The labor market recovery has been uneven across the United States as the epidemic-related lockdown has slowed. Some states have an average of five job openings corresponding to each unemployed worker; others have record high unemployment rates. An article in the Wall Street Journal summarizes the reasons for the slow recovery in some U.S. states and the difficulty in hiring in others.
According to the Wall Street Journal, states such as Utah and South Dakota and North Dakota are experiencing a booming labor market as fewer restrictions are imposed and many employers are struggling to fill open positions. Elsewhere, including urban areas and some tourist centers where restrictions have been eased more slowly, market demand is picking up and labor shortages are not as severe.
Labor markets are particularly tight in the northern Mountain West, the Central Plains and some states in the northern region of New England (six states in the northeastern U.S.), according to an analysis by job search site ZipRecruiter, which found about three openings for every unemployed job seeker in April. Even before the pandemic, unemployment rates in all three popular regions were below the national average.
The report analyzes several factors contributing to the nationwide labor shortage. These factors include high unemployment benefits, which may have inhibited some workers in low-wage jobs from returning to work; limited school and child care services that kept some parents at home; and fears of an epidemic. In addition to government restrictions on business in the midst of the epidemic, the characteristics of different regions have unevenly distributed hot and cold labor markets.
Julia Pollak, a labor economist at ZipRecruiter, said, “States located in the mountains became ‘sanctuary states’ for the epidemic” because in those states, fewer business restrictions, open spaces and affordable housing attract new residents to move in. The newcomers, in turn, sparked more economic activity and increased the demand for labor.
Those states north of the Mountain West have seen an influx of growing technology and financial sectors, which fared better than tourism and retail during the epidemic. Unlike much of the U.S., the workforce in Utah (Utah) and Idaho (Idaho) is already growing faster than it did in 2019 before the epidemic. A similar dynamic exists in South Dakota (SDS).
The Central Plains region, where state governments have imposed fewer restrictions on business activity, is also one of the fastest reopening areas. Oren Klachkin, chief U.S. economist at global research firm Oxford Economics, said these states have avoided greater job losses and are getting workers back to their former jobs more quickly. The region is also tied to agriculture and food processing, identified as essential industries that remained open throughout the outbreak.
Vermont, located in New England, has the hottest labor market in the country, with an average of 5.1 jobs for every unemployed person. This statistic is not entirely the product of a hot economy. The region’s job market reflects its long history of an aging population, low population growth and relatively few in-migrants.
In other regions, the labor market has been slower to recover. According to ZipRecruiter, some western states and one east coast state have about one open job for every unemployed worker to match. Hawaii came in last, with an average of 0.7 jobs per job seeker. The region’s unemployment rate in April was well above the national average of 6.1 percent.
Hawaii’s tourism-dependent economy continues to feel the impact of the outbreak and related travel restrictions. Employment in Hawaii’s leisure and hospitality sector remains about 30 percent below pre-pandemic levels, consistent with hotel occupancy rates below the national average this spring.
Hawaii’s measures to prevent the outbreak, including a 14-day quarantine period for people from outside the state last year, helped it achieve the lowest case rate per 1,000 people, according to a Wall Street Journal analysis of data compiled by Johns Hopkins University. However, Hawaii’s measures have also discouraged visitors. Conversely, North Dakota has the highest case rate but a much lower unemployment rate, which stood at 4.2 percent in April.
The New York area was one of the first areas in the United States to be hit hard by the Chinese Communist virus. Governors in New York (NY), New Jersey (NJ), Pennsylvania (PA) and Connecticut (CT) imposed strict restrictions on social and business activities, and did so for longer than many other areas.
New York did not allow restaurants to open for full capacity dining until mid-May. By contrast, Iowa (Iowa) lifted restrictions on events last winter, and Texas (Texas) announced its full reopening on March 10.
Recovery has been sluggish in nearby states in the Southwest, including industries such as tourism in Nevada (Nevada) and energy in New Mexico (New Mexico), which are still struggling under the impact of the outbreak.