The coronavirus (COVID-19) has had unprecedented effects on our daily lives as well as the global economy. In many places, shelter-in-place orders have led to the closure of nonessential businesses and many workers have been laid off, furloughed, or otherwise unemployed. Additionally, demand for many types of businesses has nosedived due to consumer fears about contracting coronavirus while outside of their homes, especially in leisure and hospitality businesses.
As of April 2020, the published unemployment rate rose to 14.7%, with 20.5 million workers becoming unemployed in April alone. This compares with an unemployment rate of 3.5% in February 2020. The increase in unemployment in April was the largest increase ever recorded since statistics have been collected. Additionally, the labor force participation rate fell by 2.5 percentage points to 60.2%, which was the lowest since 1973, as many unemployed workers gave up trying to find jobs.
In the midst of this challenging employment situation, AdvisorSmith examined the changes in unemployment rates among the fifty states and the District of Columbia to determine the states that have been hardest hit by unemployment as a result of the coronavirus epidemic and the economic challenges surrounding it.
We used data from the Bureau of Labor Statistics to determine an adjusted unemployment rate for April 2020 for each state that takes into account workers who have stopped looking for jobs and dropped out of the labor force. We compare this adjusted unemployment rate for each state to the rate before the pandemic (January 2020) and ranked the states to determine the which states experienced the largest increases in unemployment due to the coronavirus on a percentage basis. Read on to discover the states with the most unemployment from coronavirus.
Impact of Coronavirus on Unemployment in the United States
States with the Largest Unemployment Increases due to Coronavirus
The top two states most affected by increases in unemployment were Nevada (#1), and Hawaii (#2). Both of these states are heavily dependent on tourism economies that have been hard hit by the near collapse of the hospitality industry. Michigan (#3) was impacted due to auto plant and supplier closures, while Massachusetts (#4) saw a strong impact on its services-based and tourism economy. New Hampshire (#5) was impacted primarily in the accommodations and foodservice sectors, along with retail.
Below, we show the ranking of the 50 states and the District of Columbia based upon the unemployment impact that coronavirus has had in each state. Additionally, we show each state’s unemployment rate, labor force participation rate in January 2020 and April 2020. We also list the adjusted unemployment rate in April 2020 for each state and the change from the published unemployment rate in January 2020 to the adjusted unemployment rate in April 2020.
| Rank | State | Adjusted Unemployment Rate (Apr 2020) | Increase in Adjusted Unemployment Rate (Jan 2020 - Apr 2020) |
|---|---|---|---|
| 1 | Nevada | 35% | 31% |
| 2 | Hawaii | 27% | 24% |
| 3 | Michigan | 28% | 24% |
| 4 | Massachusetts | 25% | 22% |
| 5 | New Hampshire | 22% | 20% |
| 6 | Florida | 22% | 19% |
| 7 | Indiana | 21% | 18% |
| 8 | Rhode Island | 21% | 18% |
| 9 | Texas | 21% | 17% |
| 10 | Illinois | 20% | 17% |
| 11 | North Carolina | 20% | 16% |
| 12 | Louisiana | 21% | 16% |
| 13 | Mississippi | 21% | 16% |
| 14 | California | 20% | 16% |
| 15 | Tennessee | 19% | 16% |
| 16 | Delaware | 19% | 15% |
| 17 | New York | 18% | 14% |
| 18 | Ohio | 19% | 14% |
| 19 | Oklahoma | 17% | 14% |
| 20 | Georgia | 17% | 14% |
| 21 | West Virginia | 19% | 14% |
| 22 | New Jersey | 17% | 13% |
| 23 | Maryland | 16% | 13% |
| 24 | Alabama | 15% | 12% |
| 25 | Colorado | 15% | 12% |
| 26 | Kentucky | 16% | 12% |
| 27 | Washington | 16% | 12% |
| 28 | Pennsylvania | 16% | 12% |
| 29 | Virginia | 14% | 11% |
| 30 | Maine | 14% | 11% |
| 31 | Wisconsin | 14% | 11% |
| 32 | Connecticut | 15% | 11% |
| 33 | Vermont | 13% | 11% |
| 34 | Oregon | 14% | 11% |
| 35 | South Carolina | 13% | 10% |
| 36 | Montana | 14% | 10% |
| 37 | New Mexico | 15% | 10% |
| 38 | Arkansas | 14% | 10% |
| 39 | Arizona | 15% | 10% |
| 40 | Iowa | 12% | 10% |
| 41 | Idaho | 12% | 9% |
| 42 | Utah | 11% | 9% |
| 43 | Missouri | 12% | 9% |
| 44 | Alaska | 14% | 8% |
| 45 | District of Columbia | 13% | 8% |
| 46 | Kansas | 11% | 8% |
| 47 | Minnesota | 10% | 7% |
| 48 | South Dakota | 10% | 6% |
| 49 | North Dakota | 8% | 6% |
| 50 | Wyoming | 8% | 4% |
| 51 | Nebraska | 7% | 4% |
Below you can find a deep dive into the detailed data underlying the ranking of states.
