The news for the local economy last week was pretty bleak.

Wednesday, it was reported that Maxima Technologies will be laying off most or all of its 200 workers here beginning May 26. That same day, Lancaster Newspapers Inc., publisher of the Sunday News, morning Intelligencer Journal and afternoon Lancaster New Era, announced that the two daily papers would combine June 29, and the company would shed 60 full-time and 40 part-time jobs.

All of this happened two days after the state Department of Labor & Industry announced a seasonally adjusted unemployment rate of 6.9 percent in Lancaster County — the highest since 1985.

Ready for some good news?

The Local Economy Center at Franklin & Marshall College, which studies the county's economic trends, says the county remains in better shape than the region, the state, and the nation as a whole.

The center's third annual "Lancaster Economy Report" will be released in full later this month (a draft version has been posted on the Web at http://www.fandm.edu/lec), and F&M professor of economics Dr. Antonio Callari — director of the Local Economy Center — said it will tell a tale of an economy "that has tended to do generally well. We have relatively low unemployment and less obvious weaknesses that endanger the stability and well-being of our economy."

Our unemployment rate is lower than the state's; the cost of doing business here is lower than in the state as a whole or the seven-county region studied (Lancaster, Berks, York, Lebanon, Dauphin, Perry and Cumberland counties). Our average credit score is higher than that of the region, state or country, and income is distributed more evenly here — meaning we don't have the huge disparity between rich and poor that some other communities do.

Yet everywhere, Callari said, are danger signs.

The gap between the state unemployment rate and the county unemployment rate is shrinking.

We continue to lag behind the state and region in terms of education, while the next generation of jobs is going to require a more highly skilled work force.

And wages remain lower here, on average, than the state as a whole.

"With changing technology, education becomes more important," Callari said. "And the fact that we're not educating ourselves and not paying ourselves well can weaken us in the long term."

Figures released last week by the state Department of Labor & Industry showed that gap between the local unemployment rate and the state unemployment rate of 7.5 percent had narrowed to a mere 0.6 percent.

One year ago, Lancaster County's unemployment rate was 3.7 percent and the state unemployment rate was 4.9 percent — double the current gap.

In relative terms, Lancaster County is losing jobs faster than the rest of the state.

National figures out Friday indicated that a large percentage of jobs lost were in construction and manufacturing. Those two industries have traditionally been among Lancaster County's most robust.

The F&M report notes that 21 percent of all corporate earnings here in 2006 (the latest figures available) were in the manufacturing sector, which includes food processing. Manufacturing accounted for 18 percent of earnings in the region, 14 percent in the state, and 13 percent nationwide.

Construction represented 11 percent of all local earnings, compared to 8, 5 and 7 percent for the region, state and nation, respectively.

"Manufacturing and construction produce the majority of the personal income and wealth in our local economy," said David Nikoloff, president of Economic Development Co. of Lancaster County. "Only health care approaches or exceeds these sectors in importance." And the number of manufacturing and construction jobs here has been declining.

But Scott Sheely, executive director of the Lancaster County Workforce Investment Board, noted that the statistic can be misleading: "Manufacturers are automating here in Lancaster County," he said. "The number of jobs may be decreasing, but output is going up."

Lancaster County remains behind the region, state and country in the number of what Callari calls "high-value-added jobs" — in finance, technology and real estate. Those industries accounted for 12 percent of all corporate earnings here in 2006, compared to 14 percent in the region, 20 percent in the state and 21 percent in the nation.

The upside of this, Callari said, is that the distribution of incomes here is more equitable. There's a relative dearth of those earning extremely high incomes, while "families on the lower 50 percent of the income ladder are receiving a larger share of the area's income than in other places. The lower and lower-middle class are better off here than elsewhere."

The downside is that Lancaster County may lack these jobs specifically because we aren't as well-educated as some other communities.

According to census statistics analyzed in the report, a full 18.9 percent of Lancaster County residents did not graduate from high school, compared to a statewide figure of 13.4 percent. We have a lower percentage of residents with some college education, with an associate degree, with a bachelor's degree and with a graduate or professional degree.

