State economies restarted their jobs recovery in January, with 36 states showing jobs gains. However, the US economic recovery remains uneven across the states. Lingering job losses are disproportionately concentrated in states that imposed prolonged shutdowns and states that depend upon travel and tourism. The leisure and hospitality sector in particular shows enduring pandemic-induced jobs pain.
The new Bureau of Labor Statistics (BLS) report included original January jobs numbers along with revised and amended jobs data for all of 2020. The BLS makes annual revisions at the beginning of each year to more accurately reflect prior years, resulting in changes across all states. However, states’ individual recovery progress and relative positioning remained roughly similar to the original data, though not the exact same. On average, the amended data show more jobs losses spread across the states, while states like Louisiana and Georgia both had significant downward revisions.
One upshot of the 2020 revisions is that Utah is revealed to no longer have eclipsed its pre-pandemic jobs count, and remains just a shade below the jobs count it had in January 2020. Thus, only Idaho has recovered the entire count of jobs lost in the pandemic recession.
Cold weather states led the January jobs bounce, with the top gains going to Minnesota (+51,800), New York (+42,700), Pennsylvania (+35,700), and Massachusetts (+35,500). However, these four states remain in the bottom third of all states for jobs recovery over the past year, as explored in this blog’s second graphic. California had the worst jobs performance in January, shedding an estimated 70,000 jobs, keeping the Golden State near the bottom of the heap in the all-states recovery rankings.
Idaho alone has more jobs (+1.1%) in January 2021 than it had in January 2020. Utah (-0.2%) is running in a close second place, followed by South Dakota (-2.3%), Montana (-2.5%), and Arkansas (-2.6%), all of whom should make a full recovery in 2021. At the other end of the spectrum are Hawaii (-18.4%), New York (-10.8%), Nevada (-10.8%), California (-9.9%), and New Mexico (-9.9%), which remain years away from a full jobs recovery.
States are increasingly moving towards a full reopening as more Americans are vaccinated against the coronavirus each day. There will be more states that make a full recovery in 2021, though a greater share of states will likely cross the jobs recovery finish line in 2022.
Jobs losses in the leisure and hospitality sector reflect each state’s dependence on tourism and the severity of the state’s economic lockdowns and social distancing policies. On the whole, the national economy has 6.5 percent fewer jobs than before the recession. But leisure and hospitality jobs are down 22.5 percent across the nation. The concentrated job losses in leisure and hospitality have disproportionately impacted states like Hawaii, Nevada, and Florida, which have a greater dependence on travel and tourism.
The leisure and hospitality jobs contraction in each state appears strongly related to the state’s economic restrictions imposed on bars, restaurants, and entertainment venues. While Texas has lost one-in-seven of such jobs, California has lost two-in-five of such jobs. The leisure and hospitality job losses in America’s 10 largest states, shown below, largely reflect the emergency pandemic policies enacted in those states.
Congress has now enacted a third major aid package for states, the American Rescue Plan Act, largely swamping states with excess funds that will drive near-term spending. States should remember that such short-run spending will not translate into sustainable long-run growth unless it is accompanied with pro-growth tax relief, economic policies, and regulatory policies.
Federal aid should be allocated to one-time costs, tax relief when possible, and state-specific pro-growth measures. State policymakers should also focus on an agenda for torts, tax, and tape to make their recoveries durable. They can create lawsuit protection for small businesses, enact commonsense tax relief to catalyze growth, and make job creation more rapid by cutting through the tangle of red tape that can tie up entrepreneurs and workers.