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The El Paso Economic Outlook
by William Black
March 25, 2009
General Motors, Home Depot, Sprint Nextel, Pfizer, Caterpillar, and Circuit City: American companies whose current status range from bankrupt to nonexistent. All six companies had previously been either the industry leader or second in their industry, and all six companies have cut 10,000 plus jobs in the last seven months. These are job cuts that were sales, manufacturing, research and development, and customer service jobs; jobs that parents, high school and college students, and grandparents have lost.
In December of 2008, the United States unemployment rate reached 7.2%. In February of 2009, in response partly to the job losses mentioned above, the unemployment rate climbed to 8.1%. It is important to note that unemployment claims do not only consist of people that no longer have a job, but of people who were hired as full-time and are now only working part-time hours. The state unemployment rate for Texas has reached 6.8%, considerably less than the United States as a whole. Currently there are 796,985 members of the workforce unemployed in the state; a figure that is more than the entire population of El Paso. El Paso isn’t doing as well as the state. The city’s December unemployment rate was 6.9%, which was the mean for 2008. In January it climbed to 8.3%, a 2.4% increase from January of 2008. The city’s estimated labor force is 302,491, 277,517 of whom are employed. But what about the remaining 24,974? What about those 24,974 people’s families? We are all cutting back, but just how far are El Pasoans cutting? How have UTEP students been affected? The El Paso Times and most local news stations have featured stories answering the first 3 questions. I turned to the Ri readers to answer the fourth.
Fernando Hernandez is one of the thousands of employees laid off from Circuit City (the company officially shutdown all operations as of March 8th). As a result he finds himself struggling to pay his bills, getting to school, and succeeding in school itself. With his schedule already tight, he has to allocate time to finding another job and now has less time to dedicate to school.
Ana G. Estavillo is senior at UTEP who has interned at different companies in El Paso and Juarez. Typically interns are shoo-ins at the companies they work for, but several people have been laid off from the various companies, now employees are forced to work twice as hard for the same pay. She is skeptical about opportunities following her graduation.
It is pretty clear that the results of Regional Identity’s poll (nearly 70% of readers believe that the city is doing better economically than the nation) are misguided.
Perhaps the readers are correct. Maybe El Paso isn’t going to get as hurt as the rest of nation. I disagree; most signs lead me to believe that things are going to get worse before they get better.
The idea for this article came when I read to another student that Macy’s had announced 6,000 job cuts. He replied in a sarcastic tone, “Awww, that’s cool!” But what he didn’t realize is what could come from job cuts at a Macy’s in El Paso. The Wall Street Journal recently published an article titled Malls Race to Stay Relevant in Downturn. The subject of this article was the high amount of anchor and non-anchor stores throughout the United States Malls, as well as the increasing vacancy rate (7.1% in February, the highest ever) and shortening lease agreements. A few of the “small” mall stores closing are the Disney Store, Kid’s R` Us, Walden Books, S&K Menswear (bankrupt), and Hollister. The two biggest anchor stores closing are Mervyn’s and J.C. Penney’s. Mervyn’s ceased all store operations in 2008. J.C. Penney’s, which is typically found in malls (at one point there was a J.C. Penney’s in both of El Paso’s larger malls), is now opening standalone stores. Sunland Park Mall on the west side of El Paso has already seen a J.C. Penney’s and a movie theatre leave. Last year, Sunland Park’s Mervyn’s (one of the mall’s four anchors) shutdown its store. Dillard’s stock’s 52-week high is $23.11; it closed on March 24th at $5.93. Macy’s high is $27.08; it closed at $9.07. Sears high is $112.8; it closed at $44. Sunland Park matt is a Simon owned mall. Simon Property Group’s stocks 52-week high is $106.43; it closed at $35.20. Businesses around Sunland Park Mall are closing down as well. Linens and Things was the first to go late last year, Circuit City closed around a month ago, and a nearby apartment complex recently canceled expansion plans for the upcoming year.
So what does it all mean? What should UTEP students expect?
CNN News Room featured a forum with select Georgia Tech students who discussed their concerns about the economy and how it was affecting them. Shelby Bernard, a senior science-technology and culture major, mentioned that companies she had previously talked to at career fairs and a few that she interned at were no longer hiring. She came to realization that if she were to attempt to enter the workforce she would have difficulties paying-off the debt that she has accrued over the past couple of years. Bernard decided to stay and get her masters, not because she thinks that it will give her more value in the job market, but because she sees no other way to put off paying her debt.
With a more positive outlook State Senator Eliot Shapleigh released an article on newspaper tree detailing the “El Paso Stimulus.” The article discussed 4 initiatives that will be taken in order to help El Paso through these economic times:
- Fort Bliss expansion
- Construction at UTEP
- Improving Road ways
- Medical Center of the Americas
Fort Bliss expansion is a topic that we are all familiar with, Shapleigh estimates that it will create 40,000 jobs (2,000 of which will be high salary). The construction at UTEP will bring about 500 new jobs. Improving road ways seems to be creating more work rather than jobs, and the Medical center of the Americas will educate 680 new doctors for Fort Bliss and require 800 new construction jobs. This brings the total jobs to roughly 50,000 new jobs, around 2,700 of which will be high salary. As mentioned before there are 24,974 unemployed in El Paso according to the January data from the Bureau of Labor Statistics. This plan will obviously take some time to develop but why create twice as many jobs as necessary? This leads me to believe that the situation will get worse before it gets better, but through a combined effort the time spent between worse and better can be significantly shortened.
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