States lagging in COVID-19 vaccinations are starting to feel it in the pocketbook.
States with relatively low vaccination rates and high infection rates – mostly those in the South and West – have seen slower job and economic growth this summer, according to two reports out this week.
Conversely, states with high vaccination and low or average infection rates are leading in employment and economic gains, the studies say.
“There’s a lot of smoke suggesting that states that have (a) high infection and hospitalization rates, and have a high percentage of unvaccinated people, are feeling the ill effects,” says Mark Zandi, chief economist of Moody’s Analytics.
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Zandi says the more sluggish performance in less vaccinated, harder-hit states is notable but not yet significant enough to prompt him to lower his forecast for robust U.S. economic growth this year of 6.5%. And vaccinations nationwide have been creeping higher recently after leveling off earlier this summer.
But he says the disparity in the economies of states that are more or less vaccinated underscores that his upbeat outlook could change if COVID-19 inoculations peak again and infection rates climb higher.
Lukecas Pardue, an economist at Gusto, a payroll provider for small businesses, says the differences between the two groups of states are already “very meaningful” when measured by small business employment gains in “personal service” industries such as hotels, tourism, restaurants, entertainment and retail.
The low vaccination and high infection rates in some states are likely prompting some residents to shop and dine out less frequently and discouraging many employees from returning to work, Pardue says. So far, states generally have not reinstated restrictions such as restaurant capacity limits.
From early June to late July, jobs in personal service industries grew 0.1 percentage points faster than average in a given state for each percentage point that the state topped the nation’s average vaccination rate, Gusto’s data shows.
In early June, an average of 42.6% of U.S. adults were vaccinated, and personal service jobs grew 5% nationwide, according to Gusto and the Centers for Disease Control and Prevention.
Similarly, jobs grew 0.1 percentage point slower than otherwise in a state for each 10 percentage point increase in new COVID-19 cases. Overall, new cases across the U.S. grew an average of 359.8% from early June to late July, according to the CDC and Gusto, which serves about 100,000 small businesses.
Tennessee, Kansas struggle
During that period, the states with the most sluggish small business job growth in personal service sectors were Tennessee, Kansas, Mississippi and Georgia.
States with the largest employment advances were Vermont, Delaware, Montana and Maine, according to the report.
For example, Mississippi had the nation’s lowest vaccination rate in early June at 27.9% and COVID-19 cases grew 628%, or more than sevenfold, from early June through late July. Personal services employment fell 2.3% during that period.
Tennessee had a slightly higher vaccination rate of 32.6% but a more than tenfold increase in COVID-19 cases. In turn, employment in personal service industries inched up just 0.3%.
Vermont, Montana do better
By contrast, Vermont, with a 60% vaccination rate and a 421% rise in COVID-19 cases, saw jobs in those industries increase by 17.1%. And Montana, with a 40% vaccination rate but just a 150% rise in cases, notched a 13.5% jump in employment.
A separate study by Moody’s found roughly similar results by looking at how much a state has returned to pre-pandemic levels of economic activity, relying on measures such as employment, home sale listings and seated restaurant diners. Broadly, states in the South and West with low vaccination and high infection rates fared worse last month in efforts to reclaim their pre-pandemic showings.
This article originally appeared on USA TODAY: Economic growth affected by vaccinations, COVID infections in states