June 5, 2020 - We all know the economic impact of COVID-19 and associated shuttering of businesses has resulted in a dramatic increase in unemployment. And today we received good news that more jobs were added in May, surprising nearly everyone. But many of us wonder how Missouri is doing in comparison with the rest of the nation?
The most recent data available for Missouri are from April, 2020, the first month following government-mandated business closures that started in March. While the unemployment rate went up only slightly in March to 3.9% from 3.5% in March, many employers were keeping workers employed through the federal stimulus loan forgiveness and other federal stimulus programs. The dramatic increase in the civilian workforce unemployment rate to 9.7% in April reflects a better picture of the employment situation following the shutdown.
While the unemployment rate of 9.7 is nearly three times the unemployment rate at the beginning of the year, Missouri's unemployment rate was still far below the national unemployment rate of 14.7% in April. Preliminary data released today indicate the national unemployment rate dropped to 13.3% in May as businesses began the reopening process in states like Missouri. Missouri data is not yet available for May.
Because tourism and hospitality were the hardest hit by COVID-19, it is no surprise that county unemployment rates in counties that depend on tourism are higher than the state average. Taney County's unemployment rate was 24.5% in April and 16.4% in Stone County (both Branson counties), Camden County 13.3%, Morgan County 10% and Miller County 11.2% (Lake of the Ozarks), and Laclede County 14.8% (perhaps because the local economy depends not only on tourism but also on boat manufacturing).
The Missouri economy shed 285,000 civilian jobs between March and April. But there is good news. As businesses started to reopen, the number of new unemployment claims has dropped from its weekly high of 104,230 the last week of March to 20,459 last week. While many of those initially filing unemployment are continuing to get benefits, a reduction in the number of new claims could signal the beginning of an economic rebound. And national data suggest the job category with the greatest rebound was the category that was affected the most by the shutdowns: restaurants and the hospitality sector.
We are keeping a very close eye on the health of the Missouri Unemployment Trust Fund. Employers pay into the fund and unemployment claims are paid out of the fund. When the balance is depleted, federal advances are made into the fund. After a grace period, these amounts must be repaid from the state employer fund to the federal government. If those repayments are delayed, taxes on employers are automatically increased to pay for the deficit. This happened after the Great Recession and we do not want to experience that again.
Because the enhanced benefits, including the extended benefits announced this week, are funded by the federal trust fund without an impact to Missouri's trust fund, Missouri's trust fund may be able to weather the storm without becoming depleted, but we don't know for sure at this point. The Missouri Unemployment Insurance Trust Fund balance at the end of April was $923,352,020. Of course with more claimants added in April, there will be a significant reduction in this balance when May figures are announced.
Of course, the questions on everyone's mind are how many businesses will completely fail and to what extent will recovering businesses rehire? While we are encouraged by the preliminary May numbers released today, we will continue to keep our ear to the ground and keep you posted as more current Missouri-specific information becomes available.