Palmetto State News

As South Carolina shows signs of economic recovery from the COVID-19 pandemic, it may be useful to compare its economic improvement to a northern state taking a different path.

The Chicago Tribune reports that South Carolina ranks 26th out of all 50 states in terms of economic recovery from the COVID-19 pandemic. Its real GDP in the fourth quarter of 2020 totaled $248.8 billion, 10.7% greater than in the second quarter of 2020.

South Carolina eliminated the $300 weekly federal pandemic unemployment compensation program June 30. Gov. Henry McMaster justified his decision, saying that eliminating the extra unemployment benefits will incentivize unemployed workers to return to the workforce.

“South Carolina’s businesses have bore the brunt of the financial impact of the COVID-19 pandemic,” McMaster said in a statement. "Those businesses that have survived – both large and small, and including those in the hospitality, tourism, manufacturing and healthcare sectors – now face an unprecedented labor shortage. This labor shortage is created, in large part, by the supplemental unemployment payments that the federal government provides claimants on top of their state unemployment benefits. 

“In many instances these payments are greater than the worker’s previous paychecks,” the statement continued. “What was intended to be a short-term financial assistance for the vulnerable and displaced during the height of the pandemic has turned into a dangerous federal entitlement, incentivizing and paying workers to stay at home rather than encouraging them to return to the workplace.”

According to data from the U.S. Bureau of Labor Statistics, as of May 2021, out of South Carolina’s total labor force of 2.3 million workers, 2.2 million are employed and 110,300 are unemployed, resulting in an unemployment rate of 4.6%. At the height of the COVID-19 pandemic in April 2020, South Carolina's unemployment rate was at 11.5%.

By contrast, Wisconsin has not eliminated the $300 weekly federal pandemic unemployment compensation program, making some claimants eligible for up to $600 in additional weekly benefits, according to the Wisconsin Department of Workforce Development.

This hasn't seemed to hamper the state's economic recovery. Wisconsin ranks 19th out of the 50 states in terms of economic recovery on the Chicago Tribune's list, and its real GDP in the fourth quarter of 2020 totaled $348.2 billion, 10.9% greater than in the second quarter 2020.

According to the U.S. Bureau of Labor Statistics, as of May 2021, numbers indicate that out of Wisconsin’s total labor force of 3 million workers, 2.9 million are employed and 119,700 are unemployed, resulting in an unemployment rate of 3.9% compared with 14.8% unemployment in April 2020.

Wisconsin's federal pandemic unemployment compensation program will stop paying out additional benefits in the week ending Sept. 4. 

In a recent policy report, Romina Boccia and Adam Michel of the conservative Heritage Foundation asserted that “the most effective policies that enable the American economy to recover will remove disincentives that stand in the way of economic activity. Policymakers can realize the great American economic recovery through ensuring policy predictability and pursuing an environment that enables working, hiring, commerce, and investing without unnecessary distortions.”