Nevada, for example, registered an unemployment rate last month exceeding 28 percent, the highest in the nation, due in large part to its reliance on tourism and hospitality. That was about three times higher than the 9.9 percent unemployment rate in Maryland, the home of many civil servants and government contractors, including those still operational in Washington.
“To the extent that your economy depends on services that interface with people, you’re in deep trouble,” said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities (CBPP) and a former top aide to President Barack Obama.
In total, 43 states in April registered jobless rates higher than at any point since the government started keeping records more than 40 years ago, putting the national unemployment rate at 14.7 percent. The figures may represent an undercount of the total percentage of Americans out of work, since the federal survey on households includes only those actively looking for new positions.
Some economists said the new data should offer a cautionary tale to policymakers, a day after the Labor Department reported that roughly 38 million Americans have filed for unemployment benefits over the past nine weeks. Absent additional federal aid, especially targeting the hardest-hit industries and states, the job losses could worsen, experts say, inflicting hard-to-erase economic hardship on workers and their families.
The White House, however, recently has joined with Republicans in opposing some calls for new federal aid, including a renewal of soon-expiring, enhanced unemployment benefits. "We’re opening up; the states are opening up,” Trump said Tuesday. “It’s a transition to greatness.”
The initial wave of job losses began in March, as states across the country issued unprecedented stay-at-home orders that closed all but the most essential businesses. The restrictions aimed to stop the spread of the coronavirus, which has killed nearly 100,000 Americans, but it also left many employers without capital or customers, forcing companies to furlough or lay off workers they could no longer afford to pay.
Some of these companies have since restarted operations, seizing on their states’ decisions to open up or ease restrictions this month. But concerns persist that workforce cuts in recent months might become permanent, delaying a full economic recovery for years.
The economic turmoil has been felt greatest in states where local economies hinge on travel, tourism, shopping, commerce and other service-industry professions where face-to-face interaction has become a medical hazard. That includes Nevada, where under a third of the state’s workforce before the coronavirus belonged to the hospitality and leisure industry, said Jeremy Aguero, a principal analyst with Applied Analysis, a Las Vegas-based economic research firm.
Now, though, the Las Vegas Strip has gone dark, with many casinos shuttered until further notice. Travel to the city’s airport, one of the busiest in the country, has plummeted, and hotel rooms largely sit empty. The abrupt slowdown in local commerce hasn’t just hit tourism but also restaurants, transportation providers, cleaning services and scores of other businesses that rely on an influx of newcomers. And little of this work can be done from home, unlike other industries, including many professional services, that allow people to work remotely.
“It is the character of our economy,” Aguero said, “leading to this escalated unemployment rate.”
A year before the coronavirus arrived in the United States, the unemployment rate in tourism-heavy Hawaii measured about 2 percent, federal data show. But the state’s unemployment rate has surged more than 800 percent in April compared with the same period a year before, according to the Labor Department, leaving 121,000 workers out of a job in a single month.
Mark Muro, senior fellow and policy director of the Metropolitan Policy Program at the Brookings Institution, said the struggle facing Hawaii is one playing out across a wide map that includes Vermont, Maine and Rhode Island, where some of the biggest losses have hit workers in service, leisure and hospitality industries.
“We know that is hugely driving these statistics,” he said.
In other parts of the country, including Michigan, the closures of countless factory floors have contributed greatly to the droves of residents out of work. The unemployment rate in this car-centric manufacturing state surged to more than 22 percent just last month, federal data show.
Over that period, Michigan lost 237,000 jobs in leisure and hospitality, 174,000 in manufacturing, and 159,000 in trade, transportation and utilities, state officials said this week, noting its jobless rate in April is its highest on record. This month, though, Gov. Gretchen Whitmer (D) began to allow automakers to resume operations, ending a shutdown that initially stemmed from concerns that production facilities could quickly become hot spots for coronavirus outbreaks.
Some states appear to have steered clear of the worst effects of the downturn due in large part to the composition of their workforces. So far, many civil servants, as well as the companies and industries that serve them, have been spared some of the most crippling cuts, perhaps benefiting a state like Maryland, especially given its proximity to the nation’s capital.
“All these connections to the federal government, and all the deficit spending, mean people have a lot of work to do and can do it from home,” Bernstein, of the CBPP, said.
Other states like Utah may have benefited because of an influx of tech companies, workers and start-ups, said Muro, of Brookings. The state’s unemployment rate in April measured just over 9 percent. Connecticut, meanwhile, counted the country’s lowest unemployment rate at 7.9 percent, the Labor Department said. But state officials this week took issue with the federal government’s estimate, predicting their jobless rate may be twice as large.
“What remains to be seen is how many of these jobs were suspended and will return when public safety permits and how many were permanently lost,” Andy Condon, the director of the Office of Research at the Connecticut Department of Labor, said in a statement.
Economists fear these states may not be spared for long — and the numbers could sour elsewhere — in the absence of additional federal aid.
For one thing, the massive layoffs and furloughs nationwide have contributed to immense revenue shortfalls facing state and local governments, which say they may need as much as $1 trillion to close major gaps in their budgets. Municipal leaders warn they may have to make drastic cuts of their own unless they receive new federal dollars. Those budget cuts would likely include major layoffs targeting government workforces.
Going forward, there also remains the potential for “spillover effects,” said Tara M. Sinclair, an associate professor of economics at George Washington University. Prolonged unemployment in the services and hospitality industries, for example, could result in further drops in consumer spending, threatening even businesses that have so far managed to stay afloat.
“With demand shock," she said, "the risk is that no job is safe.”