3.2); Sheboygan, WI (+2.7); Fort Wayne, IN (+2.3); and
Youngstown, OH (+2.2).
While Detroit has faced staggering unemployment, the difference
between its actual and predicted unemployment is +1.6. Among large
metros, Portland (+3.1), Charlotte (+2.2), and, San Jose (+1.9)
experienced even bigger than expected increases in unemployment. Las
Vegas (1.5), Boise (1.29), and Orlando (+1.29) have also been hard hit.
San Francisco (+.93), Miami (+.49), L.A., Chicago (+.31), Atlanta, and
San Diego (+.21) also performed worse than their May 2008 unemployment
Several Oregon metros took worse than expected hits: Bend-(+4.6),
Eugene-Springfield (+3.8), Portland (+3.0), Salem (+2.5), Medford
(+2.4), Corvallis(+1.9). Metros that border Oregon like Spokane,
Washington (+0.8) and Boise, Idaho (+1.3) also have high differentials.
Three Texas cities - Dallas (-1.0), Houston (-0.9), and Austin
(-1.0) - performed considerably better than expected. Minneapolis-St.
Paul (-0.4) did too. Cities along the Bos-Wash mega-region - Boston
(-0.4), D.C. (-0.3), New York (-0.1), and even Philadelphia (-0.3) -
also did better than predicted. Surprisingly, Phoenix also outperformed
expectations (-.2), albeit modestly.
College towns number among the best performers, doing much better
than predicted: Champaign-Urbana, Illinois, home to University of
Illinois (-2.2); Iowa City, University of Iowa (-1.81); Manhattan
Kansas, Kansas State University (-1.82); College Station, Texas, Texas
A&M (-1.74); New Haven, Connecticut, Yale University (-1.54); State
College, Pennsylvania, Penn State University (-1.47); Boulder,
Colorado, University of Colorado (-.93); Austin, Texas, University of
Texas (-1.0); Ann Arbor, Michigan, University of Michigan (-.94); and
Ithaca, New York, Cornell University (-.97), among others.