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5.1 The Southern economy

5.1.1 Growth and change

As in the United States as a whole, the economy in the south has grown nearly continuously since World War II. Growth in jobs and income exceeded growth in population (2.6 percent per year versus 1.6 percent per year between 1969 and 1997). Manufacturing industries were a major driver of the southern economy during this period. The proportion of U.S. manufacturing jobs in the South increased from 23 percent in 1969 to 29 percent in 1998 (Figure 1).

Manufacturing wages and salaries rose from 19 to 27 percent of the national total in 30 years (Figure 1). Having 29 percent of the jobs, but only 27 percent of the salaries supports the notion that the South has a large, inexpensive labor force. Nevertheless, average hourly manufacturing wages have increased in all Southern States since the mid-1970s. In 1999, Louisiana had the highest average hourly wage ($15.19), followed by Kentucky ($14.26), and Oklahoma ($12.69). The lowest average hourly wages were in South Carolina ($10.67), Mississippi ($11.18), and Arkansas ($11.55).

Figure 2 shows the average annual rate of job growth for the 10 major economic sectors in the South and United States between 1969 and 1998. In all sectors except agriculture, southern growth outpaced the national averages. Manufacturing jobs declined in the United States while they were increasing in the South, and agricultural jobs increased faster in the United States than in the South. These changes reflect a continuing shift away from agriculture to manufacturing and service sectors in the southern economy.

Between 1969 and 1999, wages increased faster than jobs for all States (Figure 3); the largest increases occurred in Florida, Texas, Georgia, and North Carolina. Smallest increases occurred in Alabama, Kentucky, Oklahoma, and Louisiana. Mississippi and Arkansas have the smallest State economies: Florida and Texas have the largest.

5.1.2 Poverty and unemployment

The nearly continuous growth in the southern economy has not benefited everyone equally. Some segments of the population still suffer from high unemployment rates, even while the overall rate is quite low. Similarly, there are groups and places with higher-than-average poverty rates in a region with poverty rates historically higher than the United States average.

Poverty rates in the South have declined by one-third over the past 30 years. The gap between the South and the country as a whole has narrowed, but the South still experiences a slightly higher rate (Figure 4). Between 1969 and 1999, the sharpest declines in poverty rates occurred in Mississippi (19.3 percent), Arkansas (13.1 percent), and South Carolina (12.2 percent). Texas had the lowest reduction (3.8 percent).

Data on poverty broken down by State, race, and gender are available from the Current Population Survey conducted by the Bureau of the Census. Note, however, that because of survey design, reliable estimates of poverty by gender and race are available only for the Census South Region, which includes West Virginia. Poverty rates in the South differ substantially by sex and race (Figure 5). Females have higher rates of poverty than males, and both black and Hispanic rates are more than twice the rate for white southerners. As a group, black females have the highest poverty rates.

The average unemployment rate for the South during the period 1978 to 1999 was 6.2 percent. Like poverty rates, unemployment rates differ across races. The average unemployment rate among black southerners between 1981 and 1998 was 12.1 percent, while that for whites was 5.2 percent. The South's annual unemployment rate of 4.1 percent in 1999 represents a 1.5 percent decrease from 1978. Florida and Virginia led this decline with decreases of 2.8 percent and 2.6 percent, respectively, but improvement occurred throughout the South. Three Southern States had unemployment rates of 5 percent or lower in 1978, compared to 11 States in 1999.

The sharp spikes in the unemployment rate in the early eighties and early nineties (Figure 6) roughly correspond to declines in growth of U.S. Gross Domestic Product. Alabama's unemployment rate was 14.4 percent in 1982, while Tennessee's reached 11.8 percent. During the period from 1978 to 1999, unemployment for the South peaked at 9.2 percent in 1983.