Job Creation Has Left the Building
Where are the jobs? That question pervaded last week’s edition of the MetroMonitor index of recession and recovery and is becoming acute in the Intermountain West, where the companion Mountain Monitor reported that that employment actually fell slightly in the first quarter of 2010 in most of the region’s metros.
Nor is the prognosis looking much better going forward. The last dose of federal stimulus is beginning to wear off. The Senate is dawdling on a new lifeline intended to forestall additional state and local government layoffs. And for that matter the housing market is flagging again.
Which is especially troubling news for the Mountain West with its disproportionately large real estate and construction sectors.
In the West, the hope was that the recently expired federal homebuyer tax credit would juice home sales and construction, particularly in these important spring months, and so get the region’s real estate-oriented economy and the nation’s moving again. Then maybe—so the hope went—real estate sectors would carry some momentum through the rest of the year and jump start job creation across the rest of the economy.
Unfortunately, though, it’s beginning to look like things aren’t going to play out that way. Later today the Commerce Department is expected to say new-home sales dropped 20 percent last month. And meanwhile, it’s a big problem that nearly half of the million or so jobs that have been created thus far in 2010 are temporary Census positions, as David Reilly of the Wall Street Journal noted on Wednesday. After all, such short-term spots—as analysts at CreditSights observed in a report last week—simply don’t provide the security necessary to encourage households to take on large purchases, like a home, or to improve works’ chances of being approved on a loan application.
All of which suggests that those hoping for a real-estate-driven recovery in the West and elsewhere may have placed their hopes in a broken growth model and will need to look elsewhere for a true recovery.
How’s this? Well, with migration and consumption down, stimulus beginning to taper, lending still slow, and so many jobs temporary, it’s becoming clear the Mountain metros and others are this time going to need to generate an organic recovery the old-fashioned way: through the creation and exportation of true value.
This is what we’ve been getting at when we keep saying that the next economy will be export-oriented, lower-carbon, and innovation-driven (and associated with such related essentials as strong higher-education, highly trained workers, and thriving industry clusters producing innovative products). No robust housing market revival will take root, after all, until more people have stable, good-paying jobs, a steady income, and a degree of financial security. And to produce those things, metropolitan areas need to get back to the basics of learning and inventing and making and doing.
In this respect, it’s no surprise that Albuquerque and Ogden—two of the region’s most resilient metros through the recession—export fully 13.4 and 12.7 percent of their overall output, respectively. And it’s not very surprising either that two of the nation’s best-educated metros—Boulder and Fort Collins, both anchored by strong research universities—are heavily engaged in Colorado Gov. Ritter’s drive to place that state and its regions at the forefront of the emerging clean energy economy.
The Great Recession has, in short, helped accelerate a long-run reorientation of the economy towards higher value-added activities. This time, plentiful construction and consumption-oriented jobs will come only after the fundamentals that generate quality jobs and real economic value are firmly in place.