The top 10 business stories to watch in 2011

Many of the biggest business stories of 2010—from unemployment and foreclosures to health care  and financial reform—are poised to carry over into the New Year. And perennial favorites the deficit and the Census undoubtedly will break news throughout 2011.

But there’s also an argument to be made for greater exploration of some undercovered business topics such as the growing income gap, the broken pipeline to science and engineering careers, banking industry polarization, and impending state and local budget crises.

Here are a few storylines to localize, challenge and make your own.

1. Joblessness

New unemployment benefit applications dropped to 388,000 nationwide in December, a figure that hasn’t been seen since mid-2008. But Fed officials expect a return to normal unemployment rates of 6 percent is still several years off. In other words, joblessness will probably continue falling in 2011—but it will fall slowly. Keep an eye out for tax-base erosion, continued housing-market hiccups, and the negative impact on young people (who are typically the last hired and first fired). Nearly one in three young adults is now uninsured; many have aged out of their parents’ plans and can’t find jobs with benefits, which contributes to a slew of social problems from crime to homelessness.

2. Labor shortages

Although it’s challenging to see beyond record unemployment rates, some sectors of the U.S. labor market — from nuclear energy to skilled production — have sizable vacancies. Why? The U.S. isn’t graduating sufficient numbers of scientists, engineers and technicians to meet demand and internationally administered standardized tests show American students are falling behind in math and science. Thus, public and private sector efforts to address a weak educational pipeline are a business issue worth covering, particularly specific connections between STEM (science, technology, engineering and mathematics) education and global competitiveness.

3. Financial reform

Calls for regulatory reform spiked in the fall of 2008 as world markets teetered and a global credit scare took hold. In July 2010, the passage of the hotly contested Dodd-Frank Act delivered sweeping changes in federal oversight. Enter the Consumer Financial Protection Bureau and the Financial Stability Oversight Council, plus new rules that limit the size and complexity of financial institutions. The Consumer Financial Protection Bureau, charged with informing, empowering and protecting American consumers, seeks to unearth more mortgage and credit-card company misdeeds; its efforts promise to make headlines this year. Meanwhile, hints of reform are afoot in state legislatures, too.

4. The deficit

In December, the president’s bipartisan fiscal commission reported that by 2025 the U.S. will have to borrow to pay everything short of interest on loans, Medicare, Medicaid and Social Security. That puts homeland security, energy, education, infrastructure and other federal endeavors at risk. It also inhibits the nation’s responsiveness to unanticipated threats, such as wars and recessions. Foreign creditors led by China own more than half of the nation’s public debt, and their assessments of the U.S.’s credit worthiness will determine the country’s global economic standing. Mine the connections between the deficit and U.S. standards of living, global economic clout, interest rates and the dollar’s strength for story ideas.

5. Health care reform

From “doughnut hole” rebates to small-business tax credits, the new Patient Protection and Affordable Care Act aims to expand access to health insurance, improve its affordability and slow the rise of health-care costs without adding to the federal deficit. The best news here lies not in the act’s promise, but rather in its implementation—how well its provisions are put into practice and what unintended consequences emerge. Explore the adoption of new payment technologies, monitor how insurers treat higher-risk individuals and small groups, and watch how Medicaid quality fares as state budgets shrink.

By Flickr user Michael Ocampo

6. State and local budget crises

California and Illinois were just the beginning. Adjusted for inflation, state tax collections as a whole were 12 percent below pre-recession levels for the third quarter of 2010, the steepest decline on record. The states’ other income streams don’t look so hot, either: both federal stimulus dollars and cheap debt from the Build America Bonds program are drying up. Ritual slashing in health care, senior services, education and labor budgets has begun, which means that many families hit hard by the recession are bound to lose vital services. Moreover, many municipalities won’t be able to cut deep or fast enough to offset property tax declines—raising the specter of bankruptcy and disincorporation in places as far flung as Hamtramck, Mich., and Half Moon Bay, Calif.

7. Growing income disparity

From 1980 to 2005, the bulk of income increases flowed to the top 1 percent of Americans, a small segment of the population that now accounts for 24 percent of the nation’s wealth. This staggering reality barely registers with the business media, although it has the rapt attention of economists, political scientists and scholars. Find stories in the stark, growing divide between the impoverished and the affluent in America. The hollowing out of moderately skilled labor, the decline of organized labor and the fall of social mobility are ripe for investigation, as are efforts to close the income gap through micro-enterprise, workforce development and philanthropy.

8. Banking industry polarization

The disparity between the haves and have-nots doesn’t stop with people. Financial institutions are seeing a similar divide—four behemoths control 56 percent of all U.S. assets and 39 percent of all U.S. deposits. Less than 15,000 smaller banks and credit unions control the rest. Stay alert to how those institutions cope with the costly demands of Dodd-Frank compliance (e.g., closing or selling out). Consider how the changing competitive landscape, from diminishing choices to lending practices, affects the communities they serve.

9. Foreclosures

The housing market saga continues this year. Hurt by weak demand and millions of foreclosures coming to market, home prices will continue to drop. Meanwhile, regulators, prosecutors and savvy reporters will bring to light new layers of banks’ document-handling fraud, from unwarranted fees to recordkeeping mishaps. As the foreclosure process gets more complex and expensive, watch for the growth of alternatives from short sales of homes to bulk sales of loans. But don’t let robo-signing shenanigans overshadow the human dimension of this story: Millions of people are losing their homes, and an unprecedented number are flowing into homeless shelters.

10. The Census

The Constitution mandates a head count of every U.S. resident once per decade, giving business journalists a massive amount of data to crunch. 2010 Census figures began trickling out in December, sparking “reapportionment” talk, and won’t stop until 2012. America’s so-called new demographics—that is, its ethnic mix—will certainly provide fodder for exploration. Think federal fund allocations, political redistricting, services planning and more.