2/15/2009

White Collar Birthplace Essential?

Professor Tufte explained in class, awhile ago, that there are distributional consequences of recessions. Usually workers who have bad or lazy attitudes, social pathologies, are tied to a location, are at the bottom of the income latter, or do not have skills are typically the first to be affected in a recession. The article, “The Jobless Go Back to School and, They Hope, Work” by Amy Merrick and Roger Thurow in the February 5th edition of the Wall Street Journal discusses the unemployment issue in Rockford, Illinois. Rockford is a small town near Chicago, Illinois. The unemployment rate in Rockford is approximately 12.5%, which is well above the Illinois state unemployment of 7.4%, and even higher than the U.S. average of 7.1%. The town is characteristically a manufacturing town, meaning that many of the jobs there are "blue collar." Not surprisingly, there has been little incentive for residents to receive higher education. Only 19% of the residents have a four-year college degree which is much less than the national average of 27%. Would this be the same in a "white collar birthplace?" The burden of the recession is much worse in towns like these, which just goes to show that the location one is born in can determine their future financial situations.

6 comments:

Victoria said...

Jobless go back to school is good oppotunity to find out what they really want to be and do rest of their life.As we discuss in the class, the enviroment is pretty important.

Dr. Tufte said...

-1 on Gracie and Victoria for spelling and grammatical errors.

The issue with a place like Rockford is not so much that they get hurt worse in recessions, but that they are more volatile over the whole business cycle. Often what you find in places like this is that during expansions people either can work more hours but don't save the extra to smooth their consumption, or else they feel like they might lost their jobs if they don't work the extra hours. Neither of those is good, and they both contribute to lives that are worse than they could be.

Abigail said...

In life, just like in real estate, location is everything. However Rockford Illinois is a far cry form Central America. The problem here may be more correlated with ignorance than location. Kids get out of high school, fall in to a high paying manufacturing job and then figure they have it made. Did they ever think about a back up plan? As a 21 year-old kid I had a job making 45k a year with room to grow. I knew however that if for some reason I was to lose this job it would be difficult to find a comparable one with my skill set. That is why I am back in school. Maybe this issue should be addressed in early education.

Dr. Tufte said...

Hmmm ... I think the experience with young people flipping houses in St. George the last few years suggests that this is a lot harder than it sounds.

Interestingly, there is laboratory evidence on what it takes to create bubbles in prices: it's as simple as making sure there's a constant stream of new players in the market.

Luke said...

In a town, with such volatile jobs, you would think that people would move or at least start to consider other possibilities. I wanted to check out how small this town was to see if maybe because in smaller towns people help support each other and that could be a possibility of why someone would stay in such a place. I referenced Wikipedia and in 2006 the city population was 168,138 making it the third largest city in Illinois, with Chicago being first. This is no “small” town. In a town with this size, it would seem that there should be more options than working in a factory or at least influences to help assist in attaining jobs. Rockford is roughly 80 miles from the center of Chicago people could easily commute if needed. With that said there has to be some other factor in their high unemployment rate.

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