Recession yields first-of-a-kind income drop

Recession yields first-of-a-kind income drop

August 13th, 2010 in News

Staff Photo by John Rawlston/Chattanooga Times Free Press Aug11, 2010 Edwin Nelson was laid off from his job at Eureka Foundry after working there for 19 years, and he visits the Tennessee Career Center at Eastgate to check on job opportunities. Many people who lost their jobs in the past year are facing an income drop when finding new employment.

Staff Photo by John Rawlston/Chattanooga Times Free Press...

The income of the typical Chattanoogan fell by $960 last year - the first yearly drop in per capita earnings since the government began keeping such figures more than four decades ago.

Higher unemployment, shorter workweeks and smaller dividends combined to cut personal income for the average Chattanooga worker by 2.8 percent during 2009, government figures show.

The U.S. Bureau of Economic Analysis said per capita income in metropolitan Chattanooga - Hamilton, Marion and Sequatchie counties in Tennessee and Catoosa, Dade and Walker counties in Georgia - last year dropped to $33,824, and even more in Dalton, Ga. The average local worker received $6,633 less income than the typical American.

Edwin Nelson, who lost his $13-an-hour job as a janitor at Eureka Foundry in early 2009, is typical of many Chattanoogans whose income plunged because of layoffs.

"I've had to cut back on all kinds of spending," said Nelson, 64, while applying for extended jobless benefits this week. "The economy has been rough for a lot of us."

When Gary Lewis lost his job as a grinder at Chattanooga Pattern and Foundry Co. last year, his income fell from than $24,000 in 2008 to about $7,000 in 2009. The 26-year-old from Soddy-Daisy had to move back home with his parents and borrow money to fuel his truck to look for other work.

"I've worked some small jobs since I got laid off in January 2009, but there just aren't a lot of jobs out there," he said. "It's really crippled me."

17,700 fewer paychecks

Most of the income drop in Chattanooga last year stemmed from the loss of 17,700 jobs in the six-county metropolitan area during 2009, according to the Bureau of Labor Statistics.

University of Tennessee economist Bill Fox said the 7.2 percent decline in employment last year in Chattanooga nearly doubled the region's jobless rate and held back wage demands from those still on the job.

"Employment dropped significantly last year and wages fell, though not as much, primarily because workweeks and commissions were cut," said Fox, director of the Center for Business and Economic Research at UT. "This is a much more severe recession than previous downturns, and inflation is extraordinarily low already, so there isn't any real pressure for wages to rise."

Inflation, as measured by the national price index for personal consumption expenditures, declined to 0.2 percent in 2009 from 3.3 percent in 2008.

While wages and dividends were down, government payments for jobless benefits, food stamps and Social Security were up, figures show.

Hopeful Signs

Fox said employment is growing again in 2010. Bureau of Labor Statistics figures show that Tennessee's manufacturing sector, which shed more than 100,000 jobs in the previous decade, has added 5,000 jobs since December.

Still, he said, employment levels may not return to prerecession levels until 2012.

Omar Garcia, who was unemployed for months after moving to Ringgold, Ga., from his native Los Angeles, began a new job last month as a telemarketer in Chattanooga. The 30-year-old Army veteran said he rode his bike from Ringgold to the Tennessee Career Center at Eastgate Town Center nearly every day to check for openings and apply for jobs.

"I sent my resume to more than 50 employers, but I got a job," he said.

Thophles Williams, a coordinator at the Tennessee Career Center, said such persistence is key to employment.

"Getting a job is like work," he said. "You have to stick with it. But fortunately, we are starting to see more listings."

Dalton downturn

Dalton, the self-described Carpet Capital of the World, and Cleveland, Tenn., home of a major Whirlpool cooking appliance division, also have been hit hard by the recession.

Among the 366 metro areas in the United States, only 16 had lower per capita income in 2009 than the $27,708 average in metropolitan Dalton, which includes Whitfield and Murray counties.

Dalton had the highest jobless rate among the 20 metropolitan areas in Georgia and Tennessee, and its 2009 per capita income averaged 32 percent less than the national mean.

Elyse Cochran, senior vice president of economic development at the Dalton Whitfield Chamber of Commerce, is one of the leaders of the new $6 million, four-year Grow Greater Dalton campaign.

"Our recruitment effort is targeting higher-wage jobs and trying to diversify our economy," she said.

"We want to sustain our claim to fame as the floorcovering capital of the world, but we are pleased that we already have announced at least 380 jobs in industries outside of the floorcovering industry. I think the economy is starting to come back," she said.

Metropolitan Cleveland, which includes Bradley and Polk counties, reported only a 1.3 percent decline in per capita income in 2009 - less than half of the U.S. average drop of 2.8 percent. But Cleveland's per capita income of $29,704 still remained more than 27 percent below the U.S. average last year.

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