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The communities facing an especially tough 2009

Dante Chinni

Posted: 12.19.2008 / 8:34 AM PST

Sometimes the best way to understand the economy is to zoom in on one place.

A primary lesson from Patchwork Nation has been that America’s economic troubles have different meanings in different communities and types of communities. According to our Economic Hardship Index, which measures economic pain by community, one type of place seems to have been hit hardest for the longest period of time this year: the semirural, small-town places we call “Service Worker Centers.”

The median household income in these places is lower than the United States as a whole. The residents often have further to drive, so rising gasoline prices hit them harder. And because products have to be shipped in to stores, they are often more expensive.

In Lincoln City, Ore., which represents “Service Worker Centers,” the challenges are manifesting themselves in some very concrete ways. Our correspondents report more empty storefronts in downtown. Throughout the year, we’ve heard of people reducing travel into and out of town – combining trips – to save gas. And lately, the foreclosure crisis has emerged as an issue.

High food bills

One of the biggest issues for the town over the past 12 months has been the cost of shopping at the grocery store.“It seems to me that food prices have gone up about 30% here on the Oregon coast, since June,” Libby Durbin, an area retiree, wrote in an e-mail this week. “My daughter comes down from Portland and is shocked at how much higher food is here. Why should 100 miles make so much difference? Our gasoline prices have always been higher than Portland’s, also. For people on Social Security as I am, it means we do without.”

Allyson Longueira, managing editor of The News Guard, the weekly paper in Lincoln City, commented in an e-mail, “I haven’t noticed a drop [in food prices] recently … even with the fall in gas prices.”

Others in town said they’ve noticed what they think is a small decline in recent days and weeks, but nothing like the increase they’ve seen through the year.

The recent news of falling prices, such as the big drop reported Tuesday in the Consumer Price Index, might be seen as a bright spot for “Service Worker Centers” like Lincoln City. But there is a speculation that even as prices drop overall, food prices may not fall so fast. In fact, government and industry economists predict that food prices on the whole will rise next year.

If those predictions are borne out, 2009 could be a tough year in many of these communities where people live closer to the margins.

A domino effect

The rising food prices could have an additional economic impact on the town: Residents looking to reduce costs are more likely to cut down on their shopping at local stores and instead go to big-box chains like Wal-Mart and Costco.

The News Guard recently did a story looking at where people shopped and comparing the cost of 14 common items. The items cost between $45 and $49 at local stores. At WinCo, a large wholesale supermarket based in the western US, the same items cost about $33.

A Buy Local Lincoln County association is forming in the hopes keeping more money in the community. But numbers like those in the comparison above could be tough to fight.For “Service Worker Centers” like Lincoln City, the issue is complicated. If everyone drives to the nearby wholesale retailer to save money, the local economy will suffer more. But simply shopping in town takes a bigger bite out of paychecks.

Most economic forecasts see a tough year ahead. But as 2009 approaches, Patchwork Nation’s “Service Worker Centers” might see a particularly rough road in the short term.Caught in a squeeze, “Service Worker Centers” don’t appear to have any easy answers on the horizon.