Missouri unemployment could reach 15-year high

Columbia's unemployment rate remains below five percent.

By Greg Young

Published Nov. 11, 2008

While Missouri's rising unemployment rate saw short-term improvement last month, economic conditions in the state could worsen in the long run, according to a study.

Missouri's unemployment rate fell to 6.4 percent in September, down from a 6.7 percent rate in August, which was a 14-year high.

The Mid-American States Economic Conditions Survey conducted by Creighton University, found that Missouri's Business Conditions Index fell to 48.1 in October, down from 53.6 in September. A score below a 50 in the index represents economic contraction, meaning that Missouri's economy shrunk in the previous month.

Ernie Goss, a Creighton University economics professor who oversaw the report, said in a news release that Missouri manufacturers, like the rest of the U.S., are reporting "very weak" business conditions, and said the state's unemployment rate could move above 7 percent in early 2009.

In the entire U.S., the unemployment rate rose to 6.5 percent in October, the highest level since 1994. In 2008, the U.S. economy has shed 284,000 jobs, according to the U.S. Department of Labor.

"A vast majority of the unemployment can be traced to the malaise the U.S. economy is in," MU agriculture professor Thomas Johnson said.

Additionally, the financial turmoil of the U.S. auto industry appears to be taking a toll on Missouri's economy. The total amount of manufacturing jobs in Missouri has decreased by four percent compared to last year, according to the U.S. Department of Labor.

"There are some industries that Missouri is dependent on that are going through a very hard time right now," said Todd Smith, the director of the Missouri Department of Labor and Industrial Relations. "You are seeing a lot of mass layoffs, and of course that would primarily effect St. Louis and Kansas City, but you see some trickle down."

In Columbia, the unemployment numbers are less dire. Columbia is projected to have had a 4.5 percent unemployment rate in September, according to the U.S. Department of Labor.  

"Columbia has a diverse service economy focused on education and health care," MU finance professor Robert Weagley said. "We have people moving to Columbia because of the quality of life."

However, the economic slowdown is being felt in Columbia hospitals.

Due to decreasing inpatient stays, Boone Hospital Center is planning to lay off 35 full-time workers and has cut the hours of 80 other employees.  

"We continue to make difficult, but necessary, decisions in order to preserve Boone's patient safety, quality of care, service excellence and patient and employee satisfaction for the long term," Boone Hospital President Dan Rothery said in a news release.

Besides tax credits, Johnson said government investment in infrastructure projects is a way to stimulate Missouri's economy.

"It is sort of a double dividend. You are not only stimulating some short term expenditures, but you create a valuable infrastructure for long term growth," Johnson said.

Additionally, Johnson said Missouri should avoid cutting spending. Although additional spending may lead to a budget deficit, Johnson said that spending early in a recession might provide a rationale for deficit spending.

"States really have to avoid contributing to the recession by cutting their expenditures," Johnson said.

In order to fix the unemployment dilemma in the state, Weagley said he believes that a massive investment in education is important.

"We need a workforce that is not only educated but capable of working in a redeveloped, high-tech work place," Weagley said. "Unfortunately, we spend a lot of time talking about social and moral issues instead of doing something positive for economic growth."

Johnson said MU could play a role in helping boost Missouri out of its economic slump.

"We are a source of research that spawns a lot of innovation around the economy," Johnson said. "The university also plays a role in creating a high quality work force. It is on both the research side and on the human capital side."