A record job­less toll on states

FOR MOST, HIGH­EST RATE ON THE BOOKS Un­even pain as tourism, hos­pi­tal­ity hard­est hit

The Washington Post - - FRONT PAGE - BY TONY ROMM

The coro­n­avirus out­break has dev­as­tated the economies of Ne­vada, Michi­gan and Hawaii, leav­ing roughly one-quar­ter of each state’s work­force un­em­ployed — and il­lus­trat­ing how the shut­down has dis­pro­por­tion­ately wal­loped some parts of the coun­try more than oth­ers.

The three states have been the hard­est hit in the na­tion, ac­cord­ing to the La­bor De­part­ment, which re­leased on Fri­day its first break­down of state un­em­ploy­ment rates dur­ing the pan­demic. The data re­flect the dis­as­trous, and of­ten un­even, ef­fects of dark­ened fac­to­ries, halted tourism and other ef­forts to ar­rest the spread of the coro­n­avirus, con­tribut­ing to the high­est rate of U.S. job­less­ness since the Great De­pres­sion.

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 regis

tered 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 just 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 tourismhea­vy 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 such as 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 9.7 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 man­aged to stay afloat.

“With de­mand shock,” she said, “the risk is that no job is safe.”

SHAN­NON STAPLETON/REUTERS

The Las Ve­gas Strip has gone dark, with many casi­nos shut­tered un­til fur­ther no­tice. The shut­down hasn’t just hit tourism but also restau­rants, trans­porta­tion providers and clean­ing ser­vices.

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