Employment in 24 states had not fully recovered since Great Recession BEFORE the pandemic, Pew finds

Coming off a holiday that celebrates workers across the country, today’s labor market is struggling to recover from a peak set in 2000. States whose labor market still hadn’t fully recovered from the Great Recession are facing an even greater economic disadvantage from the pandemic. A new report by the Pew Charitable Trusts found that the average prime-age employment rate (adults between the ages of 25 and 54 who have jobs) in 24 states had not fully recovered from the Great Recession before COVID-19 hit. The report considers the prime age employment-to-population ratio, which provides a different perspective on jobs than the unemployment rate. That ratio peaked at 81.9 percent in April 2000, and stood at 80.6 in January of this year before diving to 69.7 in April and climbing its way back to 75.3 in August, according to Federal Reserve Economic Data.  

“With the recession triggered this year by the coronavirus, the workforce now may have to dig out of an even deeper hole than after the last downturn,” the Pew report notes. The new downturn and the potentially lengthy recovery carry major fiscal implications for states. Lower employment means less tax revenue for state governments and greater demand for safety-net services.

Among the 26 states whose rates had recovered by last year, gains in only three — Massachusetts, Michigan, and New Jersey — were statistically significant. In 15 of those 26 states, rates were less than 1 percentage point above 2007 levels. The states furthest below their 2007 employment rates by the end of 2019 were: New Mexico (-4.6 points), Alaska (-3.2 points), South Dakota (-2.8 points), Hawaii (-2.7 points), and Idaho (-2.4 points). States experiencing the top gains from pre-Great Recession rates included Michigan (3.4 points), New Jersey (2.4 points), Massachusetts (2.2 points), West Virginia (2 points); Connecticut (1.9 points); Maine (1.5 points); Maryland (1.4 points); Colorado and New Hampshire (both 1.3 points).

The report found that Northeastern states also experienced the largest increases in their employment-to population ratios of any region, largely due to those states experiencing the steepest population losses on average. The rates of Western states lagged other regions and declined on average, in part the authors said, because steady population growth outpaced job gains.