As Unemployment Dips to 7.9%, Differences Across States Show More Federal Stimulus Not Solution

Rachel Greszler / October 02, 2020

An additional 661,000 Americans found jobs in September, according to the Bureau of Labor Statistics’ monthly report, as the unemployment rate dipped to 7.9% from 8.4% in August and a high of 14.7% in April after the COVID-19 pandemic struck.

Although 14.1 million more were employed in September than April, the 12.6 million not working is still 6.8 million more than were unemployed in February, before the COVID-19 pandemic hit the U.S.

This does not mean the federal government needs to provide more stimulus than the over $3 trillion in COVID-19 relief spending already flowing.

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The economy continues to improve, but significant differences exist in how well households and businesses are faring across the country.

In Idaho Falls, Idaho, and Logan, Utah, the unemployment rate is 2.7%. In El Centro, California, it’s 22.9%.

Some places see child care shortages, while others see child care centers closing their doors for lack of returning children. Some schools are operating entirely in person, some are combining online and in-person classes, and others are online only.

Decisions made by state and local officials in response to the COVID-19 pandemic are affecting the everyday lives of individuals and households.

In general, Americans are faring better in states where (typically conservative) policymakers have allowed society to resume most activities with proper safety measures, recognized their citizens’ rights and needs to earn a living, and provided in-person education options for children.

Meanwhile, more people are struggling in states where (typically liberal) policymakers have imposed excessive lockdowns not rooted in data, attempted to close off income opportunities, used the pandemic to expand government control, and demanded federal bailouts for decades of poor budgeting instead of taking responsibility and confronting their problems head-on.

For example, in announcing 28,000 layoffs this week, the Walt Disney Co. cited California’s “unwillingness to lift restrictions” and allow its Disneyland amusement park to reopen as contributing to the layoffs.

Although it’s not a precise distinction between the two approaches, the unemployment rate in states led by Republican governors shows a stark contrast with states led by Democrat governors.

The unemployment rate in red states was 6.5% in August, compared to 9% in blue states—a potential difference of millions of jobs. (Statewide unemployment rates for September will not be released until mid-October).

This suggests that the solution to a faster and fuller recovery is to balance saving lives and livelihoods by letting society safely resume most activities, respecting individuals’ rights to earn a livelihood, and providing the option of in-person education for children.

The federal government is not in charge of these decisions, and federal taxpayers should not be on the hook for the consequences of decisions by state and local policymakers.

With over $3 trillion in COVID-19 spending flowing already from the federal government, any additional economic support should come from state and local governments.

Not only are state and local officials the ones making most of the decisions affecting Americans’ everyday lives, they are better equipped to provide the targeted support necessary to meet the unique needs of their populations.