U.S. News: Recession-Hit Areas Lag for Years Afterward
Communities hit hardest during the recession could continue to fall behind the rest of the country for decades, research released Wednesday by the Brookings Institution's Hamilton Project suggests.</br></br>In regions that suffered disproportionately in the recession of the early 1980s, for example, average earnings have risen at a quarter of the rate of the rest of the U.S. Employment grew more slowly, young people left the region, population growth slowed and, as a result, demand for housing weakened. A similar fate could be in store for areas of the country that faced the deepest housing and employment shocks in the latest downturn, the report warned.</br></br>"This is a structural change," said Michigan Gov. Jennifer Granholm, a Democrat, referring to the latest recession. "The economy is just not going to come back the way it has before."</br></br>To avoid repeating the scenario that followed the 1980s downturn, papers commissioned by the Hamilton Project -- formed by some Clinton administration Democrats to devise policies to improve the economy -- recommended revitalization efforts targeting the worst-off communities.</br></br>Among the proposals: a government-sponsored bank that would provide loans of up to $10,000 for people who have been laid off in the past five years and are looking to move. The cost would run the government between $500 million and $800 million annually, estimated the University of Chicago's Jens Ludwig and the University of California, Berkeley's Steven Raphael, who wrote the proposal.