Red States Humiliate Blue Counterparts On This Key Issue

A new report confirmed what many suspected – that red states are far outpacing blue states in terms of job growth as the United States continues its recovery from unprecedented lockdowns that decimated the economy.

Personal finance company WalletHub combined several data sources, including change in unemployment from May 2021 to May 2019, change in unemployment from May 2020 and January 2020, and non-seasonally adjusted continued claims from May 2019 to May 2021, in order to rank the fifty states and Washington, D.C. for labor market improvement.

Nine of the top ten performing states are led by Republican governors – Vermont, Utah, Nebraska, South Dakota, Idaho, New Hampshire, Alabama, Kansas, Montana and Oklahoma

Conversely, all of the bottom ten states are led by Democrat governors – Illinois, New Jersey, Louisiana, District of Columbia, California, Connecticut, Nevada, New York, New Mexico and Hawaii.

Unusually high unemployment is challenging employers across the United States — a trend driven by enhanced federal unemployment insurance.

Some states, however, have prolonged the boosted unemployment payouts for an unnecessary amount of time which has proven to be a thorn in the side of recovery efforts, as it lessens the incentive for Americans to return to work.

One recent report found that many states are offering benefit packages “equivalent to $100,000 a year in salary for a family of four with two unemployed parents.” Even without considering “food stamps, school breakfast and lunch programs, rental assistance, and the fact that some unemployment benefits are not subject to federal income tax,” analysts stated that “the maximum benefit package when including the $300 a week supplemental UI benefit” vastly outweighs Americans’ median household income of $68,000.

During Federal Reserve Chair Jerome Powell’s recent testimony before the House Subcommittee on the Coronavirus Crisis, Republican Rep. Jim Jordan asked about the policies affecting the Fed’s capacity to pursue low inflation and maximum employment.

Powell noted that federal unemployment insurance is slowing the labor market rebound, which will improve once benefits expire: “You would expect a significant — a really strong set of jobs numbers coming up, beginning in the next month.”

The issue is with current state benefits in effect, employers are struggling to fill positions. Businesses are desperately competing for employees, often times offering signing bonuses along with other incentives to draw new workers in.

According to a report from AnnElizabeth Konkel — a labor market economist at job listing company Indeed — employers in the United States are offering one-time perks to attract new applicants as enhanced federal unemployment insurance expires in many states.

The number of job postings on Indeed’s platform with hiring incentives climbed to 4.1% —more than double the percentage with incentives listed at the end of June 2020.

Indeed’s findings reflect a labor market in which employers must compete with a federal government that incentivizes workers to remain unemployed, most notably in blue states.

Sen. Lindsey Graham brought up the economy hindering issue with Office of Management and Budget Acting Director Shalanda Young.

“There’s a lot of jobs out there that are unfilled and will never be filled until you change the benefit structure. Does that logic make sense to you, given where we’re at in our economy?” Graham asked.

Author: Timothy Cyclin