| Rank | State | Unemployment Rate (Jan 2020) | Unemployment Rate (Apr 2020) | Labor Force Participation Rate (Jan 2020) | Labor Force Participation Rate (Apr 2020) | Increase in Unemployment Rate | Change in Labor Force Participation Rate |
|---|---|---|---|---|---|---|---|
| 1 | Nevada | 4% | 28% | 63% | 58% | 25% | -6% |
| 2 | Hawaii | 3% | 22% | 61% | 58% | 20% | -4% |
| 3 | Michigan | 4% | 23% | 62% | 58% | 19% | -4% |
| 4 | Massachusetts | 3% | 15% | 68% | 60% | 12% | -8% |
| 5 | New Hampshire | 3% | 16% | 69% | 64% | 14% | -5% |
| 6 | Florida | 3% | 13% | 60% | 54% | 10% | -6% |
| 7 | Indiana | 3% | 17% | 64% | 61% | 14% | -3% |
| 8 | Rhode Island | 3% | 17% | 64% | 61% | 14% | -3% |
| 9 | Texas | 4% | 13% | 64% | 58% | 9% | -6% |
| 10 | Illinois | 4% | 16% | 64% | 61% | 13% | -3% |
| 11 | North Carolina | 4% | 12% | 62% | 56% | 9% | -5% |
| 12 | Louisiana | 5% | 15% | 59% | 54% | 9% | -5% |
| 13 | Mississippi | 6% | 15% | 56% | 52% | 10% | -4% |
| 14 | California | 4% | 16% | 63% | 60% | 12% | -3% |
| 15 | Tennessee | 3% | 15% | 62% | 59% | 11% | -3% |
| 16 | Delaware | 4% | 14% | 62% | 59% | 10% | -3% |
| 17 | New York | 4% | 15% | 61% | 58% | 11% | -3% |
| 18 | Ohio | 4% | 17% | 63% | 62% | 13% | -1% |
| 19 | Oklahoma | 3% | 14% | 61% | 58% | 10% | -3% |
| 20 | Georgia | 3% | 12% | 62% | 59% | 9% | -4% |
| 21 | West Virginia | 5% | 15% | 56% | 54% | 10% | -2% |
| 22 | New Jersey | 4% | 15% | 64% | 63% | 12% | -1% |
| 23 | Maryland | 3% | 10% | 69% | 64% | 7% | -5% |
| 24 | Alabama | 3% | 13% | 58% | 57% | 10% | -1% |
| 25 | Colorado | 3% | 11% | 69% | 67% | 9% | -3% |
| 26 | Kentucky | 4% | 15% | 60% | 59% | 11% | -1% |
| 27 | Washington | 4% | 15% | 65% | 65% | 12% | 0% |
| 28 | Pennsylvania | 5% | 15% | 64% | 63% | 10% | -1% |
| 29 | Virginia | 3% | 11% | 67% | 64% | 8% | -2% |
| 30 | Maine | 3% | 11% | 62% | 60% | 8% | -3% |
| 31 | Wisconsin | 4% | 14% | 67% | 67% | 11% | 0% |
| 32 | Connecticut | 4% | 8% | 67% | 62% | 4% | -5% |
| 33 | Vermont | 2% | 16% | 66% | 67% | 13% | 2% |
| 34 | Oregon | 3% | 14% | 61% | 62% | 11% | 0% |
| 35 | South Carolina | 2% | 12% | 58% | 58% | 10% | -1% |
| 36 | Montana | 4% | 11% | 63% | 61% | 8% | -2% |
| 37 | New Mexico | 5% | 11% | 58% | 56% | 7% | -3% |
| 38 | Arkansas | 4% | 10% | 58% | 56% | 7% | -2% |
| 39 | Arizona | 5% | 13% | 62% | 61% | 8% | -1% |
| 40 | Iowa | 3% | 10% | 71% | 69% | 7% | -2% |
| 41 | Idaho | 3% | 12% | 64% | 64% | 9% | 0% |
| 42 | Utah | 3% | 10% | 68% | 67% | 7% | -1% |
| 43 | Missouri | 4% | 10% | 65% | 63% | 6% | -2% |
| 44 | Alaska | 6% | 13% | 64% | 63% | 7% | -1% |
| 45 | District of Columbia | 5% | 11% | 71% | 70% | 6% | -2% |
| 46 | Kansas | 3% | 11% | 67% | 67% | 8% | 0% |
| 47 | Minnesota | 3% | 8% | 70% | 69% | 5% | -2% |
| 48 | South Dakota | 3% | 10% | 69% | 69% | 7% | 0% |
| 49 | North Dakota | 2% | 9% | 69% | 70% | 6% | 0% |
| 50 | Wyoming | 4% | 9% | 65% | 66% | 6% | 1% |
| 51 | Nebraska | 3% | 8% | 70% | 71% | 5% | 1% |
Methodology
