Coronavirus Causing Dramatic Differences in State Unemployment


Sunday, May 10, 2020 / 11:44 AM / By  Fitch Ratings / Header Image Credit: ABC News


Economic implications of the coronavirus pandemic have been deep and substantial across the US, and state-level unemployment claims data imply a wide range of effects across states that will drive economic and revenue trends, says Fitch Ratings. Total unemployment claims filed since the start of the economic crisis through the week ending May 2 total nearly a fifth of the entire national labor force.


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Individual states are seeing a wide range of claims, from less than 10% of the labor force to nearly a third seeking unemployment benefits. The unemployment claims data, particularly initial claims, is preliminary, subject to revision and affected by various factors including recent federal changes to eligibility and states' capacity to accept and process claims. Nevertheless, the data provide a useful and timely insight into emerging economic trends across states.


The varied state levels experienced to date point to the uneven effects of the coronavirus and the potential for a wide range of recovery in employment and economic growth across the states. State differences in the spread of the outbreak and relaxation of social distancing measures, along with commercial/industrial mix and other factors, all play a role in the level of job losses and will bear on how quickly individual states can reverse those losses.


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The chart above compares cumulative initial and advance initial claims filed since the week ended March 14 as a percentage of the March 2020 labor force for the US and individual states. Fitch acknowledges this metric compares numbers developed from different sources and comparability is not precise, but utilizing this approach across the states yields a useful perspective on emerging trends.


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For the week ending May 7, claims as a percentage labor force ranged from a high of approximately 33% for the commonwealth of Kentucky, to a low of approximately 8% for South Dakota. In the week before the pandemic began taking hold in the US, claims as a percentage of the labor force were less than 1% for all states. As the coronavirus has spread across the US, the change in this metric has varied substantially, both over time and across states. For most states, there is evidence unemployment claims are growing at a diminishing rate, while for some the more recent data indicates accelerating claims growth.


The state-level median percentage of workforce employed in the travel and leisure sector, which is the sector most acutely affected by the pandemic, is approximately 10%. As of last year, only two states had more than 15% of its workers employed in this sector, Hawaii with approximately 20% and Nevada, with nearly 25%. Not surprisingly, Hawaii's claims as a percentage of its labor force is the second highest among all states at 32% and Nevada ranks sixth highest at 27%. On the other end of the spectrum, both Utah and South Dakota report claims as a percentage of labor force of less than 10%. The national percentage is 19%. Note that this metric, as calculated, can be substantially higher than other measures of unemployment, such as the insured unemployment rate from the US Department of Labor or monthly headline unemployment from the US Bureau of Labor Statistics.


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