State Unemployment Data Show That Economic Recovery Continues To Spread

November 29, 2020 Topic: economy Region: Americas Blog Brand: The Reboot Tags: CoronavirusUnemploymentDepartment Of LaborSocial Safety Net

State Unemployment Data Show That Economic Recovery Continues To Spread

Nearly half (24) of all states now have an unemployment rate below 6.0 percent, a common threshold of high unemployment.


In the past few days, the US Department of Labor (DOL) has released updated unemployment data showing the economic recovery continued to deepen and spread across the country in October. That data also suggests that one-size-fits-all federal policies, such as reviving $600-per-week bonuses in all states, are increasingly difficult to justify given the improving economic reality of most states.

On Friday, DOL released state-by-state unemployment rate data for October, when the US unemployment rate was 6.9 percent. As the chart below displays, nearly half (24) of all states now have an unemployment rate below 6.0 percent, a common threshold of high unemployment. Twelve of those states have an unemployment rate below 5.0 percent, including four states below 4.0 percent (Iowa and South Dakota at 3.6 percent, Vermont at 3.2 percent, and Nebraska at 3.0 percent).


States by Monthly Unemployment Rates, April and October 2020

Source: US Department of Labor.

Most current state unemployment rates are dramatically improved from the height of the lockdowns in April. For example, only two states (Hawaii and Nevada) continue to have an unemployment rate above 10 percent, down from 45 states in April.

On Sunday, DOL also released the latest update of its “trigger notice” for the currently federally funded Extended Benefits (EB) program, which assists the long-term unemployed where unemployment remains high. That data includes the latest average three-month seasonally adjusted total unemployment rate (TUR) for all states. The TUR is one of several eligibility criteria that govern when states pay extended benefits to individuals who have exhausted state unemployment insurance (UI) benefits, and also current federal Pandemic Emergency Unemployment Compensation benefits. The latest TUR data reflect state-by-state averages for the months of August, September, and now October.

In addition to determining when EB benefits are payable under current law, the TUR is also the yardstick that Senate Democratic Leader Chuck Schumer (D-NY) and Finance Committee Ranking Member Ron Wyden (D-OR) used to determine when federal unemployment benefit bonuses ranging from zero to $600 generally would be payable under legislation they introduced on July 1. That legislation also includes complicated “deemed first tier” and “minimum period on a tier” provisions that inflate the number of states in which bonuses would be initially payable as well as for how long bonuses would be paid. But looking just at the TUR “triggers” in the legislation, the table below compares how many states would merit various levels of bonuses immediately after the former $600-per-week bonuses expired in late July and given the latest TUR data.    

Unemployment Bonuses Payable Based on Current TUR Alone under Schumer-Wyden Proposal, August and November 2020

Weekly Bonus State TUR level States as of August 2, 2020 States as of November 22, 2020
$600 11% or above 29 (AK, CA, CO, DE, FL, HI, IL, IN, LA, MA, MI, MS, NV, NH, NJ, NY, NC, OH, OK, OR, PA, RI, SC, TN, TX, VT, WA, WV, WI) 2 (HI, NV)
$500 10.0 to 10.9% 3 (AL, AZ, KY) 3 (CA, NY, RI)
$400 9.0 to 9.9% 12 (AR, CT, GA, IA, KS, MD, MN, MO, MT, NM, SD, VA) 3 (IL, MA, NM)
$300 8.0 to 8.9% 5 (ID, ME, ND, UT, WY) 4 (LA, NJ, PA, WV)
$200 7.0 to 7.9% 0 12 (AR, CT, DE, FL, MD, MI, MS, OH, OR, TN, TX, WA)
$100 6.0 to 6.9% 1 (NE) 10 (AL, AK, AZ, CO, KS, KY, ME, MN, NC, WY)
No Bonus 5.9% and below 0 16 (GA, ID, IN, IA, MO, MT, NE, NH, ND, OK, SC, SD, UT, VT, VA, WI)

Source: Department of Labor. TUR reflects average seasonally adjusted total unemployment rate for the three-month period ending in October 2020.

As the table displays, the number of states where $600 bonuses would be payable under the Schumer-Wyden legislation has fallen dramatically, from over half of all states (29) in early August to only two states today. Meanwhile, the number of states where $200 or lower bonuses would be payable if the legislation were enacted today has risen from only one state to 38 states. In 16 of those 38 states, a current TUR below 6.0 percent means the only way the state would qualify for any bonus is because the legislation separately “deems” all states temporarily eligible for at least $100 bonuses — that is, a state could receive the bonus even if it has a TUR that indicates no bonus is merited.

Improving state unemployment rate data — both the October rates as well as the most recent three-month averages — indicate the labor market has rapidly improved in most states. Nonetheless, the latest version of House Democrats’ HEROES Act, which received an endorsement from Joe Biden last week, would revive $600-per-week bonuses in all states — even in the rapidly growing number of states where the unemployment rate terms of the July Schumer-Wyden bill suggest low or no bonuses are merited. As I reviewed recently, that continued improvement also argues that if further federal unemployment assistance is provided, lawmakers should offer states flexibility over how to use it, as policymakers did after 9/11. That would enhance job creation and avoid mandating one-size-fits-all federal policies where continued improvements indicate that such policies would make little sense.

This article first appeared on the American Enterprise Institute blog.

Image: Reuters