Migration Driving Uneven Job Recovery

McLEAN, Va. – The U.S. economy is tantalizingly close to reaching the most significant milestone yet in its long, bumpy comeback from COVID-19: the recovery of all 22 million jobs wiped out in the pandemic.

After a remarkable string of at least 400,000 payroll gains for 11 straight months, the nation has recouped 20.4 million, or 93%, of the lost jobs. That puts the U.S. just 1.6 million short of its pre-crisis employment level, a target it will likely hit by June or July.

But the achievement will mask sharply divergent performances among the 50 states. While the South and West, especially the Mountain West, are powering the recovery, the Northeast and Midwest are lagging.

Utah, Idaho and Montana reclaimed all their vanished jobs in late 2020 or early 2021 and are hovering well above their peaks, according to a Fitch Ratings analysis of Labor Department figures.

Hawaii, Louisiana and Alaska, meanwhile, have regained just 70% or less of the jobs erased.

Through February, 11 states have climbed back to their prior summits.

Most states lag in rebounding from COVID-19 job loss

By midyear, when the U.S. will likely reach its pre-crisis benchmark, fewer than half the states will have accomplished that feat, estimates Olu Sonola, head of U.S. regional economics for Fitch Ratings.

In other words, the jobs are coming back, but many have been reshuffled geographically.

“The South and West are far outpacing other regions,” Sonola says.

Adam Kamins, an economist at Moody’s Analytics, reckons that only one-third of the states will be back to their prior highs by summer.

“You’re going to have a tale of two recoveries,” he says.

Even by the end of the year, Sonola figures 10 states will still be shy of their pre-crisis levels while Kamins thinks there could be as many as 15 to 25 laggards. Some, like New York and West Virginia, may never get back to their pre-COVID-19 payrolls, he says.

South and West widen leads

Behind the split-screen picture: Before the pandemic, Southern and Western states were already leading the U.S. economically and in population growth as their favorable climates, striking landscapes and lower costs drew millions of transplants from the Northeast, Midwest and California.

The health crisis tossed kindling on the movement, with many Americans departing congested metro areas for less populated regions deemed less susceptible to COVID-19. The ability of professional employees to work remotely further stoked the shift, Sonola and Kamins say. And many states in the South and Mountain West are led by Republican governors who imposed fewer COVID-19 restrictions, keeping payrolls at restaurants, hotels and other businesses from falling as sharply, though often at the cost of bigger infection surges.

“They didn’t see as much of a dip,” so had a smaller gap to close, Sonola says. As a result, he says, “The (states) that are strong are getting stronger.”

Meanwhile, states with large cities, such as New York and Illinois, have been slow to add restaurant and retail jobs as many office workers continue to telecommute even as technology centers in the West and South grow their workforces.

The March state and local jobs report, due out next week, will likely reveal that another batch of states has returned to their pre-COVID-19 employment, including Mississippi, South Carolina, South Dakota and Indiana, Kamins says.

Colorado is latest to reach milestone

In February, Colorado became the latest to join the club. It has trailed its Mountain West neighbors in jobs growth in part because its Democratic governor imposed tougher social distancing restraints, says Steven Byers, an economist at the Common Sense Institute, a nonpartisan research group.

Colorado, he says, also passed strict limits on oil and natural gas drilling, intensifying layoffs in the energy-producing state as crude prices crashed in 2020.

But nearly all of Colorado’s restrictions were lifted last May. And like other states at or near pre-COVID-19 employment, the state is benefiting as millions of Americans sidelined by COVID-19 fears or childcare duties stream back into an improving labor market as the pandemic eases.

Nationally, job openings are near record levels and worker shortages have pushed pay increases over 5%.

The share of Colorado residents working or looking for jobs jumped from 68.2% in December to a pandemic high of 68.7% in February.

David Campbell, vice president of human resources at Phil Long Dealerships, with 18 outlets across Colorado, was struggling to fill about 100 openings for much of last year. Customers had to wait two weeks for a repair appointment.

