By Kim Mackrael and Sarah Chaney 

Large states in the Northeast and West logged some of the highest unemployment rates in the nation in August, while many of their Southern and Midwestern neighbors saw lower rates of joblessness despite significant coronavirus outbreaks over the summer.

The jobless rate in more than half of states was below the national average of 8.4% in August, according to a Labor Department report that provides details on the job market in all 50 states. Many of those states -- including Arizona, South Carolina and Texas -- recorded a surge in new coronavirus cases during the summer, according to data compiled by Johns Hopkins University. Utah and South Dakota have seen recorded cases of Covid-19, the disease caused by the new coronavirus, move higher in recent weeks.

Unemployment rates in regions across the nation moved down this summer after peaking in April, when the coronavirus first triggered widespread lockdowns across the nation. Still, jobless rates remained particularly high, on average, in the Northeast and West, and clocked in above 10% in 10 states in the U.S.

In the Northeast, earlier virus outbreaks prompted businesses to close and consumers to take greater precautions. Last month, New York had an unemployment rate of 12.5%, Pennsylvania recorded an unemployment rate of 10.3% and New Jersey's unemployment rate was 10.9%.

Adam Kamins, an economist with Moody's Analytics, said unemployment rates improved noticeably in the region, particularly in New York and Massachusetts. While the recession in those states is probably over, he said, "Once you're a state that's been particularly hard-hit, those effects linger economically."

Daniel Adams, the owner of Kerns Avenue Bowling Center in Buffalo, N.Y., reopened this week for the first time since the spring. He said the center lost three of its five bowling leagues because of members' concerns about Covid-19, and will be operating at 50% capacity when it opens lanes to nonleague bowlers. "The pain is just starting," Mr. Adams said. Continuing to operate at half the building's capacity "is not enough to sustain the business."

Mr. Adams said he hired back about half of the employees he had before the pandemic began.

In a recent Brooklyn Chamber of Commerce survey, half of businesses reported revenues were down more than 50% compared with a year ago.

"They just don't have the customer base and support. They're just not going to hire as many people," said Randy Peers, president of the Brooklyn Chamber of Commerce. "That's a concern, clearly."

Still, many areas of pent-up demand were unleashed after some restrictions on New York businesses were lifted, Mr. Peers said. For instance, when barber shops and nail salons were allowed to reopen, demand for those services was strong, Mr. Peers said. Consumers flocked to outdoor dining once restaurants began filling up sidewalks and streets with tables, he added.

New York's reopening helped pull down its unemployment rate to 12.5% from a pandemic high of 15.9% in July. Massachusetts, another Northeastern state, experienced the largest monthly drop in its jobless rate of any state last month.

"It does point to the fact that that region has been able to avoid a second wave of cases and is moving towards a recovery," said Daniel Zhao, senior economist at job site Glassdoor.

Unemployment rates are influenced by a range of factors that go well beyond the current rate of reported Covid-19 infections, said Aneta Markowska, chief financial economist at the investment bank Jefferies LLC. She said some of the states with the highest unemployment rates in August were Nevada, Hawaii and New York -- all places that rely heavily on tourism.

Population density is another factor that appears to be affecting state unemployment rates, Ms. Markowska said. "As people flee large cities, demand for services is declining further in those areas," she said, keeping unemployment levels up in places like New York City.

States with large, higher-density cities, including California and Illinois, experienced elevated levels of unemployment in August, Friday's Labor Department report showed. The jobless rate in both those states remained in the double digits last month.

The unemployment rate reflects the number of people who don't have jobs but are actively seeking employment, compared with the size of the state's labor force. It doesn't directly capture the number of people who have dropped out of the labor force because they aren't seeking work or are unable to work during the period the survey is conducted.

For some states, a decline in unemployment rates was driven by people dropping out of the labor force. That was the case in Arizona, where the jobless rate fell to 5.9%, mostly because fewer people reported that they were actively looking for work.

"Unfortunately, that kind of decline in the unemployment rate does not signal an improvement in our labor market," said George Hammond, an economist at the University of Arizona. "In fact, it suggests that the state is still really struggling with the economic fallout from the pandemic."

Some states' persistently high unemployment rates can be explained largely by their reliance on tourism and hospitality. Nevada, whose economy is primarily centered around the casino business in Las Vegas, posted a 13.2% unemployment rate. Hawaii, which requires all out of state travelers to self-quarantine for 14 days after they arrive, recorded a jobless rate of 12.5% in August.

In Florida, where the unemployment rate fell 4 percentage points to 7.4%, Don Beaudet said his furniture-manufacturing business is struggling to keep up with a surge in demand. After a one-month closure in the spring, Mr. Beaudet said he brought back all 185 of his employees in May and wants to hire another 15.

"To tell you the truth, business can't be better," said Mr. Beaudet, adding that he believes people are spending more on home furnishings because they can't go away on vacation. "We're getting orders in faster than we can produce."

Write to Kim Mackrael at and Sarah Chaney at


(END) Dow Jones Newswires

September 18, 2020 13:05 ET (17:05 GMT)

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