As Covid-19 Recedes, an Unequal Economic Recovery Takes Shape Across America

by Dante Chinni June 10, 2021 Print

Unemployment data confirm that, indeed, there is a Covid-19 economic recovery working its way through all the types in the American Communities Project. But that recovery is not equal. The data suggest rural places are coming back sooner, and there is still a lot of room for recovery in the nation’s most urban places in particular.

From December to the end of April, as vaccinations ramped up, unemployment fell in nearly all of the ACP’s 15 community types — Native American Lands were the one exception. But going back over a longer period of time to the beginning of the pandemic, unemployment is still above where it was in February 2020 in nearly all the types. It is still particularly high in the Big Cities and Urban Suburbs.

Furthermore, when you alter the lens to look at labor force participation, some communities are seeing a slower return to work than others. Three communities stand out: the Urban Suburbs, Middle Suburbs, and Rural Middle America.

The data, from the latest Local Area Unemployment Statistics update, only go through April and the employment landscape is changing rapidly. However, the ACP’s analysis offers insights into how and where the economy is making the biggest strides in returning to “normal.”

The Good News in Unemployment

Overall, seven of the 15 community types in the ACP have April unemployment rates of 5% or less, and most of those communities are somewhat rural to sparsely populated — LDS Enclaves, Aging Farmlands, Evangelical Hubs, College Towns, Rural Middle America, Exurbs, and Working Class Country.

The Exurbs stand out as different from the rest of those places because of their higher college-education rates and population density. But there is one common trait all those communities share: On the whole they are not racially or ethnically diverse. In each of the seven types, the median county is at least 80% white and non-Hispanic.

When you look at more racially and ethnically diverse rural places in the ACP, the unemployment rate was higher, in some places much higher. In the African American South, the unemployment rate was 5.6%, but in Hispanic Centers and Native American Lands, the rate was above 8% — 8.4% and 8.7%, respectively.

In some ways, those numbers suggest a return to “normal,” in that those communities of color had higher unemployment rates even before the pandemic. But the numbers are also a signal to proceed with caution. For all the talk of “jobs returning” and perhaps less need for economic aid, unemployment rates above 8% can cause real hardship. It means in those communities alone, there are nearly 900,000 people who are looking for a job and can’t find one.

And notably, the most urban community types in the ACP — the Big Cities and Urban Suburbs — have unemployment rates above 5%. That’s important because those 153 counties hold roughly half of the nation’s population and, as a group, they usually sit at or below the national unemployment figure. They drive the U.S. economy. It’s going to be nearly impossible for the nation to see a full economic recovery without those places improving.

Urban Areas Hit Harder in Long-Term Unemployment Changes

The problems in the nation’s more urban areas look more problematic when you consider where the unemployment rate in those places stood before the pandemic. The increase in the unemployment rate from February 2020 to April 2021 is highest in the Big Cities and Urban Suburbs.

The figure is 2.4 points higher in the Urban Suburbs and a massive 3.7 points higher in the Big City counties. There are currently more than 5 million people who are unemployed in those counties. If their unemployment rates were at their pre-pandemic levels, there would be about 2.6 million unemployed in them.

Why are the numbers so high? A number of factors could be at play. Many urban schools shifted to remote learning in the pandemic and that meant parents often had to stay home to watch children. But the bigger impact likely came from the change in office work culture and business travel in the pandemic that hit the service sector.

Big Cities and Urban Suburbs are home to a lot of office buildings and office jobs. When that work got shifted to home, it meant there was less need for restaurants and cafés to serve those offices. The pandemic also meant less business travel, which in turn meant fewer hotel stays and fewer meals out.

The numbers suggest that a full “turn around” in these locales may not be possible until workers are back in their offices and traveling again. And there are questions about what that workplace return could look like. Many employers are discussing only partial office returns at least through the end of 2021. That may mean a need for fewer service employees in the establishments that serve them.

A few rural locations stood out in the data for actually having slightly lower unemployment rates in April 2021 than they did in February 2020 — Aging Farmlands and Working Class Country. But these county-level data are “not seasonally adjusted” and some of those improvements may be due to those rural communities having different employment patterns in the spring than they do in the winter. At the very least, the figures suggest those communities are closer to their pre-pandemic norms.

Labor Force Participation

One other factor that’s going to have to change for the nation to get back on track economically: the number of Americans actively searching for a job, the labor force participation number. In April 2021, the number was roughly 160 million people. That was 3.8 million below the number in February 2020.

The labor force participation number is what is used to calculate the unemployment rate. So, in a sense, the current unemployment rate is probably understating the number of people who are actually out of work. Many Americans may simply have stopped looking for a job because there weren’t positions available for them — jobs they have the training and skills to perform.

But in the ACP, a few community types stand out for their change in labor force participation since the beginning of the pandemic.

The Urban Suburbs, Middle Suburbs, and Rural Middle America have all seen declines of 3% or more in labor force participation since the pandemic began. In total, 1.8 million fewer people were looking for jobs in those communities in April 2021 than in February 2020. The biggest drop came in the densely populated Urban Suburbs, where the number was 1.2 million lower.

The Urban Suburbs and Middle Suburbs share some common traits. They are often located in and around major metros. And the April data showed their labor force participation numbers actually shrunk slightly between December and April. That may have something to do with people getting temporary jobs during the holiday season in those big metros.

Rural Middle America is different. Those communities tend to be based around small towns. Even though their labor force participation numbers are still down sharply from pre-pandemic levels, the latest months (from December to April) show a slight increase, suggesting things are improving in these places.

And, again, rural communities seem to be showing a bigger bounce back. Graying America and Aging Farmlands are only showing small declines in labor force participation between February 2020 and April 2021, and the growing LDS Enclaves actually showed an increase.

The ACP will dive into these numbers again in a few months. Summer travel, which looks as though it will be heavily based in the United States due to Covid-19, may provide an extra kick to these some of the rural communities, which draw vacationers. Graying America — in the Upper Midwest, on the East and West Coasts, and in the Mountain West — may be particularly well-positioned.

The Politics of Covid

Throughout the pandemic, Covid-19 has often been viewed through a political frame. If one brings that view to the recovery, it is fair to say that, at the moment, communities that voted for former President Donald Trump are actually doing fairly well.

Of the seven community types with an unemployment rate below 5%, six voted for Trump in 2020. Meanwhile, the communities that have seen the biggest increases in unemployment since the pandemic began, the Urban Suburbs and Big Cities, went for President Joe Biden by large margins.

Ultimately, those differences are less about politics than they are about broader economic and population patterns. However, this should serve as a reminder in these hyper-partisan times that Washington’s pandemic policy does not seem to follow simple blue/red — reward/punish lines.