The national lockdown has sparked economic destruction from coast to coast, although some states have handled the devastation better than others. But does the political color of a state – red or blue – matter in today’s post-Coronavirus economy? Some jurisdictions are still trying to reopen their economies, while others are thriving amid the public health crisis – and with relatively few COVID-19 cases. Do Republicans and Democrats matter on the other side of the lockdown?
Republicans v. Democrats
According to the findings of a new study by WalletHub, Republican-led states are outpacing Democratic-run states in the economic recovery. In a review of the unemployment rates, red jurisdictions are leading the way, while blue regions are falling behind.
Republican governors lead seven of the top ten states where employment is bouncing back. The personal finance publication based its conclusions on two categories: the overall unemployment rate and the change in joblessness at the end of July compared to January 2020 and July 2019, as well as not seasonally adjusted claims year-over-year.
Here are WalletHub’s top ten states:
- Idaho (R): 4.7%
- Utah (R): 4.6%
- Kentucky (D): 6.2%
- Nebraska (R): 5%
- Montana (D): 6%
- Wyoming (R): 6.8%
- Iowa (R): 6.5%
- Wisconsin (D): 7%
- Missouri (R): 7.2%
- Arkansas (R): 7.5%
Here are the bottom ten rankings:
- Massachusetts (D): 16.2%
- New York (D): 16%
- Hawaii (D): 13.1%
- Nevada (D): 14.2%
- Florida (R): 11.5%
- New Jersey (D): 14%
- California (D): 13.7%
- Pennsylvania (D): 14.1%
- New Mexico (D): 13.3%
- Rhode Island (D): 11.4%
This comes soon after the initial jobless claims moved back above one million in the week ending August 15, with California leading total claims and New Jersey reporting the highest increase in the number of Americans filing for first-time unemployment benefits. With the Paycheck Protection Program (PPP) benefits expiring, market observers warn that this weekly reading could surge in the next several weeks.
Meanwhile, WalletHub analysts believe that it would take a lot longer for the country to reduce the unemployment rate to pre-pandemic levels than it did for the coronavirus to eliminate a decade of job growth in only a couple of months. But why are some states doing better than others?
A Look at the States
Before the virus outbreak, Idaho had an unemployment rate of 2.8%, and various surveys forecast that future job growth over the next decade would be about 44%. It has a diversified economy: Idaho depends on construction, agriculture, manufacturing, retail, and professional services. Idaho signed on for President Donald Trump’s new lost wages program that gives people who receive at least $100 in unemployment benefits an additional $300.
Largely unscathed by the pandemic, the Gem State has seen an uptick in cases as it transitions to a stage four reopening. Health authorities are recommending that Idaho return to lockdown, although daily confirmed infections never surpassed 1,000, and the death toll has topped just 300.
Gary Sasse, the Founding Director of the Hassenfeld Institute for Public Leadership at Bryant University, recently published an op-ed that asked a pertinent question: “Does a Lost Economic Decade Loom for Rhode Island?” All the early estimates paint a bleak picture for Little Rhody as IHS Markit forecasts the state’s employment situation will not return to pre-Coronavirus levels until 2024. Its economic decline may linger, too, as Governor Gina Raimondo has hit the pause button on the state’s reopening efforts due to more than 500 new cases in one week.
But while politicians are playing the guessing game with people’s lives, one state has adopted a live and let live approach to the pandemic: South Dakota. The Mount Rushmore State never went into shutdown, so the governor must have transformed the beautiful state in a graveyard, correct? Hardly. So far, it has more than 11,000 cases and 160 deaths, and the numbers do not point to a surge. This has allowed Governor Kristi Noem to gloat because South Dakota has recovered 80% of its lost jobs, and she even turned down the president’s extra jobless benefits.
The positive story coming out of South Dakota must be infuriating MSNBC’s Rachel Maddow, who condescendingly told Noem in April: “You are aware that it’s infectious, right? That it’s a communicable disease?” Does this mean the rest of the nation should adopt the South Dakota model? That is the beauty of America: 50 states can do what they like – right or wrong.
Indeed, the Coronavirus public health crisis impacted more states than others. New York still leads the nation in deaths, with more than 32,000. The next closest is New Jersey (16,000), California (12,000), and Texas (11,500). Infections are continually climbing in California, Florida, Texas, and Illinois. Despite a national downward trend since the end of last month, there is a general concern that there could be a resurgence when the flu season returns in the fall. Could this lead to another coast-to-coast lockdown? If so, the gains the U.S. economy has made could be wiped out.
Read more from Andrew Moran.