States such as Nevada and Florida that depend heavily on tourism will be hit hardest by coronavirus-related job losses this year while rural states will be most insulated, according to an analysis by IHS Markit.
“All 50 states will experience declines” in employment, says IHS regional economist Karl Kuykendall. But, he added, “States that rely a lot on travel are going to be hit particularly hard.”
Midwest manufacturing strongholds will also be hammered as consumer demand for cars and other products wilts and some factories remain closed to contain the spread of the pandemic, he says. States that experience higher infection rates could lag as more residents continue to hunker down at home.
IHS projected the percentage drop in employment for each state in 2020 rather than total job losses, which are likely to be higher in more populous states. The forecast accounts for a plunge as the outbreak keeps restaurants, stores and other businesses shuttered until late spring or early summer an then a gradual rebound the rest of the year as most merchants reopen. Yet IHS’s forecast still leaves payrolls at the end of the 2020 below their levels a year earlier in every state.
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The Labor Department on Thursday was expected to report 3.5 million initial applications for unemployment benefits last week after tallying a record 3.3 million the prior week. Such claims represent the most accurate barometer of layoffs across the country and include breakdowns for each state.
The drops in employment that IHS is forecasting, however, include layoffs as well as reduced hiring and reflect the reality that job cuts may pick up steam in some states over the next couple of months and slow in others.
Sharpest projected COVID-19 job loss
Here are the five states with the sharpest projected declines in employment this year, according to IHS:
Estimated employment decline: 9.8%.
Payrolls in leisure and hospitality make up a quarter of all jobs, more than twice the U.S. average, IHS says. Nevada casino-hotels, including those in Las Vegas, are closed. Many Americans, fearful of being infected on airplanes, have shunned flying and could do so for some time even after they resume other activities.
Estimated employment decline: 7.9%.
The Sunshine State similarly depends on worldwide tourist attractions such as its beaches and Disney World. The state also could be hit by an outsize share of coronavirus cases because of its large population of older residents, holding down consumer spending longer and slowing the rehiring of restaurant, retail and other workers, Kuykendall says.
Estimated employment decline: 7.5%.
Despite the steel industry’s decline, manufacturing still makes up 9.3% of payrolls, 10% more than the U.S. average. Also, close ties with New York City leave Philadelphia vulnerable to contagion effects from that epicenter of the outbreak, Kuykendall says.
Estimated employment decline: 7.3%.
Manufacturing, highlighted by BMW's plant in Spartanburg and Boeing’s assembly plant in North Charleston, accounts for 11.7% of employment, nearly 40% more than the U.S. average. The state also depends on the tourism in popular destinations such as Charleston, Myrtle Beach and Hilton Head.
Estimated employment decline: 7.2%.
The big automakers have mostly shut down their U.S. plants to avoid virus contagion. Manufacturing accounts for 14.3% of employment, nearly 70% more than the U.S.average.
Lowest projected COVID-19 job drops
Here are the five states with the projected lowest drops in employment in 2020:
Estimated decline in employment: 3.5%.
Like other rural states, its sparse population reduces residents’ risks of contracting the virus, allowing for more consumer spending during the outbreak and a faster recovery, Kuykendall says. And its share of leisure and hospitality jobs is 3% lower than the U.S. average.
Estimated employment decline: 3.8%.
Another rural state with lower health risks, its share of tourism jobs is 18% below the national average. And its portion of finance and insurance jobs, which can be done remotely and are generally less affected by the outbreak, is 28% higher than average. Farms are largely shielded from the effects of the virus, Kuykendall says, and demand for food and groceries has increased during the outbreak
Estimated employment decline: 4.4%.
Another rural state with a heavy reliance on the still-robust agricultural sector and relatively few leisure and hospitality workers. The state has a surprisingly high share of manufacturers but General Mills, Tyson Foods, Deere & Co. and other factories have remained open.
Estimated employment decline: 4.7%.
The largely rural state’s share of federal government workers is more than double the U.S. average, helping protect the state from layoffs as the government ramps up spending to combat the economic effects of the virus.
Estimated employment decline: 4.8%.
Like Alaska, the rural state has an unusually high share of federal workers, including FBI employees, who aren’t affected by the virus.