Where Unemployment Has Hit Hardest

The 10 cities with the highest jobless rates share one thing in common: disappearing manufacturing jobs.

What started as a housing and financial crisis has turned into a manufacturing recession.

Even as signs grow that banks are steadying up and the housing market may be stabilizing, unemployment data show just how hard the recession has hit America's manufacturing centers.

Nationwide, unemployment has jumped to 9.5% from 5.7% a year ago. But for cities focused on manufacturing, it's been worse. The 10 cities where the unemployment rate has risen the most in the past year, according to data released Wednesday by the Bureau of Labor Statistics, are all major manufacturing centers, many with ties to the automobile industry.

At the top of the list are Indiana's Kokomo and the Elkhart-Goshen metro area. Both cities have sustained double-digit percentage increases in unemployment as factories have shut down, and businesses that depend on those factories have suffered. Some 20% of the jobs in Kokomo were once at Chrysler and Delphi plants, and Elkhart-Goshen was home to recreational vehicle manufacturers whose sales have collapsed amid the recession.

Unemployment has risen dramatically in four Michigan cities--Monroe, Muskegon, Detroit, and Flint--as the auto industry has downsized. Michigan's 15.2% unemployment rate is the highest of any state, and Detroit's 17.1% rate is the highest of any metro area with more than 500,000 people.

Rounding out the cities with the highest unemployment rates are Hickory, N.C., Bend, Ore., Janesville, Wisc., and Tuscaloosa, Ala., which have all lost manufacturing jobs in the last year. Overall, of the 372 metropolitan areas tracked by the Department of Labor, 144 now have double-digit unemployment rates, or 39%. Of those, unemployment is above 12% in 62 cities.

Nationwide there are growing signs that the recession is easing or may already have ended. After three years of falling relentlessly, the Case-Shiller Home Price index, released Tuesday, suggests that home prices are stabilizing. New home sales in June rose 11%, the Census Bureau reported Monday (a positive indicator, although this was still within the report's margin of error).

And a look at unemployment by county shows many states where unemployment is not that bad and recovery will be swift. The center of the country--especially the region between the Rocky Mountains and the Mississippi River--where agriculture and energy are dominant, still has strong employment. For the best numbers anywhere in the country, look to Bismarck, North Dakota, where unemployment is 3.8% (see "What's North Dakota's Secret?").

Banking and housing seem to be recovering, and industries like education, health care, agriculture and energy are poised to stay on track, but manufacturing may have a longer way to go. But there is hope: "Exports have been a leader out of the recession in the last two recoveries," says John Canally, an economist with LPL Financial. "We could look to exports being a leader out of recession again." It may be tricky in a global downturn, but if America's manufacturers can find markets overseas, they could join housing and banking in leading the way to recovery.

Cities Where Unemployment Has Hit Hardest

The metropolitan areas where the unemployment rate has risen the most in the past year, according to data released Wednesday by the Bureau of Labor Statistics, are all major manufacturing centers, many with ties to the automobile industry.

1. Kokomo, Ind.
Unemployment June 2008: 7.4%
Unemployment June 2009: 19.2%
Change: +11.8%

In 2008, one study found 20% of Kokomo's employment came from two employers: Delphi and Chrysler. An additional 10% of jobs come from other manufacturers, many of which have been hit hard in the downturn.

2. Elkhart-Goshen, Ind.
Unemployment June 2008: 6.8%
Unemployment June 2009: 16.8%
Change: +10%

A year ago, over a third of the jobs in the Elkhart-Goshen area were in production, the highest share of any metro area in the country. That's nearly five times as much as the national employment share for production, according to the Bureau of Labor Statistics. Elkhart and Goshen are home to several recreational vehicle manufacturers that have been particularly devastated by recession.

3. Monroe, Mich.
Unemployment June 2008: 8.5%
Unemployment June 2009: 17.1%
Change: +8.6%

Just south of Detroit, Monroe's unemployment rate has soared as manufacturing in the region has declined. In the last year, Monroe has lost 31% of its manufacturing jobs, 18% of its professional and business services jobs and 11% of its leisure and hospitality jobs.

4. Muskegon-Norton Shores, Mich.
Unemployment June 2008: 8.6%
Unemployment June 2009: 16.8%
Change: +8.2%

The decline of manufacturing has triggered job losses in nearly every sector of Muskegon's economy. Professional and business services are down 14.7%, leisure and hospitality have lost 13.8% of their jobs. Even traditionally resilient sectors like education and health services are completely flat in Muskegon. The only sector to grow in the last year has been the government.

5. Detroit-Warren-Livonia, Mich.
Unemployment June 2008: 9%
Unemployment June 2009: 17.1%
Change: +8.1%

Detroit has long been a synonym for the American auto industry, and as the industry has collapsed Detroit has become synonymous with decline. As General Motors and Chrysler emerge from bankruptcy and Americans start buying cars again, there is hope of recovery on the horizon. But in June 364,000 people were unemployed in Detroit, and it will be some time before all of them can be put back to work.