Economic Development

Economic Development

By Steve Suitts

Vol. 2, No. 3, 1979, pp. 27

While the South continues to show signs of rapid economic activity, the rate of unemployment in the region, which has not been an historically severe problem as in other regions, is suggesting that economic problems are or may be ahead for Southern workers.

Although unemployment in most 11 Southern states dropped in the last years, the decline has not always been as great as in the rest of the country. While the rate of unemployment nationally dropped from 6.3 percent to 5.8 percent for the one-year period ending July 3 1, 1979, the decline in Georgia was only from 5.8 percent. In Arkansas the unemployment rate dropped only from 6.1 percent in July 1978, to 5.7 percent one year later.

The most serious indications are that four Southern states Louisiana, Florida, Alabama, and Tennessee – continue to show unemployment rates well above the national average (see map above). For example, Louisiana’s unemployment rate was 6.7 percent in July and in Alabama the 7.9 percent unemployment rate was an increase over the July 1978 percentage of 7.2 percent.

The unemployment pattern in the South loosely resembles the situation in the northeast and northcentral states, when the unemployment figures in most states surround the national average with a substantial number above the average ranging from 6.5 percent to 8.40 percent. Only two states west of the Mississippi River, however, had unemployment rates in July 1979 above 6.5 percent. One was a Southern state, Louisiana, and the other was Oregon. Throughout the Midwest, unemployment rates in July were less than 4.5 percent.

Since July of this year the national jobless rate has been hovering around 6 percent. In August it went above 6 percent and in September it dropped back to 5.8 percent. Recently the October unemployment rate showed a major shift. Likewise, the rates in Southern states appeared to have maintained generally the same pattern that existed in July.

Historically, unemployment rates in Southern states have been below the national average. Explanations for the heightened rates of unemployment often follow very much the same rationale for national unemployment. The Southern economy, like the nation’s, is suffering from its fair share of layoffs and reduced production.

There may be some historically unique factors to the Southern pattern, however. U.S. Bureau of Census estimates the region is gaining substantially in population. Combined with a national trend of increased labor market participation by women and youth, the increased number of workers may be reflected in the unemployment rates of the South. Also, migration within the region from rural to urban locations may also be a contributing factor since the work skills of the rural place are not easily transferrable in urban settings.

Some economists are also suggesting that the South’s regional economy remains largely undiversified with heavy emphasis on low wage service industries and manufacturing. Hence, with frequent turnovers of employment in these two industries, the South’s rates of unemployment is higher than in the past.

By whatever combination, these factors may be rendering an even greater problem of unemployment for the South than the Department of Labor statistics indicate. In September the National Commission on Unemployment Statistics reported that the government’s method of counting the unemployed and the definition of the “unemployed” may be substantially undercounting the actual number of people who are seeking jobs but unable to find them.

In any event, the economic growth of the South with its increases in population has not automatically reduced low levels of unemployment. While the South may still lead the nation in rapid economic growth and number of jobs available, the benefits of the boom have not yet been seen by Southerners in the unemployment lines.