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Waiters wear face masks as they serve people sitting in outside seating at the P.J. Clarke's restaurant at Rockefeller Park in lower Manhattan during the fourth phase of the coronavirus reopening on August 05, 2020 in New York, New York.
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  • High vaccination rates in the Northeast are contributing to big unemployment drops, economists told the WSJ.
  • All nine Northeastern states added jobs in the leisure and hospitality industries in May.
  • Rhode Island's unemployment rate fell by 0.5% – the joint-biggest drop in the US.
  • See more stories on Insider's business page.

Employment is rebounding in the Northeast – and economists say the region's high vaccination rates are a major factor.

As more people get their shots, economies in the Northeast, which has some of the highest vaccination rates in the country, are reopening, prompting both customers to flock to restaurants and other businesses and workers to return to jobs, economists told The Wall Street Journal.

Rhode Island's unemployment rate fell by 0.5% from April to May, per data from the US Bureau of Labor Statistics (BLS). Joint with Delaware, this was the biggest drop in the US. This was followed by four states whose unemployment rates dropped by 0.4% – two of which, Connecticut and New York, were in the Northeast.

Some of the biggest job gains were in the leisure and hospitality industries, where staff work close to customers. In all nine Northeastern states employment in these industries increased from April to May, The Journal reported, citing BLS data. Pennsylvania added nearly 11,000 new jobs in the sector, and New York added around 7,000.

Insider's Áine Cain reported earlier in June that minimum-wage workers were quitting their jobs in droves because of concerns over the spread of the virus as well as long hours, unruly customers, and low pay.

A huge labor shortage in the US is hitting industries from healthcare to hospitality and ride-hailing apps.

Read more: Recruiters are trying to find career-switchers to staff up junior investment-banking roles as Wall Street's talent pool gets stretched thin

New York's unemployment rate is falling faster than the national average - but remains high overall, at 7.8%, compared to a 5.8% average. Connecticut's sits at 7.7%, and New Jersey's at 7.2%, the BLS data shows.

Some Northeast states, however, have unemployment rates well below the national average. New Hampshire has the lowest unemployment rate in the US, at 2.5%, followed by Vermont, which is joint with Nebraska at 2.6%, BLS data shows. These are all less than half the national average.

Vermont has the highest vaccination rate in the country, with 73.6% of people having received their first dose by June 27, Centers for Disease Control and Prevention (CDC) data shows. Other Northeast states are among states with the highest vaccination rates, the data shows. New York has the Northeast's lowest vaccination rate at 59.7% - but this is still well above the national average of 54%.

"The Northeastern region has benefited from a rapid rollout of vaccines," Daniel Zhao, a senior economist at job-review site Glassdoor, told The Wall Street Journal. "The health situation is improving and economic activity is unlocked, allowing workers to return and consumers to go out and spend."

Alfonso Flores-Lagunes, an economist at New York's Syracuse University, told the publication that "people are feeling more comfortable going to restaurants, traveling, and right now in the Northeast, it's a good time to travel because it's not as cold."

Across the US, the labor shortage is causing some businesses to cut operating hours, slash production, and raise prices. The US Chamber of Commerce called the shortage an "emergency" that could hold back the country's economic recovery.

The leisure and hospitality sector is among the worst hit. Hotels and restaurants have been offering lucrative perks like free higher wages and education benefits, cash bonuses, and even free fitness machines and iPhones to attract new hires.

Read the original article on Business Insider