U.S.

Analysis: Real-time unemployment rates rise across the states

(The Center Square) – Real-time unemployment rates climbed across all states during the week ending April 18, based on data from the Department of Labor. A new wave of 4.4 million American workers filed for unemployment insurance benefits, bringing the total count of initial unemployment claims up to 26.4 million in the last five weeks of Department of Labor data.
The U.S. real-time unemployment rate climbed to 21.4% on the initial claims data, based upon 50 Economy labor market estimates. Initial claims have decreased week-over-week for three weeks in a row. However, the total count of unemployed American workers continues to climb by millions per week even as new claims slow down.
Real-time unemployment rates vary widely across the states from Kentucky (31.2%) Pennsylvania (29.1%) and Michigan (28.7%) at the high end to Wyoming (12.5%) Utah (11.7%) and South Dakota (9.3%) on the low end.
The real-time unemployment rate uses March Bureau of Labor Statistics data as a baseline, and includes recent workforce dropouts as unemployed. This baseline unemployment count is combined with 5 weeks of initial unemployment claims from the Department of Labor to arrive at the total estimate of unemployed for each state.
This method shows an estimated 35 million unemployed Americans through April 18, giving the U.S. economy a 21.4% unemployment rate.
The impact of the virus outbreak and associated local business shutdowns is driving the unemployment numbers during the coronavirus pandemic. State comparisons, even for states with exceptionally high jobless rates, are not necessarily indicative of a state’s underlying economic competitiveness. Instead, joblessness is a better proxy for the intensity of the disease’s impact within each state’s borders.
California has an estimated 4.6 million unemployed, far more than any other state, due to its large workforce and relatively high unemployment rate. Texas has 2.1 million unemployed, followed by New York with 2 million, Pennsylvania with 1.9 million, Florida with 1.7 million and Michigan with 1.4 million.
The healthcare crisis has catalyzed fiscal and economic crises across the states. When the healthcare crisis ends, the fiscal and economic crises will persist. States will become laboratories for economic recovery. States performed quite differently over the last decade during their recovery from the Great Recession, and economic power shifted accordingly to states with a better performance. The same will occur when states begin to recover from the pandemic. State and local public policy innovation is needed to clear out hurdles to business formation and new employment opportunities.
The federal CARES Act and the extensions of its aid provisions have provided financial support to workers and businesses affected by the crisis in order to help them survive the crisis. The coronavirus pandemic has dramatically depressed economic activity, consistent with prior economic research on pandemics, and economic activity will not return completely until there is a vaccine or curative drug for the virus. States now have the tremendous responsibility of executing safe strategies to gradually reopen their economies, balancing the trade-off between healthcare risks and the risks of an economic depression.
Once states are re-opened, they can ease regulatory red tape in order to allow for more efficient business formation and job creation. Re-opening strategies should be followed up by public policy reforms that make it easier to start businesses and find new jobs. State and local red tape should be scaled back, and state tax codes should improve their treatment of operating losses and the depreciation of new business investments.
America needs innovation and growth from the private sector in order to pull the economy out of crisis. This can occur more rapidly if there is policy innovation in the public sector to clear the pathway to economic success. Federal government aid to help businesses survive should not be unwound by state and local red tape. Policymakers can instead take a proactive role in advancing overdue measures to produce a better tax code and lighter regulations.
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