When the COVID-19 outbreak began and governments started imposing economic lockdowns, most parts of the country experienced huge upticks in unemployment. But how have different cities fared in the year since? A new report from WalletHub offers some insight.
The financial analytics firm looked at cities’ most recent unemployment rates, from May 2021, and compared them to their pre- and mid-pandemic unemployment rates from May 2019, May 2020, and January 2020. Using the national unemployment rate of 5.9 percent as a standard, this gives us a useful comparison showing how different cities have recovered from the pandemic and ensuing economic damage.
Here are the top 10 cities with the best post-pandemic unemployment rates as of May 2021:
- Manchester, New Hampshire: 1.6 percent
- Nashua, New Hampshire: 1.7 percent
- Burlington, Vermont: 1.3 percent
- South Burlington, Vermont: 1.2 percent
- Lincoln, Nebraska: 2.2 percent
- Huntsville, Alabama: 2.4 percent
- Omaha, Nebraska: 2.8 percent
- Salt Lake City, Utah: 2.7 percent
- Sioux Falls, South Dakota: 2.7 percent
- Billings, Montana: 3 percent
And, in stark contrast, here are the 10 cities with the worst post-pandemic unemployment rates as of May 2021:
- Hialeah, Florida: 8 percent
- New Orleans, Louisiana: 11 percent
- Long Beach, California: 10.6 percent
- Glendale, California: 10.4 percent
- Newark, New Jersey: 11.6 percent
- New York City, New York: 9.8 percent
- Los Angeles, California: 10.1 percent
- San Bernardino, California: 9.6 percent
- Chicago, Illinois: 9.3 percent
- North Las Vegas, Nevada: 9.9 percent
What explains the wide discrepancy between the cities who have essentially entirely recovered and those that remain deep in the red? Well, there are undoubtedly many factors influencing these cities’ unemployment rates, but two glaring ones stand out.
First, not all parts of the country locked down their economies with equal vigor or duration. From New Hampshire to Vermont to South Dakota, many of the states with cities represented in the top 10 strong recovery spots had relatively lighter government restrictions and rolled them back sooner. On the other hand, cities from intense lockdown states like California, New York, and New Jersey are heavily represented on the list—and that’s surely no coincidence.
Economies are complex systems, and cannot simply be switched on and off like a light switch. Those cities whose governments strangled economic activity over an extended period of time and hoped it would all come back when they decided to “open up” are clearly still experiencing the economic pain.
Secondly, the availability of ultra-generous unemployment benefits that pay many unemployed people more to stay home on welfare surely has had some influence on these rankings. States like New Hampshire with cities ranking highly have announced that they would end these benefits early, whereas states like California, Illinois, and New York have left them in place. The clear work disincentive presented by an unemployment system where households can earn the equivalent of $25/hour in many states has surely led to prolonged and heightened unemployment in the states which continue to embrace it.
Of course, there are many complex causes of city-level variations in unemployment rates and the economic recovery. But time and time again across these statistics and, frankly, the entire global economy, we see that areas with freer markets and less interference prosper more than those stifled by government control.
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Brad Polumbo (@Brad_Polumbo) is a libertarian-conservative journalist and Policy Correspondent at the Foundation for Economic Education.
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