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Monday, June 22, 2020

Shutdown Recovery: Job Gains in May

Here is another update on the employment situation in the private sector following the coronavirus shutdown. 

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While the country as a whole is moving back to full speed faster than most forecasters believed, there are some interesting differences between the states. 

First and foremost, it is important to keep in mind that this was an artificial decline in economic activity, in other words it was caused by regulatory action by government as opposed to an organically generated, "normal" recession. This means that the responsibility for restoring full employment lies with government, not the free market. The U.S. economy as a whole retains its underlying strength, making it resilient as regulations and lockdowns are rolled back.

That said, there is quite a spread among the states, from Hawaii, Michigan, New Jersey, New York and Vermont, all of which have taken a hard beating from the lockdowns, to Arizona, Kansas, Montana, Nebraska, South Dakota and Utah where the coronavirus epidemic has caused comparatively moderate job losses. 

Job losses fall into two categories: year to year and month to month. They cover three months: March, April and May. The latest Bureau of Labor Statistics numbers show that no state took a harder beating in both categories than Hawaii. Their year-to-year job losses exceeded 20 percent in both April and May. On a month-to-month basis, Hawaii was one of only two jurisdictions to lose jobs in all three lockdown months (the other being the District of Columbia). To still make the situation worse, the month-to-month loss in April exceeded 20 percent.

Michigan was hit the second-hardest, with a track record similar to Hawaii with one exception: they actually gained jobs in May compared to April. Up by almost 8.7 percent, they saw the second-strongest monthly increase in May, with only Vermont ahead of them (9.2 percent).

New York has had an equally bad experience as Michigan, except they have had a weaker recovery in May with only 2.9 percent more private-sector jobs than in April. New Jersey is marginally ahead of them at 4.3 percent jobs gain in May.

At the opposite pole, Utah has again beaten the entire country:

  • In the year-to-year category they lost jobs only in April and May, at moderate 8.3 and 4.6 percent, respectively; only Arizona and South Dakota were the only other states scoring less than ten percent job losses in all three lockdown months;
  • In the month-to-month category Utah only lost jobs in April, at a rate of 9.9 percent; they were the only state to record one single month of job losses during the lockdown.

Utah has led the country in economic growth for several years now.

Other states with a strong record are Nebraska and South Dakota, with two months of job losses in each category, all with less than ten percent losses. 

Wyoming is in the mid-pack category, with three months of year-to-year job losses, two of which with more than ten percent decline (-1.4 percent in March, -12.3 percent in April and -10.1 percent in May) and two month-to-month losses (-0.3 percent in March and -10.8 percent in April). All our neighboring states did better.

Looking specifically at May, Wyoming did a little bit better by national comparison. Our -10.8 percent in job loss year-to-year rankes us 18th in the country, with Utah at the top (-4.6 percent) followed by Idaho (-6.1), Arizona (-6.2), Nebraska (-7.1) and South Dakota (-7.3). At the bottom we find three states that have lost more than one fifth of their private-sector jobs: New York (-20.2), Michigan (-21.0) and Hawaii (-22.1). 

At the same time, as mentioned earlier Michigan is seeing a rapid recovery. In the month-to-month category the top five performers in May are: Vermont (9.2 percent more private-sector jobs than in April), Michigan (8.7 percent), Alaska (8.4), Montana (7.8) and Maine (6.7). Wyoming actually came in 7th here with a 5.6-percent improvement.

The bottom performers are California, with only a two-percent job improvement April to May; Virginia (up 1.7 percent); New Mexico (1.4 percent); Hawaii (-0.5 percent); and D.C. (-2.3 percent).

It is good to see that Wyoming is improving above mid-pack. We desperately need that, given how over the past ten years our economy has ranked at the bottom in almost every macroeconomic category. The one worry now - and this is a big one - is that the legislative majority will raise taxes in response to the revenue shortfall. I don't even want to go there now; let's just say it would be catastrophic.

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