State Jobless Rates for April Show Uneven Impact of Pandemic

Date : 23/05/2020 @ 06:56
Source : Dow Jones News

State Jobless Rates for April Show Uneven Impact of Pandemic

By Kim Mackrael and Eric Morath 

The economic upheaval caused by the coronavirus pandemic had a devastating but uneven impact on the U.S. labor market last month, leaving more than one in five workers jobless in Nevada, Michigan and Hawaii, government data showed Friday.

Nevada had the highest unemployment rate at 28.2%, the Labor Department said Friday, followed by Michigan and Hawaii, both above 22%. Rates were among the lowest in Minnesota and Nebraska at slightly more than 8%.

Unemployment rose in all 50 states and the District of Columbia, and in 43 states the rate was the highest in records going back to 1976. The national unemployment rate rose in April to 14.7%, which was the highest in records back to 1948.

The report highlights the toll that the pandemic and related lockdowns took on states that depend on industries such as tourism and manufacturing, while causing less damage in the middle of the country, where cases of Covid-19, the illness caused by the virus, were fewer. In total, U.S. employers cut more than 20 million jobs in April.

In Nevada, nearly a quarter of the state's labor force was employed in the hospitality and leisure industry before the pandemic began, according to the Labor Department. That industry, which normally employs about 350,000 in the state, lost roughly 40% of its workforce in March and April.

"Nevada remains among the least diversified economies of its size in the country," said Jeremy Aguero, a principal analyst with Las Vegas-based economic research firm Applied Analysis.

Mr. Aguero said the downturn in tourism has rippled out to affect hotel and restaurant suppliers and other businesses that depend on hospitality workers spending their earnings locally.

Nevada Gov. Steve Sisolak ordered casinos to close March 17, effectively shutting down the tourism industry. State regulators have said casinos will be limited to 50% occupancy when they reopen, but they haven't announced a date.

Las Vegas resident John Polhemus, 47 years old, said he was let go in early April from an executive position at a specialty foods company that typically does 85% of its business with restaurants in casinos.

"We saw an unprecedented change in our business model," after the state closed casinos, Mr. Polhemus said. He said business was strong before the pandemic began. "All of that stopped."

Hawaii faced similar challenges. Employment in leisure and hospitality, which accounted for about one in five jobs last year, declined by 56% in April, according to the Labor Department.

The state's $18 billion tourism industry slowed dramatically in March after travel from Asia dropped off and the Trump administration recommended Americans avoid unnecessary travel. Hawaii has recently reopened car dealerships and shopping malls, but visitors from outside the state must still undergo a 14-day quarantine after they arrive.

Carey Johnson, whose Custom Island Tours business offers driving tours around the Hawaiian island of Oahu, said he laid off seven employees and closed down temporarily in March.

Mr. Johnson, 53, said he hopes to open up again once the state allows it, and once the quarantine period for out-of-state visitors is lifted. Until then, he said, "there are no tourists here to give tours to."

States that are heavily dependent on manufacturing also saw big job losses. Auto makers General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles all closed plants in Michigan mid-March, causing a ripple effect of layoffs at suppliers in the state and elsewhere. Michigan's employment in manufacturing industries fell 28% in April, according to Labor Department data.

Auto makers on Monday began restarting their U.S. factories, though two later were halted, one due to a worker's illness and the other due to a parts shortage.

Gabriel Ehrlich, an economist at the University of Michigan, said the auto industry tends to be hit particularly hard during economic downturns because it is easier for people to delay buying a new vehicle compared with other, more urgent expenses.

"We were forecasting Michigan would be above the national unemployment rate for that reason," Mr. Ehrlich said. He said the state has a relatively high burden of illness and deaths related to the coronavirus pandemic, which may also have contributed to exceptionally high unemployment.

More than 5,100 people in Michigan have reportedly died after contracting Covid-19, according to data from Johns Hopkins University.

In Washington state, the unemployment rate rose to 15.4% in April from 5.1% in March. Boeing Co. closed its largest Seattle-area factory temporarily in late March after about two dozen workers in the region tested positive for the new coronavirus and one person died. Boeing didn't layoff workers during the closure, but some of the company's suppliers did.

Tristan Nisbet, 33, said he was laid off from his job at an aerospace parts company in Kirkland, Wash., on April 10, after contracts from Boeing and other customers dried up. He said he's getting unemployment benefits but is worried about what will happen when extended medical coverage from his union ends. "I hope to get back to work as soon as possible," Mr. Nisbet said.

Boeing has warned of future layoffs, because declining air travel has lowered demand for jetliners.

Connecticut had the lowest unemployment rate last month at 7.9%, according to Labor Department data. Still, officials at the state's Labor Department said that figure likely understates joblessness because of difficulties in collecting surveys. They said the rate may be closer to 17.5%.

A spokesman for the U.S. Bureau of Labor Statistics declined to comment on the data for Connecticut but referred to a previous statement that while the response rate to its survey "was adversely affected by pandemic-related issues," the department "was still able to obtain estimates that met our standards for accuracy and reliability."

Nonfarm payrolls fell in every state in April, according to the Labor Department. The largest declines occurred in populous states: California lost 2.3 million jobs; New York, 1.8 million; and Texas, 1.3 million. The states with the largest percentage declines were Michigan at 22.8%; Vermont, 19.6%; and New York, 18.8%.

New York has the highest number of Covid-19 cases and related deaths among U.S. states, according to the Centers for Disease Control and Prevention.

The unemployment rate represents the people without jobs but actively seeking employment as a share of a state's overall labor force. Separate Labor Department data show that many people who recently lost jobs dropped out of the labor force because they were either not seeking work or were unable to report to a job in mid-April, the period covered by the survey.

Write to Kim Mackrael at kim.mackrael@wsj.com and Eric Morath at eric.morath@wsj.com

 

(END) Dow Jones Newswires

May 22, 2020 16:41 ET (20:41 GMT)

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