Looking joblessness in the face
Saturday, March 14, 2009
By Sean F. Driscoll
Mar 14, 2009 @ 07:38 PM
At eight months and counting since her layoff from Greenlee Textron, Deborah Robertson is reminded of the area’s high unemployment rate every time she interviews for a job.
Hiring managers “say they’ve been inundated with applications,” the Rockford resident said. “I’ve been getting a lot of ‘We regretfully inform you’ letters. I just keep plodding on, hoping to find my niche out there.”
Marked increases in applicants for every job opening is one sure-fire symptom of an economy in distress. But the high unemployment rate — which measured 13.7 percent in Winnebago and Boone counties in January — may have only begun to affect the local economy, experts say.
The longer the rate remains in the double digits, the more government and social services agencies will feel the stress. As the months pass, the rate will reinforce a sense of pessimism and fear, regardless of an individual’s economic status.
“People do have funds, and they may be willing under normal circumstances to take the risk and buy a home or a car and knowingly go into debt,” Rockford College business professor Fred Rezazadeh says. “But the expectation (of a turnaround) is an important factor. When you see situations like the mortgage crisis, people are less likely to go out and buy a new house or new car or new boat. This really has an impact ... (that can) slow the economy down further and cause more unemployment. I don’t know where this is going to end, but what we see is not very encouraging.”
A measure of economic health
When the recession started in December 2007, the Rockford metro area’s unemployment rate was 7.1 percent. Since then, the rate has gone up in nine of the past 14 months.
A normal urban unemployment rate is 4 percent to 6 percent, Rezazadeh says, which includes a turnover rate indicative of a healthy economy.
There’s no precise correlation between an unemployment rate and a drop in spending or revenues, Rezazadeh says. It depends heavily on the demographics of an area, how long the unemployment has persisted and which sectors have suffered the worst job losses.
It’s not the only way to measure the strength of an economy, but unemployment is often used as an indicator because the report is issued every month; other economic reports come out every three months or less frequently.
“The employment rate is very sensitive” to change, says Joel Cowen, assistant dean for Health Systems Research at the University of Illinois College of Medicine at Rockford. “It’s the one we tend to observe the most.”
Other effects to come
Retail spending dropped in the Rock River Valley in the last five months of 2008, and local governments are girding themselves for future drops in sales-tax revenues. Cowen says there will continue to be an inverse relationship between the funds available for public assistance and the need for the help.
“On the individual side, there are greater basic needs and the use of government services, including Medicaid, food stamps, public housing,” he says. “Social agencies can expect to see more pressure. ... When the need becomes greater, they have fewer resources.”
Cowen doesn’t expect a repeat of Rockford’s 25 percent unemployment rate of the early 1980s, but this recession in some ways is deeper.
“This is eating away at our economic infrastructure. I lived here in 1982, and while that was certainly unfortunate, it just didn’t see the same impact. Maybe it’s because of the stock market decline and the fact that it’s going across all socioeconomic classes, although the unemployment rates are lower.”
Where’s the bottom?
Cowen says a decrease in the unemployment rate is usually the first sign of an economic turnaround — although that alone isn’t enough to make a determination. Other indicators include increases in building permits, sales-tax receipts and home sales.
Janyce Fadden, president of the Rockford Area Economic Development Council, says confidence can be restored, in part, by news that buoys the stock market. She pointed to a memo from Citigroup’s CEO to employees that the company operated at a profit in January and February.
The news Tuesday was enough to bump the Dow Jones 379 points, its biggest one-day gain this year.
“We need more companies to get to a point where they are delivering to Wall Street what Wall Street was expecting, or more than that,” she says. “Once we get more of those companies saying that, then perhaps we’ll have more confidence in the market and more confidence in our ability to keep jobs. Once we have confidence that our jobs aren’t going away, it will be OK to start shopping again. Shopping is what moves our economy forward. We have to have the consumers lead us, then it all will start picking up again.”
Until then, the community has to do the best it can to keep businesses open and attract new ones. Fadden says a 13.7 percent unemployment rate can be a sign to prospective companies of a willing and available work force.
“Higher-than-average unemployment is attractive to service industries, especially in customer service and manufacturing. From a prospect standpoint, we remain very busy here. We have people calling us. Companies are still looking for new sites. It kind of raises you up in some site selectors’ minds. There’s an automatic work force should they make the decision to be here.”
For Robertson, wondering when the end will come is almost more stressful than being out of work. She’s trying to stay focused on sending out resumes, networking for job openings and keeping a positive attitude.
“You listen to the news, everyone’s giving you different information, and no one’s on the same page,” she says. “Right now, everyone has a different idea of where the light at the end of the tunnel is. I watched the news when I first got laid off, I read anything I could get my hands on to figure out when this is going to end.
“I can’t do it anymore. It’s just too upsetting.”