As the economic downturn of 2002 progressed, more local communities across the country slid into persistent unemployment. Unemployment rose in hundreds of counties and cities, with unemployment rates ranging from 9% to 25%. As the American economy continues to limp towards recovery, residents in these most depressed areas will be particularly hard hit by unemployment.

This study identifies 397 cities, counties, and metropolitan statistical areas (each with a population of at least 10,000) experiencing unemployment rates that are 9.0% or above. The results of this study are based on annual average unemployment rates from 2002. Since 2001, an additional 121 localities slipped into the “high unemployment” category. This follows a disturbing trend, where over 200 localities have fallen into high unemployment since the year 2000.

For the nation as a whole, unemployment rose from 4.7% to 5.8% on average between 2001 and 2002. Since the 1940s, the national annual unemployment rate has averaged over 9% only twice, in 1982 and 1983, and has not averaged above 8% since. Recently, the country has experienced a significant increase in unemployment at the national level. Since the beginning of 2003, unemployment has increased from 5.7% to 6.4%. These local communities have borne the brunt of this national increase. In some of these areas, nearly 1 in 4 members of the labor force are unable to find work, creating significant hardships for many Americans.

Policy Implications

The 397 localities discussed in this report are having extreme difficulty keeping many citizens productively employed. While national unemployment is often the focus of elected officials in Washington, these pockets of economic distress are also vitally important. When leaders take a “one size fits all” approach to labor policies, they ignore the over 26 million Americans that are currently living in communities suffering under the burden of high unemployment. The counties and cities cited here could suffer enormous economic damage if the federal government implements policies that lack the flexibility needed to deal with local and regional economic variations.

Policymakers in Washington are not the only elected officials who must be wary of local economic conditions. State officials must also consider the situations in these localities before passing inflexible regulations on labor markets across the state. In 2003, Illinois increased its statewide minimum wage by 26%, despite the fact that nearly 1 million citizens lived in localities with average annual unemployment rates of over 9%. In addition, 24 other states considered raising their minimum wages during the 2001 legislative session. Before passing any of these wage mandates, responsible state legislators must consider the possible effect on residents in these locally depressed areas.