This study examined changes in unemployment and labor force participation rates from the U.S. Bureau of Labor Statistics, Local Area Unemployment Statistics. To determine the changes in unemployment rates due to the coronavirus and its resulting economic impacts, we compared the unemployment and labor force participation rates in April 2020 to the rates in January 2020 using seasonally adjusted figures for each state to offset the effect of seasonality and allow comparability between January 2020 and April 2020.
To measure the full impact of the coronavirus on employment, we used both the published employment rate as well as the labor force participation rate to calculate an adjusted unemployment rate for April 2020. We then compared the adjusted unemployment rate to the reported unemployment rate in January 2020.
The difference between the April 2020 adjusted employment rate and the January 2020 reported unemployment rate was used to determine the unemployment impact of coronavirus on each state. We then ranked the states from the highest unemployment impact to the lowest to find the states with the most unemployment from coronavirus.
To calculate the adjusted unemployment rate, we used the following formula:
( (April 2020 unemployment rate * April 2020 labor force participation rate ) + ( January 2020 labor force participation rate – April 2020 labor force participation rate) ) / ( January 2020 labor force participation rate)
The formula above determines the number of unemployed individuals in the labor force in April 2020. It adds (or subtracts) the number of individuals who dropped out of (or newly entered) the labor force to the unemployed to form the numerator. The denominator adds back to the labor force the individuals who dropped out from January 2020 through April 2020.
Including individuals who dropped out of the labor force in the adjusted unemployment numbers creates a more accurate picture of the effect of coronavirus on the labor market. There are several effects of the coronavirus pandemic on the labor market and the unemployment rate.
The first is direct—as businesses close (whether temporarily or permanently), workers who are laid off and continue to seek new employment increase the unemployment rate, which is reflected in the published unemployment rate.
A secondary effect due to the negative impact of the coronavirus on the economy is that some workers give up on finding employment and drop out of the labor force. These workers may have continued to seek employment had the economy not been negatively affected by the coronavirus.
Another secondary effect of the coronavirus is that some workers might actively choose not to work due to fears about contracting the coronavirus or spreading it to vulnerable family or household members. These workers also reduce the labor force participation.
Adjusting for the changes in the labor force participation rate better captures the full effects of the coronavirus on unemployment, so we used this methodology to capture the secondary effects on the labor market and unemployment rate in order to fully reflect the unemployment caused by the coronavirus pandemic.
Sources
1. U.S. Bureau of Labor Statistics, Local Area Unemployment Statistics
2. U.S. Bureau of Labor Statistics, Employment Situation Summary, April 2020
