News Column

Jobs Recovery Is All Over the Map

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After cutting its staff by 30% in the recession, Dura-Bond Industries is hiring 75 workers for a planned Pittsburgh-area factory that will make pipeline coatings to feed a natural gas drilling boom that's lifting the state's economy.

In West Palm Beach, Fla., a far more tenuous rebound in residential and commercial construction is underway. Uncertain whether the recovery will strengthen, land planners Ken and Wendy Tuma have added just two employees to their staff of 22 recently, opting to put in extra hours themselves to handle the slightly heavier workload.

Pennsylvania and Florida, both key battleground states in this fall's presidential election, highlight a jobs recovery that's been uneven across the 50 states and Washington, D.C. While Pennsylvania has regained 57% of the jobs it lost in the recession, Florida has recaptured just 19%, based on average monthly employment gains in the second quarter.

More than three years after the Great Recession ended, the U.S. has recovered slightly less than half of the 8.8 million jobs that vanished in the downturn, producing a patchwork of thriving state economies, some still troubled and many in a wide in-between. Generally, energy strongholds are leading the jobs recovery. The Rust Belt has made significant strides on an auto industry rebound and rising exports but is still well off pre-recession peaks. And states pummeled by the housing crash are trailing.

About half the states have recouped about a third or fewer of their lost jobs. Just four, and Washington, D.C., have returned to peak employment, according to USA TODAY's analysis of quarterly data from the Bureau of Labor Statistics starting from January 2007.

IHS Global Insight expects nearly half the states to return to peak employment by the end of 2013, more than four years after the recovery began. Twenty-three states aren't expected to reclaim all their lost jobs until 2015 or later.

The wide disparities among states could help tip the election, possibly benefiting President Obama in swing states that have recovered most or all of their lost jobs and giving Republican nominee Mitt Romney an advantage in states that are lagging.

"It's not a conclusive factor, but it's an important part of the environment," says Steven Schier, a political science professor at Carleton College in Minnesota.

Neither candidate appears to have a clear edge. Six swing states -- Virginia, Pennsylvania, Iowa, Colorado, New Hampshire and Ohio -- are within 1.5% to 5.1% of their pre-recession employment peaks. The other six -- North Carolina, New Mexico, Wisconsin, Michigan, Florida and Nevada -- are 5.2% to 12.6% below their peaks.

Nationwide, the glacial payroll recovery can be traced to a bruising downturn sparked by a real estate crash that decimated household wealth and set off a credit crisis that slowed lending. In July, U.S. unemployment ticked up from 8.2% to 8.3%, and the jobless rate rose in 44 states, the most states to post a monthly increase in three years.

The slow upswing is affecting regions of the country less uniformly than previous recoveries, says IHS economist Jim Diffley. In the Northeast, for example, a high-tech rebound is bolstering job growth in Massachusetts and New York, but a slowdown in pharmaceuticals is hobbling New Jersey. The real estate downturn, meanwhile, has hampered Florida and Georgia far more than Tennessee and Kentucky, both of which are benefiting from the auto industry comeback.

Mark Zandi, chief economist of Moody's Analytics, attributes the current recovery's 50-state hodgepodge to the fact that industries such as technology, biotech and global finance are no longer concentrated in hubs such as New York and the Silicon Valley, but rather are spread across the country.

"You can find pockets of strength everywhere and pockets of weakness everywhere," he says.

Here's a look at the jobs recovery in some of the strongest, weakest and middle-of-the-pack states.

Fuel and food drive leaders

Just four states -- oil-producing strongholds North Dakota, Louisiana, Alaska and Texas -- have returned to peak employment, riding a global energy boom. Other energy and agricultural states in the nation's breadbasket, including Oklahoma, Nebraska and South Dakota, are within a percentage point of their peak. All these states lost relatively few or no jobs in the downturn and have benefited from a worldwide surge in food and energy prices.

North Dakota, for example, grew payrolls through the recession. Unconventional drilling techniques are extracting oil from rock formations, pushing the state past Alaska as the nation's No.2 oil producer behind Texas. Since 2007, oil production in the state has increased fivefold, and employment in the mining and logging sector has swelled from 5,000 to 22,000. The surge is causing hotel-room shortages as roughnecks flood the state for three-week stints, boosting payrolls in leisure and hospitality and professional and business services to all-time highs.

"We are the land of milk and honey," says Andy Peterson, president of the North Dakota Chamber of Commerce.

Entrepreneur Shannon Gangl is reaping benefits on all fronts. Occupancy at his three hotels in Bismarck has risen from 65% to more than 80%, leading him to boost staffing to 250 from 200.

