Which city economies did COVID-19 damage first?

Since the United States first witnessed significant community spread of the coronavirus in March, each week has brought a fresh round of devastating economic news. From skyrocketing unemployment claims to new estimates of contracting GDP in the first quarter of 2020, there has been little respite from the growing awareness that COVID-19 is exacting unprecedented damage on both lives and livelihoods.

》Interactive dashboard

The economic pain has not been equally distributed around the country, however. Our colleagues Mark Muro, Robert Maxim, and Jacob Whiton were among the first to project how the different structures of local economies and the types of industries that immediate closures affect most would combine to make some cities more vulnerable than others to the COVID-19 downturn. In addition, the path of viral infections within U.S. borders—affecting parts of the West Coast and Northeast first, before spreading more widely throughout the country—caused some city and state leaders to act before others in shutting down nonessential businesses.

New data from the U.S. Bureau of Labor Statistics (BLS) offer the first comprehensive evidence of how responses to COVID-19’s spread began to affect metropolitan economies through mid-March. BLS derives these data from the same sources that underlie its monthly employment report for the country as a whole. On April 3, that report indicated that the U.S. economy shed 701,000 jobs between mid-February and mid-March, and that the unemployment rate increased from 3.5% to 4.4%.

Job losses through mid-March concentrated in very large metro areas 

From February to March 2020, the 191 metro areas tracked in this analysis (those with populations of at least 250,000) shed a combined 591,000 jobs—about 84% of the national total. While that was only 0.5% of the total number of jobs in these metro areas, it represented the tip of the iceberg of employment losses that began to rapidly accumulate in late March as government-mandated business closures swept the nation. Nonetheless, job loss was widespread, affecting 164 of the 191 metro areas.

These job losses were largely concentrated in a set of very large metro areas, several of which were early U.S. epicenters of the pandemic (e.g., New York, Detroit) and/or places where governments acted early to limit community spread (e.g., Los Angeles, San Francisco, San Diego). The 10 very large metro areas experiencing the largest absolute job losses together accounted for more than half of total job loss (318,000 jobs) across the 191 metro areas.

Many of the very largest metro areas were also among those experiencing the steepest percentage drops in employment from February to March, including Baltimore, Cincinnati, Providence, R.I., and Dallas. (Dallas and Texas as a whole were not early COVID-19 hotspots or quick to enact shutdowns, but rapid declines in oil prices as the virus spread around the globe affected the local energy industry negatively.) At least through mid-March, the overwhelming majority of job losses occurred in very large metro areas (those with populations of at least 1 million), and their collective rate of job decline was more than double that of large and midsized metro areas.

Unemployment rates rose most in Western metro areas and those relying on vulnerable industries 

As COVID-19-related job losses mounted, more residents of the nation’s metro areas joined the ranks of the unemployed. While initial claims for unemployment insurance began to spike after the BLS surveys were conducted, these results suggest that most metro areas were beginning to experience rising unemployment by mid-March.

Between February and March, 124 of the 191 metro areas saw their unemployment rate jump by at least one-tenth of a percentage point (i.e., 0.1%), compared to just one metro area between January and February. These changes were more regionally concentrated than total job changes, and predominantly affected Western metro areas that either took early measures to contain the virus’s spread (e.g., Seattle), or had economic specializations such as tourism (Las Vegas, Reno, Nev.) and energy (Bakersfield, Calif., Beaumont, Texas) that faced early challenges from the crisis.

In addition to these regions, several agricultural and manufacturing-oriented metro areas that employ large immigrant populations—in California’s Central Valley, along the Southwest border in Texas, and in the Florida citrus belt—experienced among the largest jumps in unemployment from February to March. This may reflect the particular susceptibility of these regions to falling domestic and overseas demand for their output, as well as vulnerabilities among their large migrant workforces.

In contrast to job declines, unemployment rate increases did not skew toward very large metro areas. It may be that in the largest labor markets, some workers were able to shift from declining sectors of the economy (e.g., hotels and restaurants) to those that were still hiring (e.g., technology and health care) in March. Smaller metropolitan areas may not have afforded their workers the same diverse sets of opportunities as the economic crisis spread.

April data will reflect much deeper and more widespread labor market pain

While these March data reflect the early warning signs of a looming economic crisis, forthcoming data from late March and early April—when most states enacted more widespread shutdowns—will show the fuller extent of the economic devastation metropolitan communities are now experiencing.

In that regard, Brookings Metro will be updating its COVID-19 Metro Economic Tracker on an ongoing basis, including next week, with data on the geography of more recent initial unemployment insurance claims. These data can help local, state, and national stakeholders understand how economic dynamics and policy measures (around both closures and reopening) are affecting businesses and workers across the key hubs of the U.S. economy.

Thank you to Alec Friedhoff for interactive data design, and Sarah Crump for research assistance.