Special Report

Most & Least Federally Dependent States

Millions of American households benefited from federal emergency unemployment programs. These programs offered financial support to workers who lost their jobs due to the coronavirus pandemic and its crippling economic impact. Not anymore.

Federal emergency jobless benefits to the unemployed, the long-term unemployed, and the self-employed (including gig workers) ended on Sept. 6 amid a fourth wave of coronavirus cases. Here are the 39 states where people gave up looking for jobs during the pandemic.

Even before the federal government ended the emergency aid, 26 states unilaterally ended supplemental unemployment insurance benefits to cajole Americans back to work. But according to research by economists at Columbia University, Harvard University, the University of Massachusetts Amherst, and the University of Toronto, these states “saw a much larger drop in federal transfers than gains from job creation.” 

One issue raised here is the relationship between the states and the federal government. Federal programs like Medicaid and this supplemental pandemic assistance operate under cost-sharing agreements with states. Conservative lawmakers and governors often try to avoid making commitments that could force them to raise state revenue through taxation.

Interestingly, though, blue states are generally less dependent on federal government funds than red states, according to a WalletHub investigation that compared federal assistance states received to federal income tax contributed by states. Many states receive more support from the federal government than they pay in federal income taxes. Some of the least dependent states have among the best economies, and some of the most dependent have among the worst economies. Here are the states with the best and worst economies.

To identify the states that depend the most on the federal government, 24/7 Wall St. reviewed data from WalletHub, which compared states in two dimensions: the state residents’ dependency score and the state government’s dependency score. Other than the state’s overall score, the other scores are relative to other states, with 1 being most dependent and 50 least.

For the state’s residents’ dependency score, WalletHub calculated the return on taxes — federal funding divided by Internal Revenue Service collections — and the share of federal jobs. For the state government’s dependency score, WalletHub calculated federal funding as a share of state revenue for 2018. Population figures are from the U.S. Census Bureau’s American Community Survey for 2019. 

Among the 10 least dependent states are New Jersey, Massachusetts, Washington, Utah, and Kansas. Among the 10 most dependent states on the federal government are West Virginia, Kentucky, Louisiana, New Mexico, and Arizona.

Here are the most and least federally dependent states