Conventional economic wisdom says that Mississippi is often the last state into and last state out of a national recession. That wisdom largely held for the 2001 and 2008 recessions, which started in sectors (tech and finance, respectively) that did not have wide footprints in Mississippi. But once the downturns spread to the rest of the economy, Mississippi suffered greater losses and slower recoveries than nearly any other state.
In fact, the state?s economy still has not fully recovered from the last recession over a decade ago. Mississippi?s total economic output in 2018, adjusted for inflation, was?1.5% lower than it was in 2008. (The U.S. gross domestic product had rebounded to its pre-recession level by the end of 2010.) Personal income has grown?at an anemic 1% a year since 2008, less than half the national growth rate and slowest among the 50 states. The?unemployment rate of 5.5%?is second-highest in the country, below only Alaska, and was rising at the fastest pace in the country prior to the coronavirus outbreak.
Mississippi’s lethargic recovery has left America?s poorest state even farther behind its national counterparts. The gap between Mississippi?s unemployment rate and the U.S. rate has?more than doubled?since the beginning of the 2008 recession, and the gap in personal income per capita has?risen from $10,400 to $16,600.
Every part of the country ? indeed, most of the world ? is feeling economic strain from the pandemic, and the damage has spread so rapidly that any place?s buffer will be very thin. Unlike the previous recessions, however, the sectors being hit first make up a disproportionately large share of Mississippi?s workforce.
Leisure, hospitality, and retail?account for nearly 30%?of Mississippi?s private sector employment ? tied for 5th-most in the country. Initial estimates produced by the Economic Policy Institute project that?4.5% of Mississippians? jobs?will disappear by this summer.
Other preliminary data suggest it could be far worse. An NPR/PBS/Marist survey found that 18% of respondents, including 25% earning less $50,000 a year,?said that they or a member of their household had been laid off or had their hours reduced due to coronavirus. That poll was taken March 13th and 14th, before many of the emergency shutdowns had started.
Across the country,?initial unemployment claims rose by 33% last week?? more than any week during the previous recession. Those numbers appear to be merely the tremor before the quake. Early data from this week show unemployment claims rising tenfold in some states: an economic cratering beyond even the most paranoid imagination.
Even in times of prosperity and health, many Mississippi families live on a financial knife’s edge.?More than half of Mississippians?do not have enough cash savings to cover basic expenses for three months without income, according to research from Prosperity Now.?One-quarter of Mississippi households?could not get by even if they sold their largest possessions, like a house or car.
Under normal circumstances, the state government provides little cushion when Mississippians lose their jobs or get sick. State law does not require paid medical or family leave, and unemployment insurance (which pays a max of $235 a week, lowest in the country) only?reaches 14% of people?who are jobless, according to the Upjohn Institute for Employment Research. There is no coverage for independent contractors or shift workers whose hours get cut. Even though the federal government picks up most of the tab for safety net programs, the state sets most of the criteria for eligibility. Mississippi’s policymakers have limited Medicaid, SNAP, and TANF assistance to only a subset of the state?s low-income residents. A robust response from the federal government will still require action from state leaders to untie restrictions that keep Mississippians from accessing emergency funding for unemployment, healthcare, and food.
While other states are?aggressively?distributing?assistance, Mississippi’s leaders have taken a passive approach. Before adjourning for two weeks on Wednesday, the Legislature?passed a bill giving local governments the option of paying employees on administrative leave, but they rejected an amendment that would have granted leave pay to private-sector workers. The state agency that administers unemployment insurance has issued no new guidelines ? save a notice that its job centers would?shut their doors except for appointments. Unless the state government implements quick and compassionate measures to keep Mississippians’ finances afloat, this recession could once again set the state’s economy back a decade or more.
The recession has begun: How bad will it?get?
Conventional economic wisdom says that Mississippi is often the last state into and last state out of a national recession. That wisdom largely held for the 2001 and 2008 recessions, which started in sectors (tech and finance, respectively) that did not have wide footprints in Mississippi. But once the downturns spread to the rest of the economy, Mississippi suffered greater losses and slower recoveries than nearly any other state.
In fact, the state?s economy still has not fully recovered from the last recession over a decade ago. Mississippi?s total economic output in 2018, adjusted for inflation, was?1.5% lower than it was in 2008. (The U.S. gross domestic product had rebounded to its pre-recession level by the end of 2010.) Personal income has grown?at an anemic 1% a year since 2008, less than half the national growth rate and slowest among the 50 states. The?unemployment rate of 5.5%?is second-highest in the country, below only Alaska, and was rising at the fastest pace in the country prior to the coronavirus outbreak.
Mississippi’s lethargic recovery has left America?s poorest state even farther behind its national counterparts. The gap between Mississippi?s unemployment rate and the U.S. rate has?more than doubled?since the beginning of the 2008 recession, and the gap in personal income per capita has?risen from $10,400 to $16,600.
Every part of the country ? indeed, most of the world ? is feeling economic strain from the pandemic, and the damage has spread so rapidly that any place?s buffer will be very thin. Unlike the previous recessions, however, the sectors being hit first make up a disproportionately large share of Mississippi?s workforce.
Leisure, hospitality, and retail?account for nearly 30%?of Mississippi?s private sector employment ? tied for 5th-most in the country. Initial estimates produced by the Economic Policy Institute project that?4.5% of Mississippians? jobs?will disappear by this summer.
Other preliminary data suggest it could be far worse. An NPR/PBS/Marist survey found that 18% of respondents, including 25% earning less $50,000 a year,?said that they or a member of their household had been laid off or had their hours reduced due to coronavirus. That poll was taken March 13th and 14th, before many of the emergency shutdowns had started.
Across the country,?initial unemployment claims rose by 33% last week?? more than any week during the previous recession. Those numbers appear to be merely the tremor before the quake. Early data from this week show unemployment claims rising tenfold in some states: an economic cratering beyond even the most paranoid imagination.
Even in times of prosperity and health, many Mississippi families live on a financial knife’s edge.?More than half of Mississippians?do not have enough cash savings to cover basic expenses for three months without income, according to research from Prosperity Now.?One-quarter of Mississippi households?could not get by even if they sold their largest possessions, like a house or car.
Under normal circumstances, the state government provides little cushion when Mississippians lose their jobs or get sick. State law does not require paid medical or family leave, and unemployment insurance (which pays a max of $235 a week, lowest in the country) only?reaches 14% of people?who are jobless, according to the Upjohn Institute for Employment Research. There is no coverage for independent contractors or shift workers whose hours get cut. Even though the federal government picks up most of the tab for safety net programs, the state sets most of the criteria for eligibility. Mississippi’s policymakers have limited Medicaid, SNAP, and TANF assistance to only a subset of the state?s low-income residents. A robust response from the federal government will still require action from state leaders to untie restrictions that keep Mississippians from accessing emergency funding for unemployment, healthcare, and food.
While other states are?aggressively?distributing?assistance, Mississippi’s leaders have taken a passive approach. Before adjourning for two weeks on Wednesday, the Legislature?passed a bill giving local governments the option of paying employees on administrative leave, but they rejected an amendment that would have granted leave pay to private-sector workers. The state agency that administers unemployment insurance has issued no new guidelines ? save a notice that its job centers would?shut their doors except for appointments. Unless the state government implements quick and compassionate measures to keep Mississippians’ finances afloat, this recession could once again set the state’s economy back a decade or more.
[Photo by thom masat?on?Unsplash]
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