Recently, the company started receiving 20 to 30 applications per opening, up from two or three, and the number of vacancies has fallen to 50 or 60, Campbell says.

“It feels much better,” he says.

In January, Alex Assila, 26, joined Phil Long as a sales associate in Denver, leaving part-time work with autistic children and as a builder of team skills for organizations. He says his job as a behavioral technician was rewarding but also “emotionally exhausting.”

As he struggled with pandemic-induced inflation, he cut back on skiing and dining out. Assila, who was laid off from a different behavioral technician position at the start of the pandemic, felt he had a limited window. “I didn’t want to lose my market … my value.”

After just a couple of weeks of training, Assila was already meeting his sales quota and earning the equivalent of $100 an hour, up from $25 to $45 in his part-time gigs.

And he feels he’s still using his psychology background. “It’s about how to be a good person and connect with people.”

In Georgia, which reclaimed its pre-crisis payrolls in December, about 36,000 people have joined the labor force in recent months.

Chris New, owner of Carrollton-based Barnes Van Lines, says the worker supply has gotten “a little better” recently, allowing him to bring on a truck driver and a few laborers.

But he would still like to add 10 employees to his staff of 24, noting he had to turn down about $250,000 in sales over the past several months as California residents continue moving to the state. He has raised wages by about 30% to 50%.

Here’s a look at the job recoveries of the top and bottom five states, based on Labor data compiled by Fitch and Moody’s:

Top five

Utah: Recovered all lost jobs in January 2021. Employment: 5.1% above its pre-COVID-19 level.

The state, brimming with mesas, natural arches and plateaus, is among the fastest growing. The Salt Lake City area has become a tech hub known as the Silicon Slopes. Utah also had few COVID-19 restrictions.

Kanab, at the nexus of several national parks and the Grand Canyon, has attracted both tourists and new residents who “can have their jobs pretty much anywhere and live in Utah,” says Dean Baker, co-founder of the Center for Economic and Policy Research who moved to the area himself from Washington, D.C., and works remotely.

But the share of people working or looking for jobs has edged below its mid-2021 level. Victor Cooper, owner of Rocking V Cafe, says the fine dining restaurant is so short-staffed it’s open just five days a week and often turns away about 200 customers a night.

Cooper recently hired 10 employees, expanding his staff to 28. But “I could use eight more,” he says.

Idaho: Recovered all its lost jobs in December 2020. Employment: 5.1% above its pre-COVID-19 level.

The state led the nation in population growth for the fifth straight year in 2021, and Boise is a tech and remote work hive.

Wages have risen sharply the past couple of years, easing the “sticker shock” that used to hit new residents moving from California, says Doug Haneborg, owner of an Express Employment Professionals franchise in town.

Montana: Recovered all its lost jobs in April 2021. Employment: 3.1% above its pre-COVID-19 level.

Another mountainous wonderland. Bozeman and Billings were becoming retirement havens even before the health crisis turned them into Zoom towns for residents fleeing San Francisco, Los Angeles and Seattle.

Texas: Recovered all its lost jobs last November. Employment: 1.7% above pre-COVID-19 level.

Texas was one of the first states to loosen restrictions, and also has notched the nation’s biggest population gains. Those developments, along with the state’s diverse economy, helped it weather the oil crash in COVID-19’s early days, Kamins says.

Florida: Recovered all its lost jobs in October. Employment: 1.7% above pre-COVID-19 level.

The state had among the nation’s most lenient COVID-19 restrictions and attracted lots of remote workers to its low-cost metro areas with mild weather, such as Orlando, Tampa and Jacksonville.

The surge in early retirements during the pandemic also drove consumer demand and job growth in this haven for retirees, Kamins says.

Bottom five

Making up the bottom five states were: Hawaii, recovered 58% of its lost jobs; Louisiana, recovered 69% of lost jobs; Alaska, recovered 70% of lost jobs; Minnesota, recovered 71% of lost jobs; and North Dakota, recovered 72% of lost jobs.

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