The global economic crash hurt almost everyone, but not equally so. On Monday, 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.
1. Mississippi
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)
2. Nevada
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.
Unemployment rate: 12.9 percent
Share of unemployed out of work for more than 27 weeks: 46.1 percent
Per capita income: $41,321
Median household net worth, as a percentage of national average: 84 percent
Poverty rate (2008): 11.3 percent
Share of the population without health insurance: 20 percent
Foreclosure rate: 9.7 percent
3. West Virginia
West Virginia stands out for its low net worths—the accumulated legacy of long years of relative hardship—the second lowest average incomes in the U.S. and the sixth highest poverty rate.
Unemployment rate: 8.1 percent
Share of unemployed out of work for more than 27 weeks: 33.1 percent
Per capita income: $30,217
Median household net worth, as a percentage of national average: 52 percent
Poverty rate (2008): 17 percent
Share of the population without health insurance: 15 percent
Foreclosure rate: 2.1 percent
4. California
The Golden State has long been among the most prosperous states in the nation; if it were a country, its economy would be the world’s largest. But while it still accounts for around an eighth of the country’s economic output, it had one of the biggest real estate bubbles, and has been hit hard by the downturn. That followed a decline in high-paying manufacturing jobs in the 2000s—California accounted for over 15 percent of the country’s exported goods in 2000, but that fell to just over 11 percent in 2008. While Californians enjoy relatively high incomes, they are also badly overextended. With an average of $77,000 in household debt, its citizens lead the nation.
Unemployment rate: 12 percent
Share of unemployed out of work for more than 27 weeks: 46.1 percent
Per capita income: $46,488
Median household net worth, as a percentage of national average: 84 percent
Poverty rate (2008): 13.3 percent
Share of the population without health insurance: 19 percent
Foreclosure rate: 4.4 percent
[W]ith the automotive industry appearing to be on the rebound and lots of new business investments, the Great Lakes State should see better days ahead.
5. Alabama
Alabama has a relatively low foreclosure rate and a share of the population without insurance that is below the national average. It belongs here because of Alabamans’ relatively low household net worths, the sixth lowest per capita incomes in the country and a poverty rate among the top 10.
Unemployment rate: 10 percent
Share of unemployed out of work for more than 27 weeks: 46.5 percent
Per capita income: $32,245
Median household net worth, as a percentage of national average: 57 percent
Poverty rate (2008): 15.7 percent
Share of the population without health insurance: 14 percent
Foreclosure rate: 2.0 percent
6. Florida
Like Nevada, Florida saw a huge real estate bubble inflate and then burst just as revenues from tourism were tanking. The Sunshine State’s foreclosure rate, at over one in eight properties, leads the country. Florida households are saddled with around $50,000 in debt, on average, and it trails only Texas and New Mexico for the largest share of its population without health insurance—no small feat for a state packed with Medicare-eligible retirees. Almost half of the state’s unemployed have been out of work for 27 weeks or more. One of the bright spots is Florida’s agricultural sector, which has benefited from high crop prices due to drought-driven food shortages around the world.
Unemployment rate: 10.7 percent
Share of unemployed out of work for more than 27 weeks: 49.5 percent
Per capita income: $35,815
Median household net worth, as a percentage of national average: 91 percent
Poverty rate (2008): 13.2 percent
Share of the population without health insurance: 21 percent
Foreclosure rate: 13.7 percent
7. South Carolina
Despite being far from the canyons of Wall Street, the Carolinas were among the hardest hit states in the downturn. South Carolina is tied for third in unemployment, has low average incomes and modest net worths, and a poverty rate in the top 10. Over half of the state’s unemployed have been out of work for more than six months—one of the highest rates in the country.
Unemployment rate: 10.9 percent
Share of unemployed out of work for more than 27 weeks: 51.9 percent
Per capita income: $31,378
Median household net worth, as a percentage of national average: 78 percent
Poverty rate (2008): 15.7 percent
Share of the population without health insurance: 16 percent
Foreclosure rate: 3.6 percent
8. Michigan
Long one of the most productive states in the union, Michiganians enjoy household net worths somewhat higher than the national average, and with the automotive industry appearing to be on the rebound and lots of new business investments, the Great Lakes State should see better days ahead. With a higher-than-average concentration of unionized workers, it has a relatively low rate of uninsured citizens. But Michigan has a lot of poverty, it’s currently tied with South Carolina for the nation’s third highest unemployment rate and just under half of its jobless have been out of work for a half-year or more.
Unemployment rate: 10.9 percent
Share of unemployed out of work for more than 27 weeks: 49.8 percent
Per capita income: $34,893
Median household net worth, as a percentage of national average: 107 percent
Poverty rate (2008): 14.4 percent
Share of the population without health insurance: 13 percent
Foreclosure rate: 4.0 percent
9. Georgia
Georgia’s economy would be the world’s 28th largest if it were a country. It is headquarters to 1,700 multinationals, including Fortune 500 companies like UPS, Home Depot, Coca-Cola and Delta Airlines. It also has lots of poverty, low incomes, and a lot of uninsured workers. More than half of Georgia’s jobless find themselves among the ranks of the long-term unemployed.
Unemployment rate: 10.1 percent
Share of unemployed out of work for more than 27 weeks: 51.2 percent
Per capita income: $37,366
Median household net worth, as a percentage of national average: 98 percent
Poverty rate (2008): 14.7 percent
Share of the population without health insurance: 19 percent
Foreclosure rate: 3.4 percent
10. Kentucky
About a quarter of all electricity generated in the U.S. comes from Kentucky’s coal and uranium mines, and its cheap-labor, largely de-unionized workforce has attracted enough automotive manufacturing to make it fourth in the country in producing cars and trucks. But Kentuckians’ net worths are about a third lower than those in the rest of the country, its per capita incomes are among the 10 lowest in the U.S. and it is tied (with three other states) for the second highest poverty rate.
Unemployment rate: 9.5 percent
Share of unemployed out of work for more than 27 weeks: 37.2 percent
Per capita income: $33,326
Median household net worth, as a percentage of national average: 65 percent
Poverty rate (2008): 17.3 percent
Share of the population without health insurance: 16 percent
Foreclosure rate: 3.2 percent
Honorable Mentions
In this economic climate, deciding which 10 states to highlight wasn’t easy. Three states almost made the cut. Tennessee, with median net worths over a fifth below the national average and a poverty rate over 15 percent, would have made it if we’d done the 11 worst state economies. But it has a relatively low foreclosure rate—about half the national average—unemployment under 10 percent, and with a low cost of living, it’s easier to scrape by on low incomes than it would be in many states.
North Carolina would come in 12th. Most people are probably unaware of the fact that North Carolina ranks second in banking after New York, and was hit hard in the financial crisis. With an unemployment rate over 10 percent—almost half of it consisting of the long-term jobless—it was saved only by its per capita income of just under $40,000 and a foreclosure rate under 2.5 percent.
Arizona, the fourth state that saw the rise of a huge housing bubble, has a foreclosure rate of over 5 percent, its citizens are saddled with $53,000 in household debt, on average, and a fifth of its residents lack health insurance. But with an unemployment rate just a tick over the national average—and long-term unemployment just below average—it fell short of the 10 worst.
This post originally appeared at AlterNet.org.
