The 10 States With the Worst Economies In America
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The global economic crash hurt almost everyone, but not equally so. Last week, we looked at 10 states that are doing better than most in this grueling economy. Today, we'll consider 10 that aren't faring so well.
What accounts for their relatively poor performance? Three of the four states that saw the biggest real estate bubbles arise in the 2000s are on the list, beaten down by Wall Street hucksters promising them never-ending growth in home prices. People in California, Nevada and Florida, fueled by irrational exuberance, got badly “over-leveraged,” and when the house of cards fell apart, millions were left underwater. These states saw extremely high rates of foreclosures, and steep job losses as people pulled back on spending while credit market tightened. States themselves invested pension funds and other reserves in mortgage-backed securities, thanks to AAA ratings bought from ratings agencies like Standard and Poors, and that, combined with a massive drop in tax revenues, led to budget crises and public sector cuts at the worst imaginable time.
Others like Mississippi, the Carolinas, Tennessee, Georgia and Alabama are cheap-labor “right to work” states. These are the economies that were devastated during the Civil War, came back only after the United States began mobilizing for WWII and have never truly caught up with the rest the country. With some of the lowest average net worths in the country and large service sectors that rely heavily on consumer spending, they were less able to weather the economic storm. Rounding out their pain is a severe drought, which has devastated agricultural outputs.
Rounding out the list is Michigan, which may be seeing some “green shoots of recovery.” Michigan ranks fourth in high-tech workers and R&D spending, but has been hurt badly by the long decline of the auto industry, which was hastened during the 2000s by high fuel prices and an out-moded fleet of gas-guzzling products.
Here are the 10 states doing the worst, based on a number of metrics. It's not a comprehensive examination of their economies so much as a snapshot of this painful time in our economic history.
Mississippi didn't make the top spot because of how it's done since the crash – it's always been a relatively poor state. It gets top billing because while they were the fifth richest Americans prior to the Civil War, Mississippians are now the poorest people in the United States, ranking last in average incomes and household net worth and leading the nation in poverty.
Unemployment rate: 10.4 percent (Nationwide: 9.1 percent)
Share of unemployed out of work for more than 27 weeks: 43.9 percent (Nationwide: 44.4 percent)
Per capita income: $29,345 (Nationwide: $42,449)
Median household net worth, as a percentage of national average: 40 percent
Poverty rate (2008): 21.2 (Nationwide: 9.7 percent)
Share of the population without health insurance (2008-2009): 18 percent (Nationwide: 17 percent)
Foreclosure rate: 3.0 percent (Nationwide: 4.3 percent)
Nevada has the highest unemployment rate in the country, and also ranks second in foreclosures. The state doesn't have a terribly diverse economy. There's mining and livestock, but tourism and gambling are the biggest sources of revenue for the Silver State. Nevada saw a huge construction boom during the 2000s, as a massive housing bubble arose out of the desert, and it burst just as tourism and gaming took huge hits in the recession. According to the Las Vegas Sun, “Gaming revenue fell by 16 percent, taxable sales fell 13 percent, visitor volume fell 12 percent, airport passengers declined 16 percent and convention attendance was down 21 percent” between early 2008 and 2009. Nevadans are second only to Californians in average household debt; they owe, on average, $73,000, about 50 percent higher than the national average.