The Tragic COVID-19 Story in the US... 1 in 10 People in New York State Lost Their Jobs

[Asia Economy Reporter Yujin Cho] In New York State, USA, which was the hardest hit by the novel coronavirus infection (COVID-19), more than one in ten people lost their jobs.

According to data from the U.S. Department of Labor on the 27th (local time), New York, Hawaii, and Michigan recorded the steepest employment declines last year. These states were heavily impacted by economic shutdowns due to lockdown measures implemented to curb the spread of COVID-19. Unemployment rates in New York and Michigan exceeded 10%.

In Hawaii, where the economy depends on the tourism industry by 20-30%, the wage reduction was the largest. According to the U.S. Department of Labor report, the average annual wage in Hawaii last month decreased by 13.8% compared to the same period last year, marking the largest wage loss among U.S. states. The unemployment rate rose by 6.6 percentage points year-over-year to 9.3% as of the end of last year. Unemployment rates in Colorado and Nevada, which also heavily depend on tourism, increased by 5.9 percentage points and 5.5 percentage points respectively during the same period.

As outings decreased due to the spread of COVID-19, 110,000 restaurants across the U.S. closed last year. Even those that continued operating amid sharp sales declines reduced their staff to cut costs, resulting in the loss of jobs at 2.5 million restaurants. During this period, total sales in the dining industry plunged 34%, from $990 billion the previous year to $660 billion.

The economic shock caused by unemployment and income reduction was greater for those with low education and low income, and 8.1 million Americans newly fell into poverty in the second half of last year alone. Amid soaring housing prices, financial hardship, and overdue public utility bills, many of these people became homeless. Greg Abbott, governor of Texas, which is suffering from a surge in homelessness, announced, "We will prepare measures to crack down on homeless camps where increasing numbers of homeless people are camping along roads near city halls or city councils."

(Source: Jay Janner/American-Statesman)

Due to sluggish COVID-19 vaccination, a difficult path is expected this year as well. According to the Economist Intelligence Unit (EIU), a political and economic analysis organization under The Economist, the U.S. economic growth rate this year is forecasted at 4.0%, making a V-shaped recovery unlikely. Beth Ann Bovino, chief U.S. economist at global credit rating agency Standard & Poor's (S&P), predicted that the current U.S. unemployment rate of 6.7% will be unlikely to return to pre-pandemic levels by 2024. She estimated the probability of the U.S. economy falling into a recession at 25 to 30%, but if a large-scale additional fiscal stimulus package is implemented as planned, that probability could drop below 25%.