2021’s Best & Worst State Economies

The U.S. economic recovery was in full swing during the decade following the Great Recession. Before the recent COVID-19 pandemic, jobs were being created by the millions, and wage growth was on the rise. Driving the economic growth prior to the COVID-19 pandemic was marked by expansion in healthcare, notably the growth in healthcare-related jobs. Advances in technology, such as artificial intelligence and machine learning, have helped drive growth in other sectors. Other sectors making notable contributions to the economy over the last decade include construction, retail, and non-durable manufacturing.

With certain state economies hurt more than others during the COVID-19 pandemic, such as Hawaii, which has a 9% unemployment rate, the personal-finance website WalletHub today released its report on 2021’s Best & Worst State Economies.

In order to determine America’s top economic performers, they compared the 50 states and the District of Columbia across 29 key indicators of economic performance and strength. The data set ranges from change in GDP to startup activity to the share of jobs in high-tech industries.

Best vs. Worst

• Louisiana has the highest value of exports per capita, $12,782, which is 56.8 times higher than in Hawaii, the state with the lowest at $225.
• New Hampshire has the lowest share of the population living in poverty, 7.60 percent, which is 2.7 times lower than in Mississippi, the state with the highest at 20.30 percent.
• Vermont has the lowest foreclosure rate, 0.0015 percent, which is 11.9 times lower than in Delaware and Nevada, the states with the highest at 0.0179 percent.
• Massachusetts has the highest share of jobs in high-tech industries, 8.37 percent, which is 4.1 times higher than in Arkansas, the state with the lowest at 2.03 percent.

WalletHub Q & A

What are the most effective ways for state and local officials to help their local economies recover from the impact of the pandemic?

“Promote economic freedom, stay out of the way, and work to get the public health nannies out of our lives,” said Jon Reisman, University of Maine at Machias.

“Two factors must be considered:

• In economics, resources must be spent on where they will be most productive. In this case, the most affected individuals and businesses by the pandemic will be the most productive post-pandemic. This means, minority groups, and small businesses.
• resources must be spent on where there are bottlenecks. One key bottleneck affecting labor supply throughout the US is the absence of an affordable childcare system for families, said Hamid Mohtadi, University of Wisconsin-Milwaukee.

States often compete for business investment by offering tax breaks and other incentives. Do such efforts more often result in a net positive or net negative impact on state economies? Do such efforts create a “race to the bottom” across states?

“That very much depends on how big the tax breaks are, how long they last, and what the “other incentives” might be,” said John L. Campbell, Dartmouth College. “States, for instance, also try to attract new business not only by offering tax breaks but also by the necessary infrastructure. Sometimes states and localities try to attract or retain business by coordinating job training programs whereby local educational institutions work with businesses to develop curriculum and apprenticeship programs, perhaps with state/local government subsidies, that provide qualified workers for these businesses.”

“These sorts of incentives do not expand the total investment pie,” said David Skidmore, Drake University. “Rather, they simply force cities and states to devote scarce public funds to subsidize investment that would have occurred anyway, with the money going to firms that are already quite profitable. States are better off joining regional compacts that restrict this sort of inefficient and ineffective diversion of taxpayer money.”

To view the full report and your state or the District’s rank, please visit:

https://wallethub.com/edu/states-with-the-best-economies/21697

Courtesy: WalletHub