State Economies Most Likely to Be Crippled by COVID-19

The unemployment rate stands at 16.4% in Illinois, higher than in all but half a dozen states. The high unemployment will mean lower revenue for the state government (such as in the form of income taxes), and Illinois is not well equipped to handle a revenue shortfall. The state has only $4 million saved in a rainy fund — not enough to cover even one-tenth of one percent of its annual budget. In fiscal 2021, Illinois is projected to face a 15.8% budget shortfall.

Illinois has been hit particularly hard by the virus itself. There have been 952 confirmed cases for every 100,000 people through June 1, more than in all but a handful of other states.

In Washington state, a staggering 32.6% of the workforce has filed for unemployment since March 15, the fourth highest share among states. Washington was one of the first states to be hit hard by COVID-19, and on March 23 became one of the first states to issue a stay-at-home order. Some parts of the state have begun to reopen, but the Seattle region remains locked down.

As of June 1, Mississippi ranked 16th overall in confirmed coronavirus cases per capita, at 527 per 100,000 residents. However, in recent weeks, the rolling 7-day average of daily new cases has increased in the state, from less than 250 in mid-May to 328 as of June 1. Prior to the pandemic, Mississippi had an above-average share of employment in industries highly at-risk of a slowdown in the wake of the pandemic, including leisure and hospitality and transportation and warehousing. Since mid-March, roughly 23% of the state’s labor force has filed for unemployment.

Pennsylvania is one of the states hit worst by the coronavirus pandemic in terms of both the spread of the virus and economic fallout. As of June 1, there were 564 confirmed COVID-19 cases per 100,000 residents in Pennsylvania, the 14th highest infection rate of any state. There have been 44 deaths per 100,000, the eighth highest death rate.

From April 2019 to April 2020, Pennsylvania saw an 11.0 percentage-point increase in the unemployment rate, the 15th largest increase of any state. The unemployment rate now stands at 15.1%, the 16th highest such figure nationwide. Since March 15, some 29.8% of the state’s labor force — 1.9 million Pennyslvanians — have applied for unemployment, the 10th largest share of any state.

While Alaska has been relatively isolated from the physical spread of coronavirus — with just 63 confirmed COVID-19 cases per 100,000 as of June 1 — the state is particularly vulnerable to the economic consequences of the pandemic. The Alaskan economy is heavily dependent on the oil and gas sector, which has shrunk in recent months alongside the global downturn in economic activity. An estimated 21.8% of Alaskan workers are employed in industries classified as high-risk due to the coronavirus, the fourth largest share of any state.

According to Moody’s, Alaska will face a 66.8% decline in state revenue through fiscal 2021, the largest decrease of any state. But while Alaska will face a large fiscal shock, the state’s rainy day fund — equivalent to 85.3% of expenditures as of fiscal 2019, the second largest in the nation — will likely prevent the need for any budget cuts in 2021.