US Unemployment: Location, Location, Location

By admin_45 in Blog

The August state-level US unemployment data was out on Friday, and we have 3 points of interest on this data. We’ve been looking at these statistics since the start of the COVID Crisis because they show exactly where joblessness is highest, lowest and what the trend lines are.

#1: While the national unemployment rate was 8.4% in August, there is a remarkably wide variance in joblessness among economically important states.

• Specifically, New York (12.5%), California (11.3%), Illinois (11.0%), New Jersey (10.9%), and Pennsylvania (10.3%) are all over 10%.
• Those are all in the top 10 in terms of their contribution to US GDP, but so are Texas (6.8% unemployment), Florida (7.4%), Ohio (8.9%), Georgia (5.6%) and Washington state (8.5%) where joblessness is often well below the national level.

Here is a chart back to January 2020 which shows the dichotomy in the 6 US largest states by GDP contribution:

Takeaway: the COVID Crisis has hit various states’ labor markets much more unevenly than past economic downturns.

#2: Among the large states with the highest unemployment, much of this joblessness is occurring within their largest cities:

New York City: 16.0% unemployment in August versus 12.5% for the state as a whole.

• There are 1.2 million unemployed workers in New York City right now, or one of every 11 jobless Americans.
• If every out-of-work New Yorker left the city and they formed their own metropolitan area, it would instantly be a top-10 American city by population.

Los Angeles: 16.1% unemployment in August versus 11.4% for California.

• The jobless total here is 795,000 at present.
• That is greater than the total populations of Denver (727,000) or Boston (692,000).

Chicago: 12.6% unemployment in August vs. 11.0% for Illinois.

• 455,200 unemployed here.
• For comparison, that’s close to the entire population of Miami (468,000) or metro Minneapolis (430,000).

Takeaway: almost 1 in 5 unemployed Americans (18%, to be precise) live in the 5 boroughs of New York City, Los Angeles county, or one of Chicago’s wards, even though only 4.7% of the country resides in one of those 3 cities.

#3: Since the US general election is drawing ever closer, here are the recent trends in unemployment for 6 “battleground” states: Pennsylvania and Ohio (still above national unemployment levels) as well as Florida, North Carolina, Wisconsin and Georgia (all somewhat below the national rate):

Takeaway: to the degree to which voters in these states vote on economic issues, their local labor markets may inform their political choices and – as the chart above shows – these can be quite different from the national unemployment data.

The bottom line to all three points: it makes complete sense that the COVID Crisis has hit major metro areas and the states in which those cities are located much harder than more rural areas of the country. If you live in the Dakotas, or Utah or Idaho or even Vermont, your local unemployment rate is 4% - 5%. The trouble is many more Americans live in NYC, LA or Chicago where joblessness is 13% - 16%. All this puts some useful context around why the Federal Reserve is so concerned about seeing further fiscal stimulus and investors are focused on that issue as well. Until there is a COVID vaccine that allows for a more normal life in urban areas, US unemployment will remain high.