The United States Conference of Mayors
J. Thomas Cochran
1620 Eye Street, NW, Washington
Tel: +1 202 293-7330
Fax: +1 202 293-2352
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Southern and western US cities
will benefit most from job growth
A report by Global Insight prepared for the US Conference of Mayors
1 June 2003: The strong expansion in US gross domestic product during the second half of 2003 and into the first quarter of 2004 has resulted in a marked improvement in the country’s employment situation. After losing 2.5 million jobs from March 2001 through December 2003, employment increased by 1.2 million during the first five months of 2004. With the national recovery expected to strengthen further in 2004 and into 2005, the US employment picture should continue to improve, says a report prepared by Global Insight for the US Conference of Mayors in June 2004.
By the end of 2004, the report forecasts that payrolls in the metro areas should be growing by nearly two per cent annually. The authors of the report expect that by the early part of 2005, employment levels in metro areas should return to, and later surpass, the previous peak achieved in early 2001.
The resumption of broad-based employment growth in US metro areas is critical to the ongoing strength of the current national recovery. The non- metropolitan portion of the country provides only 16 per cent of total employment; this small fraction cannot sustain a lasting recovery across the entire nation. Underscoring the importance of the metro areas to the nation, between the start of 2001 and the end of 2003, payroll losses in the metro areas accounted for 84 per cent of all the nation’s job losses. Conversely, in the first quarter of 2004, metro areas were responsible for 80 per cent of new payroll jobs added to the economy. The robustness of the recovery in the metro areas is thus central to the future health of the US economy.
Of the metros that gained jobs from December 2003 to April 2004, 14 gained more than 10,000 jobs and an additional 19 metros added 5,000 jobs. All but nine of the top 33 gainers are metros located in southern or western states. The southern and western states have exhibited the strongest gains so far in this recovery. These states have experienced robust population gains, as well as stronger growth in “new economy” industries such as high technology and communications. The southern states also tend to boast a lower cost of living, thus reducing labor costs for employers. Some of the notable technology and manufacturing metros, which lost numerous jobs in 2001-03, such as Detroit, Denver, Cincinnati, and St. Louis, have displayed gains this year. Others, like Boston, San Jose, Chicago, and Madison, lost additional jobs in the first four months of 2004.
Boston’s struggling technology, financial, and business services sectors have landed the metro on the bottom of the rankings in terms of numbers of jobs lost. Washington DC, at the top of the list, saw gains in all sectors but manufacturing in the first four months of 2004. The metro area has experienced a surge in professional and business services jobs during the recovery, while the government sector also made gains. The influx of jobs has also created a housing boom, resulting in substantial growth in construction employment.
The recession year of 2001 saw large employment declines in the older mid-western manufacturing centers, as well as in the new high-technology metropolitan clusters. In addition, Detroit, Cleveland, Chicago, St. Louis, and Greensboro lost over 10,000 jobs each due primarily to cutbacks in the manufacturing sector.
Seattle, San Jose, Boston, and San Francisco experienced similar declines, as the dot-com bubble burst. New York, tragically, lost the most jobs, largely due to the 9/11 terrorist attack. Although the technical end of the recession had occurred by early 2002, the employment picture darkened in some metros across the country. Some 21 metros lost more than 10,000 jobs from December 2001 to December 2002, in many cases following job losses in 2001.
Aerospace manufacturers saw an immediate reduction in orders after 9/11, and the layoffs took hold during 2002 in such places as Wichita and Seattle. By the end of 2003, the labor market situation had not yet shown signs of revival for a number of metros.
Cities where employment declined the most from December 2002 to December2003 were Detroit (60,000), New York (49,200), Boston (47,600), Los Angeles (40,800),and San Francisco (34,300).
At the other end of the scale, however, nine metros, all of which are located in southern or western states where the rebound has been more evident, gained more than 10,000 jobs during that same period. The top five gainers through December 2003 were Las Vegas (35,300), Phoenix (31,200), Orlando (18,700), WashingtonDC (17,300), and Tampa (15,300).
After a sluggish start to 2003, the national recovery picked up speed in the second half of the year. That trend continued into 2004, as the top 20 metros and the nation overall posted positive year-over-year growth through April 2004. However, though economic activity was rising, employment growth in the top 20 metros continued to lag the nation. Through April 2004, total employment in the top 20 metro areaswhich accounts for 32 per cent of national employment increased by 0.2 per cent, compared with 0.5 per cent gains across the United States. It is apparent that these metro areas felt the brunt of the economic slowdown due to their relatively high concentrations of high-tech, manufacturing, and finance industries, which have struggled.
As the recovery unfolds further, employment gains should be broad-based and should accelerate through the end of 2004 and into 2005. Nonetheless, the pattern of job growth across the top 20 metro areas will be diverse.
Between the second half of 2004 and the end of 2006, the Global Insight report forecasts that the strongest payroll gains will come in the Sunbelt metros; San Diego, Phoenix and Atlanta will all experience payroll growth averaging over 2.5 per cent during this period.
Thanks to federal government spending, Baltimore and Washington DC will both see employment growth slightly more than 2.0 per cent. Relatively high business costs and slow population gains will lead to slower employment growth in some of the major northeastern metro areas such as New York and Philadelphia. In addition, weighed down by a moderate recovery in the high-tech sector, Boston and San Francisco will experience a relatively slow jobs recovery, 1.6 per cent and 1.1 per cent, respectively, through 2006. Employment growth in the top 20 metro areas will be led by a marked improvement in the professional and business services sector. Sparked by an upswing in corporate confidence and spending, employment in this sector is expected to increase 2.0 per cent in 2004, 4.5 per cent in2005, and 3.7 per cent in 2006.
Metro areas such as Boston, Atlanta, and Baltimore will benefit in particular from the sharp improvement in this sector. Moreover, bolstered by improving global trade conditions brought about by a weakening dollar, the recent spate of job losses in the manufacturing sector should start to dwindle as 2004 progresses.
Indeed, during 2005 and 2006, manufacturing employment in the top 20 metro areas is expected to post year-over-year growth for the first time since 1998, on the strength of durables manufacturing industries. In the financial services sector, gains will slow slightly in 2004, as the recent rise in interest rates has already moderated demand for mortgage refinancing, offsetting some of the growth in the broader financial services sector.
Nominate exceptional women mayors for the World Mayor Prize
The 2018 World Mayor Project is dedicated to women in local government. It features the achievements of women mayors from across the world and will honour the best of them.
Please nominate your candidate now
Women have fought prejudice and struggled for equal rights and opportunities for hundreds of years. They did it with courage and resolve. In the 20th and early 21st centuries, women have achieved success in many spheres previously reserved to or monopolised by men, but their contributions are still often undervalued and their potential not recognised enough. Only some 20 per cent of the world’s mayors are women.
The 2018 World Mayor Project aims to encourage more women to consider a career in local government and stand for political office.
mayors for the 2018
World Mayor Prize