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These 3 States (and D.C.) Could Face Massive Job Losses If the Debt Ceiling Crisis Isn’t Resolved

Published

May 11, 2023

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United States Capitol is the meeting place of the US Congress and the seat of the legislative branch of the US federal government. — Mikhail Makarov/istockphoto

Surprise, surprise: Congress has yet to resolve its debt ceiling crisis, which means that the United States could run out of money as early as June. That spells disaster for everyone — a default could tank the economy — but especially for states dominated by government-funded jobs and federal workers, according to a recent report from Moody’s Analytics. The report argues that a default would “most immediately” impact the following regions because of the concentration of federal workers.

Washington, D.C.

It shouldn’t be a surprise that the nation’s capital will feel the brunt of the economic pain, with the federal government accounting for around one in four jobs. In a prolonged debt limit scenario, the city would peak at an 8.9% unemployment rate. Moody’s Analytics calls the district the “most immediately vulnerable economy.”

Alaska

In states like Alaska, which rely on federal jobs to bolster the economy, a breach could accelerate the region’s economic fallout. The state could lose 6,900 jobs in the near term, reaching a peak unemployment rate of 7% if the political impasse lasts until the summer.

Hawaii

Hawaii is in a particularly vulnerable position, and not only because Moody’s predicts that the state will lose 9,200 jobs in a prolonged debt crisis scenario. Beyond having many military and federal workers, the archipelago has a heavy tourist industry, which would be particularly susceptible to a debt crisis. A drawn-out debt crisis would leave the state with a peak 4.5% unemployment rate.

New Mexico

Downtown Albuquerque skyline aerial view with neighborhoods in the foreground and the Sandia Mountain Range in the background. Photo was taken in autumn. — Davel5957/istockphoto

Government employees make up around 21% of the New Mexican economy, larger than any other sector, according to the Bureau of Labor Statistics. In the worst-case scenario, New Mexico’s unemployment rate would peak at 7.7%.

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Meet the Writer

Maxwell Shukuya

Maxwell is a California-based writer who got his start in print journalism, a career that satisfies his love of research. That penchant for learning also fuels his desire to be a discerning consumer — whether he’s looking for his next pair of headphones or rock-climbing shoes. When he’s not hunched over his laptop, you can find Maxwell sending routes at the crag, playing Magic: The Gathering, or hanging out with his buddies at the bar. As a UCSC alumnus, he’s also a proud banana slug. You can reach him at [email protected].