Employment Gains and State Re-Openings in the COVID Economy

The spread of COVID-19 has not been uniform across the country. Urban areas have generally seen more aggressive spreads of the virus. These differences manifested themselves somewhat in the labor market as well. There is a strong relationship between the exposure to COVID-19 and employment declines.

While employment fell in all states, the employment declines were largest in those states that had more disease exposure. The authors compare two groups of states: (1) a set of large states that broadly opened in late April or early May (FL, GA and TX), and (2) a set of large states that broadly opened in late May and early June (IL, PA, VA and WA). Looking at employment in the Food and Accommodations Sector for both groups of states, the authors find employment in this sector fell similarly through mid-April in both state groupings. Starting in late April, employment in this sector within the states opening early increased faster than employment in the states opening later. In the states that opened early, however, employment in this sector is still 40 percent below February levels as of mid-May. This suggests that opening does not guarantee employment will fully rebound in these sectors.

The authors also found that employment in these sectors within states that opened later started to increase even prior to those states re-opening. While the increase was modest it showed that demand was increasing even before the states officially re-open. These findings suggest caution by researchers and policymakers alike seeking to link employment gains to re-opening schedules.