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Chronic unemployment: What is ahead?
City’s jobless rate generally has led state for five years
Sunday, July 22, 2012
By BULLETIN STAFF REPORTS -
Martinsville has had the highest unemployment rate in Virginia since May 2007, with the exception of one month, January 2009.
That is according to data from the Virginia Employment Commission (VEC), which also show that Henry County’s rate has been much higher than the state average for much of that time.
In May 2007, the city’s unemployment rate was 7.3 percent, according to VEC data.
The city’s jobless rate rose steadily and reached 20 percent March 2009. It generally remained 20 percent or more through August 2010, except four months, when it was more than 19 percent. The jobless rate peaked at 21.9 percent in March 2010.
The city’s jobless rate was 14.4 percent in May 2012, the VEC reported recently. But it still is the highest in the state.
Henry County’s unemployment rate was 4.9 percent in May 2007 and peaked at 16.1 percent in February 2010, according to VEC data. The county’s unemployment rate was 9.3 percent in May (ninth among Virginia’s 134 localities), the VEC recently reported.
According to local and state officials and government data, the ramifications of those five years of chronically high unemployment include more poverty, reduction in income or slowing of the growth of income, a widening of the local versus state income gap, poor health and mental health impacts, greater stress on local governments and human service agencies, and population declines, especially among younger people, as people move out of the area.
Local and state governmental officials said that the issue should be viewed as a regional issue, not a local one. That is because the region is marketed that way and viewed that way by prospective businesses, and because they say the region was hard hit when much of the furniture and textile industries moved offshore.
Regional economist Terry Rephann likens Southside Virginia to the Pittsburgh, Pa., area after the collapse of the steel industry in the 1970s and 1980s.
And Rephann, of the University of Virginia’s Weldon Cooper Center for Public Service, said he thinks progress in economic development is being made in Southside and that the region will recover over time, just as it took time for the Pittsburgh area to reinvent itself and flourish again.
Pittsburgh’s recovery has taken about 30 years, he said, but now it is a center for high-tech, robotics and pharmaceutical industries, he said.
He predicted a similar process will occur in Southside, but he is not sure which industries will fill the void.
Southside’s recovery could take 10 to 20 years or so depending on national economic conditions, Rephann predicted, adding that the national gross domestic product is growing at a slow 2 percent.
“This has been several decades in the making what’s happening to you,” Rephann said of Southside’s economic woes.
The area’s population has shrunk during the poor economy. According to a West Piedmont Planning District report, which cited data from the U.S. Census Bureau, the city’s population dropped from 15,416 in 2000 to 13,821 in 2010. Henry County’s population fell from 57,930 in 2000 to 54,151 in 2010.
Ironically, Rephann said, population loss and high unemployment can at some point create attractive conditions for prospective businesses — for new workers to move in and for available unemployed workers to be retrained to meet the needs of prospective businesses, Rephann said.
When companies are looking for locations, Virginia is competitive, and Southside has a willing pool of workers, he said.
One problem with Southside is it doesn’t have a major research education institution. “You don’t have that Virginia Tech,” Rephann said.
Converting New College Institute into a four-year college could play a key role in turning around the region, he said.
Industries that are growing in the U.S. include information technology, health care and advanced manufacturing with up-to-date, computer operated machinery, Rephann said,
One lesson for Southside’s economy is not to put all its eggs in one basket, he said. Having a more diversified economy will make the region less sensitive to business cycle swings, he added.