Red State Recovery, Blue State Recession

A review of current state unemployment rates reveals a stark partisan divide between the states with the highest and lowest unemployment rates. As the chart below reflects, nine of ten states with the highest recent unemployment rates have a Democratic governor (the tenth is deep-blue Massachusetts, currently led by Republican governor Charlie Baker). Meanwhile eight of the ten states with the lowest unemployment rates have a Republican governor (with the two exceptions being otherwise red states of Montana and Kentucky). The 30 states in the middle are more evenly split — 17 have a Republican governor and 13 have a Democratic governor.

States by Current Total Unemployment Rate (TUR) and Governor’s Party

Sources: Department of Labor. Total unemployment rate is the most recent three-month seasonally adjusted average total unemployment rate (TUR). Governor’s party affiliation here.

The chart above applies the unemployment rate metrics used by the longstanding federal-state extended benefits (EB) program. That program provides up to 13 weeks of unemployment benefits to the long-term unemployed in “high unemployment” states, which have a three-month seasonally adjusted total unemployment rate (TUR) of 6.5 percent or higher, among other criteria. EB likewise provides up to 20 weeks of benefits in “extremely high unemployment” states with a TUR of 8.0 percent or higher, again among other criteria. States for their part tend to game this system — opting in when the federal government is paying the entire cost of benefits as it is temporarily doing now, and often opting out when they must cover half of program costs.

During the coronavirus recession, federal support has gone well beyond paying benefits targeted according to a state’s unemployment rate, as the EB program does. Extraordinary unemployment benefits not tied to a state’s unemployment rate include the now-expired $600-per-week federal bonuses, the unprecedented federal Pandemic Unemployment Assistance  program that currently assists over 10 million previously uncovered individuals, and the payment of 13 weeks of federal benefits under the Pandemic Emergency Unemployment Compensation program. Those and other benefits have been payable regardless of state unemployment rates, and constitute the vast majority of the unprecedented over $350 billion in federal unemployment support provided this year. Despite the absence of an explicit unemployment rate linkage, as the Wall Street Journal has noted, these policies have meant blue states “with stricter and longer closures” resulting in elevated unemployment have received greater federal funding than red states where local economies recovered more quickly.

Senate Democratic leaders this summer proposed targeting future federal unemployment assistance — including revived federal bonuses of up to $600 and up to 52 weeks of federal extended benefits  to states where unemployment is the highest. As the chart shows, the greatest benefits under their plan would flow disproportionately to blue states. Also under their plan, states with the lowest unemployment rates — which tend to be red — would receive little or even no such federal support.

That legislation in turn is one part of far broader proposals some Washington lawmakers and other experts have crafted that would permanently link federal relief to where unemployment rates are highest. Those plans stretch beyond unemployment benefits to include vastly enhanced federal spending under entitlement programs like food stamps, Medicaid, and welfare, and even stimulus checks and transportation funding. In a Democratic election sweep, such proposals could become part of the next wave of relief legislation, turning temporary pandemic relief into permanent “automatic stimulus” payable well after the pandemic has passed.

Supporters of such plans will argue that would result in bigger, longer, and more certain relief where need is greatest. But among many other concerns, skeptics — likely citing charts like the one above — will note the obvious political implications. That is, that such automatic stimulus would tend to permanently grow federal subsidies for blue states whose policies contribute to elevated unemployment, while offering little or nothing to red states whose policies don’t.