May 22, 2002


A report on how hard the recession has been on Atlanta

In those surveys about desirable places to live, one of the most favorable conditions for Atlanta throughout the 1990s was its employment opportunities.  This recession, by contrast, has been much harder on Atlanta job seekers than in most of the country.  Why?

Before asking why, we must determine whether the collapse in Atlanta employment truly is unusual.  The answer is an emphatic double yes. 

First, of 291 urban places in the United States, Atlanta currently is 287 in job creation as reported in the latest Forbes survey of desirable places to live.  In previous downturns, Atlanta declined less and rebounded stronger than the nation. 

This time, the U.S. lost about 1.1 percent of its jobs.  Atlanta has lost 3.1 percent in the past twelve months.  Excluding Atlanta, Georgia's job loss has been 1.6 percent over the same time period. 

Second, Atlanta never before lost 67,700 jobs in a single twelve month span.  Even in the serious 1972-1973 downturn, Atlanta's job loss was a smaller percentage than today.  This recession is very real and very severe for Atlanta. 

Moreover, manufacturing is such a small percentage of Atlanta's employment (less than 10 percent), that the inventory excesses that plagued the remainder of the U.S. cannot be used to explain Atlanta's problems.  Percentage job loss in Atlanta's manufacturing is about half the percentage loss of all other jobs, and transportation equipment (including Lockheed) is responsible for most of that.

Job loss in construction is severe, about 10,000 jobs in the past year, but larger percentage declines have occurred in other downturns.  At 5.2 percent of all employment, construction activity is sufficient to provide homes, shops and office space for about 2.5 percent growth in activity.  Unfortunately, with jobs declining, we may still be early into the construction slump. 

However, the greatest problems are in the service economy.  Jobs in transportation services are off almost 14,000, and that's even before UPS contemplated a strike.  Communications jobs continue to erode by 5 percent per year. 

One "good" bad news is that retailing is off even more than overall jobs.  The lost jobs in grocery and restaurant sectors is substantial, and surprising.  Atlanta sales cannot be off that much in those sectors.  (My informal survey of special examples shows restaurant sales down, but only a couple percentage points.)

As mortgage refinancing has slowed, financial jobs have slumped.  With less discretionary income in Atlanta, insurance employment also is down. 

Real estate agents are growing, but this is not good.  Housing activity appears to be slowing.  Furthermore, spouses sometimes jump to real estate sales when family incomes are in jeopardy.  That does not mean that real estate agents are doing more business. 

Hotels have not yet recovered, with jobs off more than 12 percent.  Temporary jobs rebounded last month, as they did nationwide.  However, declines of more than 5 percent from previous year levels still persist. 

And who says that computer and data processing service providers are in short supply.  Their jobs are of more than 7000.

There is job growth in some sectors, such as amusement, hospitals, and social services.  Also, government employment continues to grow despite revenue shortfalls.  Local governments are using expanded tax digests to preserve their jobs.  Instead, they should be using those gains to purchase equipment and processes that will improve efficiencies when property values stall. 

(That behavior of local governments to be more concerned about creating government jobs than serving their constituencies is not unusual, but it remains disappointing.)

Although construction jobs will decline further and the jump in real estate agents cannot persist, there is some hope for improved job prospects.  Because Easter came at the end of March, much of the 9700 increase in April jobs reflects more than normal seasonal gains. 

Job declines in hotels and transportation services are so extreme that a bounce should be expected.  No further job declines should develop in trade and finance unless other jobs continue to erode.

But the industries of the mind are not growing in Atlanta.  They are not growing elsewhere either, but our roots remain even more shallow in the jobs of the future.

The severity of this recession for Atlanta shows that even our industrial diversity cannot save us from government inefficiencies and educational inadequacies.  Will the phoenix again rise from the ashes, or are we finally too exhausted to flap our wings?


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