Southeast Missouri job losses mount in the first quarter of 2009

Sunday, May 3, 2009

Southeast Missouri mirrored the national economy in the first three months of the year as job losses mounted, increasing demand for safety net services and cutting into sales at many retailers. And more robust businesses can attribute part of their success to the misery of others -- restaurant and hotel receipts showed strong growth in Cape Girardeau at the same time areas to the south were caked in ice.

Overall, in a 10-county region from Poplar Bluff to Perryville and extending through the Bootheel, the number of people reported as unemployed in March was 45 percent greater than March 2008, according to the Missouri Economic Information and Research Center. The overall unemployment rate in those counties, 8.8 percent, closely mirrors the national rate of 8.5 percent and the statewide figure of 8.7 percent reported by the U.S. Bureau of Labor Statistics.

The lowest rate is in Cape Girardeau County, reported at 6.9 percent. The highest rates are in the Bootheel counties of Pemiscot, at 12.7 percent, and Dunklin, at 12 percent. In March 2008, Cape Girardeau County's rate was 4.5 percent, while Pemiscot and Dunklin were reporting 6.9 percent and 7.7 percent, respectively.

Even with signs the national contraction is losing strength, the employment picture won't improve much until after a recovery begins, said Dr. Bruce Domazlicky, director of the Southeast Missouri State University Center for Economic and Business Research. "What happens is that businesses want to be sure the recovery is underway and the economy is finally moving," Domazlicky said. "It takes them time before they are convinced they want to hire new workers."

The numbers behind the percentages show that since March 2008, employers in the 10 Southeast Missouri counties have shed almost 6,000 jobs. Of that number, 1,882 people don't show up in unemployment statistics because the number of people working or looking for work is falling. Those people, sometimes called discouraged workers, can make the unemployment rate appear lower than it might, Domazlicky said.

If the labor force wasn't shrinking, the unemployment rate would be 9.9 percent.

"Our worst-hit sectors, clearly construction is one of the worst," Domazlicky said, noting a big decline in housing starts in Cape Girardeau and Jackson. "And I am certain that parts of retailing are hurting."

But "spending hasn't dropped off a cliff," he added.

Measuring by food

One measure of how unemployment and lost income are affecting people is the demands placed on the Southeast Missouri Food Bank. The food bank supplies food to 145 agencies in 16 counties, including food pantries and senior centers. In the first three months of the year, executive director Karen Green said, the food bank has shipped 1.5 million pounds of food to the agencies for distribution. That is equal to half the amount shipped in all of 2008, she said.

"The numbers are growing, and we are seeing longer lines at the food pantries every time the doors are open," Green said.

While the pantries try to keep up with demand, many of the smaller operations are only open one day a month. The food provided often doesn't last a whole month, she said.

Green said the food bank will be embarking on several fundraising ventures this year to raise public awareness of the need and to make the food bank more effective. "We are trying to create awareness by people knowing what we do," she said. "That is how we become visible."

The food bank is benefiting from the federal stimulus bill through increased allotments of federal commodity foods, she said. Unfortunately, that food comes with income guidelines that can mean many people in need are being denied those products.

The retail sector, despite a round of inflation last year, is hurting as people cut back on spending. Cape Girardeau saw sales tax receipts fall 2.2 percent in 2008. Revenue from the city's 100 largest retailers, which generate more than 75 percent of the sales tax, fell 1.9 percent. The remaining retailers, many locally owned shops, saw taxable sales fall 3.2 percent, according to figures from the city finance department. Sales taxes on automobiles fell 20 percent during 2008, and fell another 26 percent in the first quarter compared to the same period of 2008.

Those auto sales tax figures are closely aligned with the reports from new car dealers, most of which reported lower sales in 2008 to the Missouri Department of Revenue. A few scored small gains, but many dealers in the region saw sales decline by 15 to 25 percent. A few dealers endured new car sales that fell as much as 60 percent.

The declines are not uniform and a number of businesses are thriving, said John Mehner, president and chief executive officer of the Cape Girardeau Area Chamber of Commerce. The chamber's enrollment of new members is up so far this year. Membership renewals are down, but a change in billing procedures could be the cause, he said.

"You can't throw everybody in the same basket," he said. "There are still a lot of people who are doing well and hiring."

One plus

Companies in a position to hire can find talented people, which Mehner said is one plus generated by the job losses. He also takes heart that the Cape Girardeau County unemployment rate is much lower than the national, state or regional rate. That is evidence of a resilient local economy with some insulation from national problems.

"The car situation is what it is," Mehner said. "The overall retail situation is that, while the numbers are only down 1 to 1.5 percent in this area, the employment numbers are down more."

Sectors that are helping keep the Cape Girardeau economy strong include the two major hospitals, both of which, Mehner noted, are in the midst of construction programs, and restaurant and hotel sales. "We don't get as high as the high nationally and we don't get as low as the low."

Housing construction took a slide in Cape Girardeau and Jackson in 2008, as the number of building permits issued fell by nearly 50 percent. The prospects for recovery in the housing market are questionable, both Domazlicky and Mehner said, but federal stimulus spending, coupled with big local projects, should help keep commercial builders and their labor force working this year.

Cape Girardeau is embarking on a $20 million park construction program. Saint Francis Medical Center last week won approval from the Cape Girardeau County Commission for a $75 million industrial development bond issue that will finance construction of a heart and cancer building. And Southeast Missouri Hospital broke ground in January on a $33 million cancer center.

Sales at hotels and restaurants can be measured through receipts from Cape Girardeau's 1 percent tax on restaurant meals and a 4 percent tax on hotel rooms. In the first nine months of the fiscal year, revenue from restaurant taxes grew by 3.9 percent and hotel taxes grew 6 percent.

The return in March, which reflects sales made in late January and early February, was up by 10 percent or more from both taxes. Hotels to the south were closed for much of that period and restaurant sales grew as people living without electricity came to Cape Girardeau for services.

Asked whether he attributes any of the increase to higher prices, Convention and Vistors Bureau director Chuck Martin noted that prices are higher for many goods and regular sales taxes are not keeping pace. Cape Girardeau's restaurant and hotel industry is strong because the city is a regional hub, drawing people for services such as hospital care, and through marketing, which fills rooms for sports tournaments and events like last month's Storytelling Festival.

"You see these numbers growing and you think about how the general sales taxes would be impacted even further if these businesses weren't doing well," Martin said.

A national turnaround may be slow in coming and that will mean extended pain for those looking for work, Domazlicky said. But indicators are showing some life, including a drop in business inventories that should, at some point, force businesses to increase their wholesale buying. His prediction? "It will not be until late this year or early next year before there is a recovery in employment."


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