America’s Two-Track Jobs Recovery

Memo to Ron Klain: Here are the pandemic policies that worked.

WSJ editorial. Excerpts:

"lockdown states continue to suffer high unemployment while Republican-led states that maintained many fewer restrictions have almost fully recovered."

"the unemployment rate in October hit the lowest on record since 1976 in West Virginia (4.3%), Georgia (3.1%), Oklahoma (2.7%), Utah (2.2%) and Nebraska (1.9%). Vermont (2.8%), Idaho (2.8%), South Dakota (2.8%), New Hampshire (2.9%), Alabama (3.1%), Montana (3.1%), Wisconsin (3.2%) and Indiana (3.3%) are close to their pre-pandemic rates."

"In some of these states, many unemployed have dropped out of the labor force, which has reduced their unemployment rates. But the labor force has grown in Idaho, Oklahoma, South Dakota, Utah and Wisconsin as well as some others. All these states have GOP governors and legislatures, with the exception of Wisconsin (Democratic Governor) and Vermont (Democratic legislature).

Nine states, on the other hand, have unemployment rates above 6%—California (7.3%), Nevada (7.3%), New Jersey (7%), New York (6.9%), New Mexico (6.5%), Connecticut (6.4%), Hawaii (6.3%), Michigan (6.1%) and Alaska (6.1%). All have Democratic government trifectas save Michigan (GOP legislature) and Alaska (GOP Governor and legislature).  

While payroll jobs nationwide are 2.7% below their pre-pandemic peak, Utah and Idaho have exceeded theirs by 3.5% and 1.6%, respectively. Arizona (-0.2%), Texas (-0.5%), South Dakota (-0.7%), Nebraska (-0.8%), Alabama (-1.2%), Arkansas (-1.2%), Montana (-1.2%), Georgia (-1.3%), Tennessee (-1.7%), South Carolina (-1.8%) and Florida (-1.9%) will do so soon.

By contrast, New York (-8.2%), Pennsylvania (-5.4%), Michigan (-5.1%), Massachusetts (-5.1%), California (-5%), New Jersey (-4.8%), Connecticut (-4.7%) and Illinois (-4.7%) will take much longer to recover the jobs they lost, if they ever do. The New York City (-10.1%), San Francisco/East Bay (-7.4%) and Los Angeles (-6.6%) regions have even further to go. 

There are about four million “missing” jobs since February 2020 in the 23 states with Democratic governors versus 1.3 million in the 27 with GOP governors even though they have only 15% more population."

"What explains this startling dichotomy? One obvious culprit is the extent of lockdowns. Democratic governors tended to favor extensive lockdowns that were especially hard on small businesses. Population migration has also reduced the demand for services. Many offices in New York and San Francisco haven’t fully reopened, so hospitality jobs that depend on them haven’t returned."