State Policy Network
SPN Jobs Report: States that ended bonus federal unemployment benefits had faster jobs growth
States can adopt policies to accelerate recovery.

The US economy added 943,000 jobs in July, enough to drive jobs growth in 47 out of 50 states on the month. California led all states with a gain of 114,400 jobs, with Texas (80,900), North Carolina (75,600), and Florida (68,100) also showing large gains on the month. One-third of all state job gains came from recovery in the leisure and hospitality sector, continuing a trend of relatively strong recovery in the most recession-battered industry.  

Despite strong jobs growth in recent months, the Bureau of Labor Statistics reports 10.1 million job openings in the US economy, a record level of unfilled jobs. Business complaints about a labor shortage are backed by data showing that the number of job openings outnumber the 8.7 million unemployed Americans.

July jobs performance by state

Job growth rates in July were stronger across the majority of states, reflecting stronger national job growth. Small states Vermont (2.3%) and Hawaii (1.8%) led in jobs gains relative to the size of their economies, with North Carolina (+1.7%) in third. Rhode Island (+1.5%), Alaska (+1.3%), Massachusetts (+1.3%), New Mexico (+1.1%), Georgia (+1.0%), and Utah (+1.0%) all eclipsed one percent jobs growth on the month.

Roughly half of states ended the federal unemployment bonus program that provides an extra $300 per week for unemployed workers in June. These states, on the whole, are already further advanced in their jobs recoveries. States that ended bonus federal unemployment benefits in June had slightly faster jobs growth from May to July than states that continued the program. By comparison, the states that have continued bonus unemployment benefits had been recovering jobs more quickly in prior months, in part because they have so many more lost jobs to recover.

Recession recovery update through July

Arizona, South Dakota, North Carolina, and Montana are poised to recover to their pre-recession jobs count in the next few months. They are each within one percentage point of their pre-recession jobs level, and they have been recovering strongly in recent months. Utah (+2.7%) and Idaho (+2.4%) continue to outpace the field and are the only two states with more jobs today than they had before the pandemic recession.

Hawaii (-12.0%) and New York (-9.0%) continue to bring up the rear of the recovery. Large states like New Jersey (-6.5%), Michigan (-6.4%), and California (6.2%) are all in the bottom 10 for recovery. These states appear to be years away from a full jobs recovery.

Leisure and hospitality jobs

Leisure and hospitality jobs are being recovered more quickly than jobs in any other sector. Nonetheless, leisure and hospitality jobs continue to make up the largest private sector losses. The states with the worst performance on leisure and hospitality jobs, such as California, New Jersey, Nevada, Hawaii, Alaska, and New York, all appear at the bottom of overall jobs performance.

Florida, Hawaii, and Nevada are most reliant on leisure and hospitality jobs. They have the highest percentage of payroll jobs in the leisure and hospitality sector, and they are most dependent on out-of-state travelers to support these jobs.

Policy reforms will accelerate state recoveries

Policy reforms are needed to accelerate a jobs recovery, especially in the states that are furthest behind. States that cancelled federal bonus unemployment benefits have 2.7 percent fewer jobs compared to before the recession, while states that continue to extend bonus unemployment benefits have 5.8 percent fewer jobs compared to before the recession. Much of that difference pre-dated the cancellation of federal unemployment bonuses, but it shows the distinct pathways different states have taken. While some prolonged lockdowns and incentivized joblessness, others remained more open and incentivized work. The results speak for themselves.

Federal unemployment bonuses end September 6, 2021. Officials from the Department of Labor and Department of Treasury indicated that states can use the $350 billion they received from the American Rescue Plan Act (ARPA) to continue to pay extra unemployment benefits. States should not extend further unemployment benefits and should instead return to normal and use ARPA funds to backfill their unemployment trust funds to prevent a tax hike on hiring workers.

State lawmakers should press forward with tax reforms through the 2022 legislative sessions. State tax revenues are strong and budgets are cushioned with unprecedented federal aid, creating a rare opportunity for long-term tax reform. With tax hikes likely to emanate from Washington DC, state tax and regulatory reforms can help cushion the blow. Job differentials between the states show the continuing importance of state policy and management through the pandemic recovery, and states are best positioned to drive growth in the coming years.

Categories: Policy Issues
Policy Issues: Jobs
Organization: State Policy Network