Where job drain is biggest (it's not Ohio)

Here along Highway 495, a crescent of asphalt arching around Boston's suburbs, the effects of large-scale layoffs the past four years are visible from local restaurants to defunct car washes. When Lucent Technologies laid off close to 3,000 workers here between 2001 and 2002, half a mile away the lunch crowd at the Loft Restaurant and Bar thinned to a tiny gaggle. Business at the local car wash nose-dived.

Development of a nearby strip mall stopped. "Lucent's employees were the heart of a lot of business here," says Loft owner Jane Cassidy, gazing at the restaurant's mahogany bar. Lost jobs, especially in high-tech manufacturing, have become as familiar here as bad driving and Red Sox boosterism.

The job-drain problem runs nationwide, of course, with some 2.3 million more jobs lost than gained since 2001. But some states have been hit harder than others, and by one measure Massachusetts tops the list. It has lost a higher percentage of jobs the past three years - 6 percent - than any other state, according to data released this month by the Labor Department.

The reasons here and in other hardest-hit states are varied, and suggest why the job issue is both at the centerpiece of the presidential campaign and difficult for politicians to solve. Outsourcing, enemy No. 1 in current discussions of the job dearth, is part of the problem. Lucent's jobs, for example, went to China and Canada. Meanwhile, if manufacturers aren't moving work offshore, they are learning to produce more efficiently at home, shedding workers in the process.

But there are other factors at work. Corporate scandals. The 9/11 attacks. Even drought. And as happened in North Andover, cutbacks at one large employer ripple outward in local economies, affecting small business and consumer buying.

"This isn't just about outsourcing overseas as many people are saying," says Doug Woodward, an economics professor at the University of South Carolina. "This is a complex issue that varies state to state."

Consider a few of the states that have lost jobs: Massachusetts, Colorado, Ohio, Illinois, and South Carolina.

In Massachusetts, job losses are rooted in the woes of the very industries that made the state an engine of the new economy during the '90s.

The decline of high-tech, prompted largely by a bursting stock market bubble in 2001, hit the state's information-based economy with inordinant force.

"The customers we serve got very conservative about how much they were willing to spend for our equipment," says Mary Wark, a Lucent spokesperson.

In addition to outsourcing some work overseas, the company also began working with contractors who paid their employees part-time wages of $9 compared to the minimum of $16 to $25 they received from Lucent, says Gary Nilsson, who heads the local Communication Workers of America union here.

Ohio has also seen a big loss of jobs, but it exemplifies another side of the nationwide trend in manufacturing. The state is known for manufacturing heavy durable goods like appliances and automobiles. Jobs have leaked from these industries for several decades, largely because of pressure overseas.

But the 3.8 percent job decline in Ohio since 2001 was based primarily on factories' investments in better technology during the late 1990s. When the recession came, factories were able to increase productivity while still laying off thousands.

"Companies in leaner times often start applying new technology," says Keith Ewald, head of the bureau of labor market information in Ohio.

Illinois also took a hit in manufacturing, but that's just part of the reason it lost 3.7 percent of its workforce since 2001. The collapse of accounting firm Arthur Andersen, based in Chicago, left thousands unemployed. American Airlines and United Airlines have each faced serious setbacks recently, including layoffs and even rumored bankruptcies. The purchase of Bank One by Morgan Stanley has led to a thinning of several businesses tied into financial services in Chicago.

Colorado lost more than 4 percent of its workforce during the past three years for a variety of reasons. Most important: The state was a major hub of the telecommunications industry, where fiber-optic firms like Level Three, Quest, and Time-Warner Telecom slowed their pace of construction as the promise of a vast revenue stream dimmed. The acts of terror on Sept. 11 also played a role. Tourism fell sharply in Colorado after 9/11, because so many visitors get to the state by air. A long drought and a series of fires in 2002 also depressed tourism.

The cumulative effect dampened the state's population boom of about 2 to 3 percent a year through much of the '90s. That prompted homebuilding - a key bright spot in much of the US economy - to slacken.

"With fewer jobs here, there was less migration, and then less construction, and that led to another loss of jobs," says Rich Wobbekind, a business professor at the University of Colorado.

In South Carolina, it had been known for several years that apparel industry was failing because of Chinese competition. But Chinese competition has evolved to the point that countries like Mexico have sought out other industries in which to compete because they, too, are losing to China. Now another key South Carolina industry, auto parts, faces competition from Mexico.

New efficiencies in the chemical and paper industries have also made many workers obsolete. And as in other states, South Carolina's state budget woes have led to a freeze on government salaries and in hiring.

In North Andover, workers earning part-time wages after getting laid off are having a hard time making ends meet. One recent study found that a wage of no less than $22 an hour is needed to afford a two-bedroom apartment. The high-cost of living here has chased many of Lucent's former workers out of state, says Nillson, looking for work in the South and Southwest where rents are lower and hiring is up.

And like in so many communities that have seen employment pillars crumble, what is noticeable is not only the lack of jobs, but a shaken sense of community.

The Loft, says Ms. Cassidy, once was the site of near-weekly parties celebrating job promotions and growing stock options. Now, there's rarely a reason to hire a DJ, and faces that were familiar for more than 20 years are rarely seen. Says Cassidy: "They're not going to drive up here to say 'hi' if they don't have work to do."