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Tuesday, October 6, 2020
Employment Recovery: Nobody Lags Like Hawaii
By News Release @ 11:27 PM :: 779 Views :: Economy, Hawaii Statistics, Labor, COVID-19

Employment Recovery Persist; HI, NY, MA Lag

News Release from Fitch Ratings, 06 Oct, 2020

The vast majority of US states experienced continued improvement in employment recovery in August, although the pace of recovery was slower than it was in July, and a few states have seen declines in recoveries, Fitch Ratings says. The median employment recovery, or gain in non-farm payrolls since the April trough, improved to 51% in August from 45% in July.

Those states in the lower left quadrant in the chart below experienced the steepest declines in employment in the first three months of the pandemic and have seen lower overall employment recovery in the following three months. Of those states where job losses at the height of the pandemic exceeded the state median of 13%, most have seen total employment recoveries of 45% or more. The pace of recovery is slowing somewhat with a median increase in employment recovery in August of 7 percentage points (pp) from the prior month versus 8pp in July.

Of those states with severe peak-to-trough job losses close to 20%, Hawaii, New York and Massachusetts are the only states with recoveries still below 40%. Put another way, these states have the largest gap between February and August employment levels. New York was the epicenter of the pandemic in the spring and bore considerable economic consequences as a result. Massachusetts has been significantly affected by job losses in the leisure and hospitality (L&H) and education and health services sectors.

Hawaii has recovered just 13% of the jobs lost since the start of the pandemic, down from 16% in July. Before the outbreak of the pandemic, the L&H sector employed approximately 20% of Hawaii’s workforce. L&H job losses account for 50% of total job losses in the state, and persistent weakness in the L&H sector will be a significant drag on economic recovery.

The depth of employment declines and pace of recoveries vary widely among states, with implications for medium-term economic and labor market growth. Three states, Hawaii, North Carolina and Wyoming, reported an employment decline in August. North Carolina, with a peak to trough employment loss equal to the state median, saw recovery fall to 43% in August from 47% in July, primarily due to lagging employment growth in the L&H sector.

The pace of employment recoveries remained steady or increased in August from July in 22 states. Six states, Idaho, Indiana, Kentucky, Mississippi, Utah, and West Virginia, have seen over 60% recovery in employment since June, driven by robust recovery in L&H and the trade, transportation and utilities sector.

Employment losses negatively affect income and sales tax revenues, squeezing state budgets and slowing economic recovery. Fitch considers most states well positioned to deal with resulting budget imbalances at current rating levels but the risk of a return to economic contraction consistent with Fitch's coronavirus downside scenario could compound revenue declines that erode states' gap closing abilities.

Fitch assessed monthly data from the US Bureau of Labor Statistics (BLS) Current Employment Statistics (CES) program to calculate states' employment declines and subsequent growth. BLS notes the ongoing pandemic affected the agency's data collection process and led to some modifications in its reporting model.

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