In Some States, Unemployment Stays Stubbornly High

This story was originally posted by Stateline, an initiative of the Pew Charitable Trusts.

The economic recovery is leaving millions of people behind, especially those with jobs depending on conventions, tourists and live performances.

“It is a very sad situation. I can see why many lose hope and give up,” said Zuleika Lee, a former trade show model and mixologist in Nevada who’s been without work since last March, when the pandemic shut down the convention centers and bars where she made her living.

The state’s tourism-based economy was still reeling in January, the latest federal figures show. Nevada’s unemployment rate was 8.1%, more than twice the level it was a year earlier. Lee is looking for work in more pandemic-proof fields such as sales and graphic design.

While the nationwide number of workers who have been temporarily laid off has declined sharply, permanent job losses remain stubbornly high—about 3.5 million in February. The permanent job loss category covers people who, like Lee, don’t have a job to return to, and need to find a new one when the economy reopens completely.

At the height of the jobless crisis in April, 78% of the then 23 million unemployed Americans were temporarily laid off and only 9% were in the permanent loss category. As of last month, more than a third of the remaining 10 million unemployed were in the permanent loss category.

Those 3.5 million people total more than twice the pre-pandemic number of 1.3 million in February 2020, according to federal Bureau of Labor Statistics reports.

Economists warn that that increase will slow the recovery, leaving states looking for ways to retrain workers or get them into college, and to keep additional workers from losing jobs by creating job-sharing arrangements.

As shutdowns linger for some groups, “a growing share of unemployment will consist of people in persistent categories of joblessness, thereby slowing the overall recovery,” economists at the Federal Reserve Bank of San Francisco warned in November.

That state of affairs is part of a pattern that’s reached crisis proportions during the pandemic. Low-skill jobs in tourism and in restaurants near office buildings, high-skill jobs in the arts that require live audiences and donations, factory jobs making airplane parts—all could evaporate, move or just take too long to return after a year of shutdowns.

Hawaii remains the most affected state, the only one with more than 10% of jobs that existed in January 2020 still gone this year. The number of jobless people in Hawaii is five times what it was last year, also the worst among states. State-by-state numbers on permanent job losses are unavailable, but California, Connecticut, Maryland, Nevada and Vermont have lost nearly a tenth of the overall jobs they had last year.

Two states have bucked the trend. Idaho attracted people who could work remotely during the pandemic and wanted the state’s wide-open spaces. South Dakota kept people employed because pandemic restrictions didn’t temporarily close businesses, as they did in every other state—though that strategy might have contributed to its relatively high numbers of COVID-19 deaths per capita. Those were the only two states with more jobs in January than the year before.

With the permanently unemployed, as opposed to those temporarily laid off, forming a larger and larger share of the jobless, states and labor experts are concerned about how to transition them back to work.

“If people have to find new jobs, employment growth is likely to slow,” the federal Bureau of Labor Statistics concluded in a December report. Employment rose rapidly last spring and summer, fueled by people recalled from temporary layoff, the report noted. But that momentum has slowed as more people have had to start over and find new work.

Some lost jobs will come back, but workers will need to adapt to get them, said Brad Hershbein, a senior economist at the W.E. Upjohn Institute, a Michigan think tank that focuses on labor issues.

Food service workers will be affected even when nearby office buildings begin to reopen, if office employees continue to work remotely much of the time. Hawaii and Nevada may see their fortunes improve once tourism picks up again, but jobless workers may not be able to wait and may have to leave or find other jobs, Hershbein said.

“The hard-hit metros like Maui and Vegas will come back, because people still want to go to those places,” Hershbein said. “It may take a year or two, and some workers can’t wait that long.”

Artists and performers will have trouble if they depend on philanthropic donations in big cities where the patrons may have moved away, as evidenced by layoffs and furloughs in major operas and live theaters around the country.

States with stubborn unemployment rates are looking for ways to avoid a crisis as they allow more workplaces to reopen.