A Montana Mike's franchisee that Gangl recently opened in Minot to take advantage of the oil boom set a national company record for opening-week sales. Hiring 130 workers for the restaurant was so tough that he's paying them twice what employees earn at his other eateries in the state, forcing him to charge an extra $2 per entre.

And with sales at his concrete-pouring company up fivefold vs. three years ago, Gangl stopped taking bids for 2012 projects two months ago. He recently bought several 10-seat planes to shuttle oil executives from offices in Bismarck to Williston oil fields. "The opportunities are endless right now," he says.

Some States Roar Back

Some states lost jobs moderately in the downturn and have rebounded strongly on technology, biotech and natural gas drilling. Pennsylvania and Massachusetts, for instance, each lost more than 4% of their payrolls but have recouped more than half those losses.

A natural gas drilling boom in Pennsylvania's Marcellus Shale near Pittsburgh has nearly doubled energy-industry employment the past five years and offset sharp job losses by Philadelphia's budget-strapped city government, according to BLS and Moody's. The natural gas frenzy is lifting makers of the pipes needed to transport the fuel to electricity producers and chemical manufacturers.

Dura-Bond laid off 150 of its 500 workers in the recession as financing for long-haul gas pipes dried up, Vice President Jason Norris says. But since then, sales are up 50%. Besides building the pipe-coating plant, slated to open this fall, the Export, Pa., company has increased staffing at its three existing Pennsylvania factories by 10% to 400. "I have a lot more business because of the Marcellus," Norris says.

In the Boston area, growth in technology and biotech is driving the recovery, even pushing up employment in the formerly beleaguered construction industry to a four-year high in July. Tocci Building Cos. recently hired about seven employees to oversee construction of a $1 billion office and lab center in Cambridge that will house life sciences firms. Demand for such projects is so high that Tocci was turned down by several subcontractors, says executive Laura Handler. After cutting 40% of its 100 workers in the recession, payrolls have climbed back to 75.

Utah and Colorado have mounted even more robust comebacks, partly as a result of growth in both high-tech and natural gas exploration. Employment in each state fell 6% to 7% but more than half those jobs have returned.

Manufacturing Climbs Back

The Rust Belt was hit more severely in the downturn as manufacturers intensified a strategy of moving jobs overseas and replacing employees with automation. Ohio, Illinois and Michigan have reclaimed about a quarter to a third of their lost jobs as a result of the auto rebound, strong exports of factory machinery and efforts to diversify decades-old industrial bases.

While Michigan has led the auto rebound, the nascent lithium battery industry has fizzled because of weak electric vehicle sales. The state has lost more than 10% of its population, which has shrunk its tax base and contributed to an 8% decline in state and local government payrolls. Michigan's employment is still 7% off its peak.

Ohio has fared somewhat better -- payrolls are 5.1% below peak -- thanks in part to a diverse economy that features a roaring steel industry that's supplying area natural gas drillers and the growth of a biomedical cluster in Cleveland.

The Columbus area -- a mix of corporate headquarters, manufacturers, universities and health care facilities -- has nearly recovered all the jobs it lost in the slump. Kenny McDonald of Columbus 2020, an economic development group, largely credits an aggressive effort to persuade 200 companies to locate or expand in the area over the past 18 months.

Quantum Health, a 280-employee manager of health benefit plans for corporations, has added 50 workers so far this year and plans to hire another 475 by 2014, says CEO Kara Trott. The firm was considering moving to Texas or Colorado to tap a larger pool of bilingual job candidates but was swayed by about $7 million in city and county incentives.

Housing-bust States Lag

States hurt most in the real estate crash -- Nevada, Florida, Arizona and California -- have made small strides in recovering their lost jobs, but are among the furthest from their peak employments. The bust crushed household wealth and slashed construction industry payrolls by nearly half or more.

Few of those construction jobs have returned. And plummeting real estate values and property taxes have forced the states to chop state and local government payrolls.

Yet a technology boom in Northern California is aiding that state's recovery. Gumas Advertising in San Francisco has boosted its staff from 14 to 22 this year to handle new business from social media and other tech firms, says CEO John Gumas.

And travel and tourism is leading a modest recovery in all four states. Florida has recouped nearly 70% of jobs lost in leisure and hospitality on increased business travel, according to BLS and the West Palm Beach Convention and Visitors Bureau.

Still, a sense of caution pervades the business community, says Dennis Grady, CEO of the Chamber of Commerce of the Palm Beaches. Russell Greene, CEO of Grand Bank, trimmed his staff to 62 from 100 as capital shrank to $16 million from $50 million. And while small-business loan applications have increased lately, he hasn't opened the lending spigots.

"Years ago, you basically looked somebody in the eyes and if it looked like they were going to repay you, you gave him the loan," he says. "Things have changed quite a bit."

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