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What Recovery? Across America, People in Distressed Cities and Small Towns Face Economic Catastrophe

It's time for a new economic approach that brings jobs and hope to the places left behind.

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The US economy, many believe, is turning a corner.  Maybe so, but for much of the country, what lies around the corner is a dead end.  In far too many places, high levels of unemployment still exist, and joblessness has been the norm for years, even decades. Unless we try something different, these places will once again be left behind as more prosperous areas recover.

In over 200 metropolitan and micropolitan areas, the jobs crisis dominates everyday life, but these communities were experiencing high levels of unemployment long before the Great Recession. They are “distressed areas,” which we define as areas where the unemployment rate has been at least 2 percentage points higher than the national average for at least five years—in some places, for over 20 years.

We usually assume that economically distressed areas exist only in inner-city slums or rural backwaters. But areas plagued by persistent high unemployment almost never fit into conventional categories. Distressed areas share characteristics that make them unlikely to recover if the remedies offered rely only on the standard approaches to boosting the economy.

In distressed areas , government aid provides nearly one-third of residents’ incomes, compared to 17 percent nationwide. Upwards of 40 percent of the population in these areas lives on $30,000 a year or less, and the workforces there have low educational-achievement rates, with more than half possessing just a high-school degree or less. Most jobs are in low-end service industries, especially prisons, casinos, nursing homes, and retail. Such jobs offer few chances for upward mobility or skill enhancement.

For instance, unemployment in Yakima, Washington, has averaged 4 percentage points above the national average over the past 20 years—57 percent of its adult residents have only a high school degree or less. Similarly, in Rockford, Illinois, where the average unemployment rate has been 2.4 percentage points above the national standard for over 10 years, 53 percent of the population has no education past high school. To take one more example, a staggering 62 percent of the population in Danville, Virginia, has only a high school degree or less, and its unemployment rate has hovered 2.1 percentage points above the national average over the past five-plus years. In the country as a whole, by comparison, 43.3 percent of the adult population has no post-secondary education; in some thriving areas, the figure is much lower—for instance, Cambridge, MA (22.7 percent) and Seattle, WA (25.8 percent).

What distressed areas need is a new approach to reducing joblessness and building sustained prosperity. Efforts to promote industrial development, either by the Chamber of Commerce or through targeted government grants and subsidies, are no longer enough.  Worker-training programs are also insufficient, since trainees often discover after completing such programs that the hoped-for jobs do not materialize. The challenge is even greater for those who have been out of work for extended periods of time.

The dire conditions confronting jobless American workers in distressed areas won’t go away if we just wait for the long-anticipated increase in economic growth. These places have been struggling through both booms and busts; they offer proof that, unfortunately, a rising economic tide does not lift all boats. We need new approaches to reverse the long-term trends in unemployment.  

One approach that might bring about job growth is to expand access to startup capital for small businesses. Distressed areas lack the capacity to support new businesses. Moreover, existing businesses are unlikely to expand into distressed areas.

Report after report notes the number of unemployed workers in their 40s to early 60s who face poor prospects of restarting their work lives in their previous career field. In addition, there are countless younger workers who want to pursue new opportunities but can’t find any in the distressed areas where they live. For many of them, moving is not an option—they simply can’t afford it .