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Lessons from America’s worst cities

July 27, 2011

Lessons from America’s worst cities
By Oregon Tax News

Oregon Tax News recently analyzed the information behind three different worst city ratings which included;”America’s Shrinking Cities List” (by MSNBC), “America’s Most Miserable City List” (Forbes) and “Worst Job Seeker City List” (US & World Report). The four most common factors of being among America’s worst cities were unemployment, high crime, low education levels and a city’s exposure to the housing crisis fall-out. A more narrower data point not highlighted in this article were worst cities that were impacted by disasters like Hurricane Katrina.

The U.S. News & World Report dubbed Riverside, California, the worst city for job seekers in the country. Currently, Riverside’s unemployment rate is 13.9 percent (March 2011).  Experts attribute Riverside’s high unemployment to the city’s real estate boom in the past decade which was among the greatest housing fallout areas in the nation.   On the counter side, Texas had a more conservative banking-housing climate before the housing crises, suffered less economical damage and their cities have been creating  30-40% of the new jobs for the entire nation.

In addition, Riverside is one of the least-educated metropolitan areas in the country. Experts determined that the recession hits those with less education the hardest. The national unemployment rate for those without a high school diploma and over 25 years of age was 14.6 percent in April. That figure is noticeably higher than the unemployment rate for those of the same age but with a high school degree, 9.7 percent, and those with a college degree, 4.5 percent.

In the past year, the U.S. economy as a whole lost 7 percent of the jobs in the private sector, but cities like Riverside, Las Vegas and Sacramento lost about 15 percent of private sector jobs. This shows some cities suffered a double jobless impact compared to the national average.

Yet Riverside does not have the highest unemployment in California. The city of Merced in northern Calif. has an unemployment rate of 21.4 percent. In the beginning of 2011, California faced massive budget deficits, high unemployment, lowered home prices, violent crime and increasing taxes. These problems lead California to receive eight of the 20 spots on Forbes’ America’s Most Miserable Cities, with Stockton ranking first for the second time in three years.

Like Riverside, the housing bust played a role in Stockton’s decline. Median home prices in the city tripled between 1998 and 2005, when they peaked at $431,000. Now experts forecast that as the median price will be $142,000 this year, according to research firm Economy.com, a decline of 67% from 2005. Foreclosure filings affected 6.9% of homes last year in the Stockton area, the seventh-highest rate in the nation, according to online foreclosure marketplace RealtyTrac.

In addition to the housing boom, violent crime and unemployment rates in Stockton also rank among the 10 worst in the country. Although Economy.com expects jobless rates to decline or stay flat in most U.S. metro areas during 2011, it projects Stockton’s unemployment will rise to 18.1% in 2011 after averaging 17.2% in 2010.

Controlling crime and creating a job growing climate appear to be city leader’s best hands on tools to grow a city and avoid the misery ratings attributed to other cities.

  
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