Connecticut, for example, expanded its Shared Work Program, which allows companies such as airplane parts manufacturer Pegasus Manufacturing to avoid layoffs by cutting hours and allowing workers to claim partial unemployment benefits from the state.

“When employees remain attached to their jobs, it makes it much easier to bring that company back to full strength,” said Judi Luther, the state’s Shared Work Program director.

In Massachusetts, where the ranks of the unemployed are still almost triple what they were last year, Labor Secretary Rosalin Acosta told lawmakers this month that the vast majority—a quarter million of the total 300,000 jobless—no longer have jobs to go back to.

Acosta advocated for a funding increase for technical schools to retrain people. The proposed state budget includes an increase from $4 million to $15 million.

Such programs can help “make sure that we are helping folks that probably will not be able to go back to work that they had previously,” Acosta said in the hearing.

Michigan started a tuition-free community college plan in February that drew thousands of applications, aimed partly at people with low-skill jobs. “There’s a growing consensus that the economy coming out of a pandemic is different than the one before it,” said Erica Quealy, a spokesperson for the state Department of Labor and Economic Opportunity.

And Nevada won a $13.8 million federal grant last year to retrain workers during the downturn in fast-growing fields such as health care, technology and manufacturing, joining other states working to retrain hard-hit hospitality workers.

That may not be soon enough to help residents such as single mom Jessica McCoy, who quit an Amazon warehouse job in Nevada last March because she was pregnant and didn’t want to endanger her unborn child in the pandemic. Later, when her local school and child care shut down, she had little choice but to stay home to care for her baby daughter and 8-year-old son.

Like many Nevadans, McCoy was hoping for unemployment benefits that never materialized in the state’s balky system. Other states also are working to restructure systems that failed under the weight of unprecedented claims.

“It’s very frustrating. I’ve been bouncing around from room to room struggling with bills and groceries,” McCoy said. Before her daughter was born, she said, “I started driving for UberEats just to get some kind of income coming in to feed my kid, once the school year was over. Then my car got taken away.”

Some highly skilled performance artists are still pressed by the slowdown. New York’s Metropolitan Opera stopped paying musicians last April, and about half have left the area or retired. Similar layoffs hit the Houston Grand Opera.

“Singers have been hit so, so hard by this because of the risks of playing and singing together and how the respiratory symptoms of COVID-19 could severely damage our ability to work in the future,” said Lisa Neher, a Portland, Oregon, composer and singer who is organizing a “micro-opera” festival online to keep attention on the medium.

Ironically, the biggest stars have suffered most because they depend less on teaching and community work for churches and other organizations, which can be done remotely. Some of the most in-demand singers, those who toured the country for most of the year, have started training for jobs in accounting or technology, she said.

“We’re all working 40 to 50 hours a week to put food on the table and squeezing our art into the nights and weekends,” Neher said.

In South Dakota, one of two states that managed to grow jobs in the pandemic, the lack of state-ordered shutdowns and relatively few cases early in the pandemic served to keep more businesses up and running.

“Our labor market has not seen the severe impacts of the pandemic in other states,” said Melodee Lane, administrator of the South Dakota Department of Labor and Regulation’s Labor Market Information Center. “South Dakota was one of seven states that did not issue stay-at-home orders and the only one that did not require businesses to close.”

The state’s jobless total did more than triple between March and April last year, but by January it fell to a level close to pre-pandemic numbers. COVID-19 deaths were initially low in the state but started to climb in late summer. A Sturgis motorcycle rally of nearly half a million people in August may have led to more than 3,000 cases in the state, according to a non-peer-reviewed study by San Diego State University’s Center for Health Economics & Policy Studies. South Dakota now has the eighth-highest death rate in the country.

In Idaho, another state with more jobs now than last year, some of the increase was from people choosing Idaho as a low-cost workplace with hiking and skiing options, said Craig Shaul, a research analyst supervisor for the state Department of Labor.

“Some people were looking for a place that’s a little more open, a little more spacious than an urban area, and Idaho fit the bill,” Shaul said.