All But 3 States See Higher Over-the-Year Unemployment

February 1, 2021 Updated: February 2, 2021

Only three states in the union—all Republican-led—saw unemployment rates drop or remain unchanged between December 2019 and December 2020—South Dakota, Alaska, and Nebraska, according to a recent government report.

The Bureau of Labor Statistics, part of the U.S. Department of Labor, said in a report last week that over-the-year unemployment remained unchanged in Nebraska, fell by 0.3 percentage points in Alaska, and dropped by 0.4 percentage points in South Dakota—the state with the lowest unemployment rate in December 2020.

Red states top the chart in terms of the lowest unemployment rates (with Kansas, a blue state, the only notable exception), while blue states occupy the bottom rungs.

Nine out of 10 of the states with the lowest rates of unemployment were led by Republican governors: South Dakota (3.0 percent), Nebraska (3.0), Iowa (3.1), Vermont (3.1), Utah (3.6), Alabama (3.9), New Hampshire (4.0), North Dakota (4.1), and Arkansas (4.2).

Kansas, the only Democrat-led state in the top 10, had a jobless rate of 3.8 percent, a 0.7 percentage point rise in the measure compared to December 2019.

The top 10 states with the highest unemployment rate in December 2020 were all led by Democrat governors: Hawaii (9.3 percent), Nevada (9.2), California (9.0), Colorado (8.4), New Mexico (8.2), New York (8.2), Rhode Island (8.1), Connecticut (8.0), Illinois (7.6), and New Jersey (7.6).

Besides blue states having, in general, the highest unemployment rates in December 2020, they also had the highest over-the-year growth in unemployment, the report shows.

One theory is that blue states are struggling with higher unemployment because they took more aggressive steps in fighting the pandemic, with Democratic governors tending to impose more stringent restrictions than their Republican counterparts.

South Dakota Gov. Kristi Noem, who has resisted imposing the kind of lockdowns that have been seen in other parts of the country, blamed pandemic-related restrictions for hurting the economy.

“Last year, we saw governments all across the country shut down people’s lives. American citizens could not go to church, run their business, or send their children to school,” Noem wrote in a Jan. 8 op-ed in The Federalist.

“COVID didn’t crush the economy. Government crushed the economy,” she wrote, arguing that Republicans “stand for your right to earn a living and to do business.”

kristi noem
South Dakota Gov. Kristi Noem gives a State of the State address in Pierre, S.D., on Jan. 8, 2019. (James Nord/AP Photo)

It’s a sentiment that was often expressed by former President Donald Trump, notably during one of his debates with then-candidate President Joe Biden, when Trump said, “They’re shut down so tight and they’re dying.”

A study of lockdown measures in the states was carried out by researchers at the personal finance site WalletHub in October 2020. It concluded that the states with the most rules tended to have the highest unemployment rates.

Another theory for why unemployment is higher in blue states than in red states has to do with the fact that blue states tend to be more reliant on service industries, especially ones related to travel, leisure, and hospitality, which have been hit by the pandemic disproportionately hard.

This might go some ways toward explaining why Kansas, which has had restrictions roughly on par with other blue states, has fared relatively better. Its economy is driven by manufacturing, contributing around $28 billion in quarterly GDP compared to accommodation and food services, which contribute around $4 billion in quarterly GDP but which dropped to $2.5 billion in the second quarter of 2020, at the height of the lockdowns, while manufacturing remained unchanged.

Hawaii, on the other hand, which tops the unemployment table, looks much different in industry contribution to GDP, with arts, entertainment, recreation, accommodation, and food services accounting for nearly $9 billion in 2019, compared to manufacturing, which contributed just $1.7 billion.

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