The Final Four: The four large cities that best weathered the recession

The four cities that best weathered the recession

WASHINGTON — Call them the Final Four: The four large cities that have made it through the Great Recession with the smallest increases in unemployment.

Minneapolis, Buffalo, Oklahoma City and Rochester, N.Y., don’t have much else in common. But a government report shows they’ve had the smallest increases in joblessness over the past two years among cities with at least 1 million people.

None of the four relies on heavy manufacturing industries, such as autos or steel, which have been hit hard by the downturn. And all have avoided the extremes of the housing boom and bust that devastated much of California, Florida and Nevada.

Minneapolis was the city with the smallest rise in unemployment among the nation’s 49 largest metro areas, according to Labor Department data released Friday. Its jobless rate rose by only 2.8 percentage points from January 2008, a month after the recession began, through January 2010. Its rate reached 7.7 percent that month.

Nationwide, the rate rose by nearly 5 points during those two years, to 9.7 percent in January, up from 5 percent. Employers cut 8.4 million jobs, the most in any downturn since the 1930s.

Minneapolis benefited from a medical equipment industry that’s fared better than other manufacturers during the downturn, according to Jeet Dutta, a senior economist at Moody’s Economy.com. The city’s major employers include Medtronic Inc. and Boston Scientific Corp. Health care is one of the few sectors of the economy that have added jobs during the downturn.

Oklahoma City’s January unemployment rate of 6.7 percent, meanwhile, is the lowest among large metro areas, the Labor Department said. It’s risen only 2.9 percentage points in the past two years. About a fifth of the city’s workers are employed by state or local government, said Russell Evans, a regional economist at Oklahoma State University. That includes the employees of 29 Native American tribal governments in the region, most of which have offices in Oklahoma City, the state’s capital.

Those workers benefited from federal stimulus money that helped plug holes in the state government’s budget and avoid layoffs, he said.

In addition, booming oil and gas prices leading up to the recession and a growing aerospace maintenance industry led to strong income gains for the region’s workers even as the recession took hold in other parts of the country, Evans said.

“Consumers in Oklahoma were a little slower than in the rest of the nation to tighten their wallets,” he said.

Buffalo and Rochester, N.Y., by contrast, didn’t suffer so much in the recession partly because their economies had already been struggling beforehand. Buffalo’s unemployment rate was 9.2 percent in January. That’s high but below the national rate of 9.7 percent. It rose only 2.9 percentage points during the recession.

Buffalo has diversified out of heavy manufacturing industries, like steel, that used to underpin much of its economy and moved into growing areas like health care, economists said. And last year, in the depths of the downturn, Canadian shoppers flooded into the city as the U.S. dollar weakened against the Canadian dollar.

“That’s been a boon to retailers,” said Marisa DiNatale, a director at Moody’s Economy.com.

Unemployment grew 3 percentage points in Rochester, N.Y., reaching 8.7 percent in January. The city has also diversified, said Richard Dietz, senior economist at the New York Federal Reserve. Its largest employer is now the University of Rochester. The university took over from Eastman Kodak, which is based in the city but has shrunk.

Overall, unemployment rose in nearly all 372 metro areas in January, the Labor Department said Friday, because the weak recovery hasn’t spurred much hiring.

The figures aren’t seasonally adjusted. And January is traditionally a grim month for employment as retail workers and other seasonal employees lose their jobs.

Among cities of all sizes, the lowest unemployment rates were in Fargo, N.D. and Bismarck N.D. They reported rates of 4.8 percent and 4.9 percent, respectively. Higher prices for agricultural commodities have bolstered the upper Plains states throughout the recession.