States with highest rates of joblessness share causes

Unlike the last recession, today’s unemployment hot spots are all over the map.

The five states with the highest unemployment rates – Michigan, Rhode Island, South Carolina, California and Oregon – all have something in common, though: a heightened exposure to the root causes of this downward spiral.

The collapse of housing. The implosion of the auto industry. The meltdown of financial services. The exodus of manufacturing.

All states are feeling the pain, but the worst are getting hammered on multiple fronts:

•The rotten housing market has punished California lenders and builders, taken an ax to Oregon’s timber industry and soured the prospects for construction workers in Rhode Island, where buyers from neighboring states helped drive up home prices.

•The steady decline of the manufacturing sector has punished Rhode Island and South Carolina, where laid-off factory workers lack the training and job opportunities in an increasingly high-tech economy.

•The auto industry’s pain is Michigan’s above all. But it is also being felt in states like South Carolina, where German automaker BMW has cut 500 temporary workers, and in California, where many dealerships have shut down.

“What makes this a different recession,” said Rebecca Blank, an economist at the Brookings Institution, “is that it is so widespread.”

During the 2001 recession, which was largely tied to the dot-com collapse, the West had a disproportionate amount of the jobless burden: Oregon, Washington, Alaska and California had the highest unemployment rates. (Mississippi and Washington, D.C., were tied with California.)

There is one region of the country that has largely avoided the country’s real estate and manufacturing woes, and as a result has been spared the worst of the recession’s pain.

A contiguous cluster of Plains states – Wyoming, North Dakota, South Dakota, Nebraska and Utah – had the lowest unemployment rates in November, ranging from 3.2 percent to 3.7 percent. The Labor Department on Friday said the national jobless rate in December was 7.2 percent.

Historically high prices for energy and grains have been a boon to their economies, although recent declines in commodity prices are beginning to bite, economists said.

For the majority of the country, the air has come out of a decade-long housing bubble, with home prices falling an average of 20 percent in the past year and almost one in 10 mortgages either overdue or in foreclosure. A wide swath of industries is feeling the pain, including real estate agents, bankers, builders, lumber companies and furniture makers.

The real estate bust is at the heart of mounting job losses in California, which has seen its unemployment rate reach 8.4 percent, the third-highest in the nation. In the year ending in November, 71 percent of the nonfarm jobs lost in California were housing-related.

Many of the nation’s leading mortgage lenders were based in California and have since been bought by larger banks or gone bankrupt.

As the country’s leading lumber producer, Oregon has also taken a direct hit from housing, with sawmills producing sharply less than a year ago. The slump has cost Oregon about 1,000 logging jobs in the past two years and more than 7,000 jobs in wood manufacturing, which includes plywood mills and the production of door and window frames, said David Cooke, an economist in Oregon’s employment department.