Even Madison's unemployment rate is rising
Nobody has to tell Kevin Farrell about the slumping economy.
A human resources director, Farrell was among the 270 Famous Footwear employees whose jobs were transferred to St. Louis when the company headquarters on Mineral Point Road was closed earlier this year.
Farrell surprisingly harbors no hard feelings against Famous Footwear or its parent firm, Brown Shoe. He said it was a great company to work for.
"They've treated people here really well but I just didn't want to move to St. Louis," said Farrell, a Madison native and 1970 graduate of Edgewood High School,
So Farrell has been out pounding the pavement, looking for another position. He's still looking.
"All I can tell you is it's tough out there," he said.
Thanks to the twin pillars of the University of Wisconsin and state government, Madison has historically enjoyed a leg up on the rest of the Badger State when it comes to riding out economic hard times.
But with the national economy facing unprecedented challenges and government no longer the biggest employer in town, can the region avoid the pain of this latest downturn?
"No doubt Madison and Dane County have been insulated but eventually this is going to catch up to everybody," warned Ken Harwood, a business consultant from Verona and publisher of Wisconsin Development News.
Last week, the U.S. Labor Department reported the nation's unemployment rate surged to a 14-year high of 6.5 percent in October. Wisconsin's jobless rate stood at 4.4 percent in September, with new figures not due out until Thursday.
For Madison, the good news is that the area doesn't depend on just one private-sector company for its economic livelihood -- unlike Janesville, which has been devastated by the pending closing of the General Motors plant. As a result, the city has enjoyed a low unemployment rate historically, dipping as low as 1.7 percent in 1999 and averaging out in recent years at 3.4 percent.
And although the unemployment rate in Madison has climbed higher in recent months, labor analysts say the uptick has more to do with weakness in the retail sector than any reduction in government or UW jobs.
"Where you're really seeing (cutbacks) is in retail trade. Home centers and places like that have been hurting," said Eric Grosso of the state Department of Workforce Development.
Grosso said the latest figures show about 900 fewer retail jobs in the Madison area compared to a year ago.
Softness in the retail sector, where shoppers are spending less, hits particularly hard during the holiday season when a lot of workers bank on picking up some additional hours.
"People are already saying they will be cutting back on their holiday spending, so then stores hire fewer people to work," said Cynthia Jasper, a professor of consumer science at the UW-Madison.
Adding to the retail woes, Jasper noted, is the credit crunch, with banks and credit card companies tightening up on issuing cards to consumers. That further adds to the drop in spending, putting more pressure on retailers and leading to even more layoffs.
"It's a huge problem and I don't see it improving much in the short term," Jasper said.
The Madison area has seen its share of job cuts over the past year. The most dramatic, of course, was the announcement in April that Famous Footwear was moving its headquarters to St. Louis.
Others layoffs of note included 30 workers at GE Healthcare Life Support Systems, formerly Datex-Ohmeda, and the announcement earlier this month that American Girl in Middleton was cutting 31 positions, or about 5 percent of its local workforce.
Some of these losses have been offset by employment gains in Madison's high-tech sector.
Virent Energy Systems, for example, has seen its payroll jump from 20 to 75 employees in the past two years. The biofuels research firm recently announced the hiring of former BP executive Lee Edwards as its new CEO.
"We have been growing tremendously although I don't expect that same kind of growth in the near future," said Virent spokeswoman Mary Blanchard. "I'd expect we'll add a handful of people next year, which on a percentage basis still isn't too bad."
But even the information technology sector, long viewed as guaranteed work for those with computer skills, is seeing some weakness. Nationally, more than 140,000 technology jobs have been cut so far in 2008, according to Chicago-based Challenger, Gray & Christmas Inc., with nearly two-thirds of those cuts coming since July.
"The tech sector is simply the latest victim in this downturn that began last year with the collapse of the housing market and quickly spread to the financial markets," said CEO John Challenger in a statement.
While much of the focus has fallen on Wall Street and the higher ends of the economy, those closer to the bottom are likely feeling the impact most acutely, said Carolyn Heinrich, director of the La Follette School of Public Affairs at UW-Madison.
"What you don't see in these unemployment reports are the number of people who were counting on picking up some extra hours during the holiday season and can't find those jobs," she said.
The slowdown is also hurting blue collar workers who have seen their hours cut or overtime eliminated. "I was in Fond du Lac recently talking to folks at Mercury Marine where they have been closing some shifts," said Heinrich.
Even if the new figures Thursday show Wisconsin's jobless rate is going up, it would have a long way to go to reach the 12.7 percent unemployment rate in February 1983. Madison also recorded its highest jobless rate on record that month: 8.3 percent.
Nobody is predicting the job losses will approach that level this time.
"The best news is that at some point we hit the floor and have to start building back up," said consultant Harwood.
File photo
Madison's Famous Footwear headquarters closed up shop recently, shipping some jobs out to St. Louis.
