Unemployment by the numbers

Published 8:37 am Friday, October 30, 2009

FRANKLIN—Early projections indicate that several hundred jobs indirectly tied to the International Paper Co. mill could be affected by its closure, but those job losses will affect the city of Franklin, and Southampton and Isle of Wight counties differently.

Despite this, local government and economic officials remain optimistic about the economic future of the region.

Last week, IP revealed that 324 of the 1,097 employees at the paper mill live in Franklin, while 250 reside in Southampton County. The southern half of Isle of Wight County, specifically Carrsville, Windsor and Zuni, is home to 107 workers. Another 198 employees live in other Virginia communities, and 218 reside in North Carolina.

Using IP’s figures, paper mill employees account for 7.8 percent of the civilian workforce in Franklin, 3.1 percent in Southampton and sixth-tenths of one percent in Isle of Wight County.

Asked if the Western Tidewater region would remain economically viable, even if new jobs didn’t materialize soon, Franklin Mayor Jim Councill said unequivocally yes.

“We will always be viable,” Councill said. “It’s just going to be a matter of time. We’re going to have a downturn and a big hiccup. We’re going to come back and we’re going to have those jobs.”

The mayor acknowledged that some city residents will inevitably find employment outside of Western Tidewater, or would move from the area altogether.

“Some people will choose to (leave) while the jobs are being developed to come back in,” Councill said. “I don’t blame them, and I would encourage them to do that. We have nothing on the drawing board other than some very good ideas and hope. But even from conception to hiring is going to be some number of months. We’re still going to have some downtime between. (But) I’m very optimistic that we’re going to be able to fill a lot of those jobs.”

Southampton County Administrator Michael Johnson said people who were predicting that the mill’s closure somehow signaled the “death of Franklin” were baseless.

“I’m sure there are naysayers out here that think it’s the end, but I can assure you it’s not the end,” Johnson said. “I think this community will clearly change in many ways, but it’s not the end of the community.”

Data from the U.S. Department of Labor indicate that the unemployment rates in Franklin, Southampton County and all of Isle of Wight County in August were 10.9, 7.6 and 6.3 percent, respectively.

Assuming a worst-case scenario, where the 1,100 displaced mill workers are unable to find new jobs, the unemployment rate would climb to 18.6 percent in Franklin and 10.7 percent in Southampton County. Unemployment in Isle of Wight County would be affected slightly, rising to 6.89 percent.

“Anytime you have a community, county or city that approaches and goes beyond double-digit unemployment, that signals some real distress,” said John Smolak, president and CEO of Franklin Southampton Economic Development Inc. “There’s no question about that. Those stress factors that are getting into the red zone.”

A study conducted by the Virginia Economic Development Partnership at the request of Isle of Wight County estimates an additional 2,400 jobs in the region and 700 jobs elsewhere in the state could be lost as a result of the mill’s closure. For the purposes of the study, the region included Franklin, Southampton and Isle of Wight, and also Surry and Sussex counties and the city of Suffolk.

According to Brian Kroll, a senior economist with the VEDP, the most adversely affected job sectors at both the state and regional levels would be automotive repair and maintenance, logging, the maintenance and repair of non-residential buildings, medical services, real estate, restaurants, retail trade, services to buildings and dwellings, trucking services and wholesale trade.

Kroll said those job sectors employed 20,009 people across the region in 2008. Isle of Wight accounted for 16 percent of the total, or 3,205 workers. Franklin represented 13.5 percent of the affected jobs, or 2,704 workers, and Southampton had 5 percent, 985 workers. The figures were tabulated using the VEDP’s Quarterly Census of Employment and Wages.

Assuming the 2,400 projected job losses were distributed proportionately by locality according to their percentage of the affected job sectors, Isle of Wight would lose 384 jobs indirectly tied to the mill, while Franklin would lose 324 and Southampton 120.

If accurate, direct and indirect job losses in Franklin would factor at exactly a 1-to-1 ratio, meaning that for every one layoff at the mill there would be one indirect job lost. In Isle of Wight, every mill job lost would affect slightly more than three jobs elsewhere, a 1-3.33 ratio. The ratio would be flip-flopped in Southampton; for every two layoffs at the mill, one indirect job would be lost, a 2-1 ratio.

The unemployment rate would climb to 26.4 percent in Franklin after factoring in indirect job losses. Southampton’s unemployment rate would rise to 12.3 percent, and Isle of Wight would go up to 8.9 percent. The national unemployment rate was 9.8 percent in September, according to the U.S. Department of Labor.

Smolak said the closure of the mill, while unfortunate, did provide one upside.

“We’ve got a great unemployment base which we can market to outside concerns,” Smolak said, adding that a demographic review of the 1,100 affected workers was in order. “Once we find out more about all of their specific skill levels, training and education (we can) market that to (companies) that may be looking at the area for operations unrelated to the paper industry.

“It’s a negative and it’s also a positive.”

Smolak said low unemployment levels, in the neighborhood of 4 or 6 percent, pose their own problems.

“You’re down to people who are not as skilled as (employers) would like them to be and they don’t the education levels (employers) would like them to have,” Smolak said. “The very employable people are already working and they’ve got good jobs. Now that we have a surplus, we have a positive that we can market to the world about the skill level, education level, and the numbers of people we have that are ready to go to work right now.”