According to the latest Bureau of Labor Statistics (BLS) report, the economic pain of the coronavirus and associated government lockdowns can be most clearly seen in leisure and hospitality sector job losses. No other sector was so vulnerable to the pandemic itself and the state lockdown policies that followed. Although the sector accounted for only one in nine of American jobs before the pandemic began, it accounts for two in five of jobs that are yet to be recovered from the recession. The total sector job loss tells a story of concentrated economic pain, while the job loss breakdown by state tells the story of how different state policies produced divergent economic outcomes.
The leisure and hospitality sector is split into Arts, Entertainment and Recreation and Accommodation and Food Services. Arts, Entertainment and Recreation jobs have dropped from 2.5 million in January 2020 to 1.7 million in February 2021 while Accommodation and Food Services jobs have dropped from 14.4 million in January 2020 to 11.7 million in February 2021. In total, the leisure and hospitality jobs count is down by 20 percent year-over-year. By comparison, the jobs count for the rest of the US economy is down by only 4 percent.
The top three states for leisure and hospitality jobs are Nevada (25% of all jobs), Hawaii (19%), and Florida (14%), all of which are dependent on tourists from other states and other countries. Inter-state and international tourism and travel flows were severely disrupted by the pandemic. As a result, Hawaii, Nevada, and Florida were going to suffer great job losses regardless of their state and local policies.
However, leisure and hospitality jobs are distributed fairly evenly across the rest of the states, making up between 9-12 percent of all jobs in the vast majority of states. Looking at state-by-state jobs comparisons shows the economic pain of lockdown policies, after accounting for factors such as dependence on foreign tourists. For example, New York (-34.9% on leisure and hospitality jobs), California (-33.8%), Oregon (-30.4%), Illinois (-29.4%) have imposed some of the nation’s strictest bar and restaurant policies, and they have suffered proportionately.
Less economically restrictive states like Oklahoma (-6.8%), Utah (-8.9%), Texas (-14%), and Georgia (-16.9%) have suffered less than half the jobs losses of more restrictive states. Even Florida (-22.3%), with its outsized dependence on foreign and inter-state tourism, is near the national average for leisure and hospitality jobs losses, putting it in a far better position than the most restrictive states.
The pandemic pain of lost economic opportunity can be seen most clearly in the loss of leisure and hospitality jobs, in particular in states which have imposed the strictest economic restrictions. Health and safety concerns have been preeminent across all states during the pandemic. However, some states have clearly outperformed on protecting economic opportunity in the most acutely-affected industries. Ongoing economic restrictions should be weighed against the debilitating long-term loss of economic opportunities.
State recoveries depend upon displaced leisure and hospitality workers finding new work opportunities. Many displaced workers need states to reopen and, as safety allows, for Americans to increasingly return to bars, restaurants, and tourism and entertainment venues. But the industry will not recover its full pre-pandemic vigor rapidly enough for all displaced workers to return to meaningful work.
Therefore, state policy and political leaders should prioritize a reform agenda that allows for accelerating economic opportunities across industries so that there are more businesses creating new opportunities. They can do so by providing tort protection for pandemic-affected businesses, tax relief for both households and businesses, and regulatory reform to clear out the red tape that smothers opportunities.