As Mitch McConnell Suggests State Bankruptcies Over Bailouts, Kentucky Has Largest Share of Unemployed in U.S

The largest share of unemployment claims filed in the U.S. during the COVID-19 pandemic is in the state of Kentucky, where more than 671,000 workers, nearly a third of the state's labor force, have sought jobless benefits since the start of the COVID-19 pandemic in the U.S.

The U.S. Department of Labor released its weekly claims report on May 7, indicating that nearly 33 percent of Kentucky's workforce has filed for unemployment benefits in April.

"Today's report reflects the massive impact that measures to contain the coronavirus has had on the American workforce. This employment situation is exceptionally fluid," U.S. Secretary of Labor Eugene Scalia said in a statement after the report on April's numbers was released. "We know that today's data reflect neither the additional layoffs that occurred in late April and early May nor the employees beginning to return to work in some States. We also know that, by re-opening safely, we have the capacity to avoid permanent job losses for the overwhelming percentage of Americans who, the report shows, currently view their job loss as temporary."

The new numbers were released the day after Kentucky Governor Andy Beshear announced the first phase of his plan to reopen the state's economy.

According to the report, 3,169,000, unemployment claims were filed nationwide during the last week of April, which is a decrease of 677,000 from the previous week's revised numbers.

Mitch McConnell
Senate Majority Leader Mitch McConnell (R-KY) speaks during a news briefing at the U.S. Capitol April 21, 2020 in Washington, DC. McConnell recently commented that some state's should consider decalring bankrupcty over using federal aid. Chip Somodevilla/Getty

Restrictions implemented in some U.S. states in late March and early April to curb the spread of the new coronavirus allowed many industries to telecommute or work from home, but that's a difficult, if not impossible task in Kentucky's blue-collar economy, where many jobs are factory-based.

Auto manufacturers in Kentucky idled their operations in March, and temporarily laid off more than 20,000 plant employees, but will reopen their facilities this month.

"Those are jobs that are harder to work remotely, maybe simply impossible to work remotely," Michael Clark, the associate director of the Center for Business and Economic Research at the University of Kentucky told CNN. "They're going to be subject to greater job losses during these times of restrictions."

The high unemployment rate in the state comes weeks after Senate Majority Leader Mitch McConnell, who represents Kentucky, suggested that states experiencing financial difficulties could declare bankruptcy instead of asking the federal government to give them bailouts.

"I would certainly be in favor of allowing states to use the bankruptcy route," McConnell said during the April 22 broadcast of The Hugh Hewitt Show. "It's saved some cities, and there's no good reason for it not to be available."

However, there is no federal law that would allow for U.S. states to declare bankruptcy, though cities and other local municipalities are allowed to do so.

But according to a report from the Kentucky Center for Economic Policy, there were only enough funds to pay for four days of essential services statewide in the state's rainy day fund in March when Governor Andy Beshear declared a state of emergency. With few resources in the state's coffers, Kentucky needed federal assistance to bridge the gap of rising costs, including Medicaid for those suddenly without health insurance due to lost jobs and a rise in unemployment payouts.

Help came in the form of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. According to USA Today, Kentucky received more than $2.7 billion from Congress, with $1.7 billion of that considered dedicated money. Most states received an average of $1.25 billion.