The figures are skewed because they include the Amish population. Tom Baldrige, president of the Lancaster Chamber of Commerce & Industry, cites figures showing that once the Amish population is removed from the equation, Lancaster County education levels are on par with the state and region.

Nevertheless, Baldrige said, "Historically we've talked a lot about how Lancaster County's economy has been driven by entrepreneurs. But in today's economy, it's more important than ever for those entrepreneurs to have an adequate education."

Another indication of a community's attitude toward education and learning is library expenditures, Callari said. Here, Lancaster County lags significantly behind both the region and the state, as it long has.

Per capita library spending here in 2006 was $16.01; in the region, the figure leaped to $20.58, and Pennsylvania as a whole spent $25.98 per capita. We also have fewer library items per capita than the region and state — but Lancaster County actually has a higher percentage of the population with library cards.

The Lancaster County Library System actually endured a budget cut this year, as county commissioners struggled to pass a budget amidst the downturn without raising taxes.

"Programs that get more money don't always mean they're of a better quality," said commissioner Scott Martin. "Everyone is struggling right now and having to do more with less."

That in itself, he said, could make libraries — and all government agencies — more efficient and effective in the long run.

"We almost don't have a choice."

Lancaster Countians continue to be more conservative with their money than most. The average credit score here is higher than in the region, state or nation. The amount of money we owe (our "debt load") has crept upward and now outpaces the state as a whole, but still remains far below the national average. And we have a significantly smaller number of mortgage borrowers who are 60 or more days overdue on payments.

Foreclosures simply haven't been as big an issue here as they have elsewhere, noted William J. Reuter, chairman and CEO of Susquehanna Bancshares.

"Anything above zero is a rise," he said, "but the numbers are still very small."

Reuter said area businesses are being very conservative: "They're not buying that next piece of equipment; they're not taking out that next loan right now." He expects things might begin to turn around toward the end of the year.

But Callari suggests that where individual consumers are concerned, recovery could be hampered by the fact that even those who keep their jobs earn, on average, less than workers across the state.

The F&M report asserts that in virtually all occupations, except for health care, Lancaster County workers make less money than workers in the region and state. The average weekly wage for all workers here in 2007 was $712; in the region, the figure was $752. In the state, it was $832.

The report attributes this to a greater concentration of lower-paying jobs here, along with the weakness of organized labor in Lancaster and fewer hours of work available in some professions.

"Traditionally," Callari said, "employers have come here because they could pay people less than elsewhere, and because of that, we had a lower rate of unemployment." But that hasn't always meant the jobs available were good.

Indeed, Sheely said, "as long as hospitality and retail are such huge industries here, we'll keep getting dragged down by those numbers.

"When we're talking about growing jobs, we ought to be looking at which jobs we're growing ... we need jobs where people are making $12 to $15 an hour" at least.

Sheely said federal stimulus money will allow the Workforce Investment Board and other groups to offer training "targeted to the needs of key industries" such as manufacturing, which not only pays better but has a higher "multiplier effect" than virtually any other industry.

"We have to upskill the work force," Sheely said. "In the construction industry now, you have to know how to use lasers, global-positioning systems" and other new technology.

"What people need are skills."

Baldrige, from the Chamber of Commerce, noted that the county is "well-positioned with our five colleges and technical schools" to provide the kind of training and education the local work force will need.

He remains optimistic. "Benecon, Willow Valley, Amelia's, all of them have announced major projects over the past three months, when we're supposed to be in a struggling economy. There's no doubt we're weathering this recession better than other areas of the country."

But Callari remains concerned. His report tracks not just the effect of the recession on the county, but long-term economic trends.

"We have a lot of elements that will allow us to do well in the future, but only if we educate ourselves," he said. "Higher wage levels can guarantee more spending and more investment.

"We have a tradition of hard work and income equality," Callari said. "Our traditions made us less vulnerable.

"For a while."