Washington, D.C.’s Unemployment Claims Drop
Author(s): Scott Douglas Jacobsen
Publication (Outlet/Website): A Further Inquiry
Publication Date (yyyy/mm/dd): 2025/05/28
Washington, D.C. saw a 19.6% drop in weekly unemployment claims but remains second-to-last nationwide due to a 91.25% increase year-over-year. Chip Lupoexplains that D.C.’s job market is vulnerable due to federal employment volatility, legal uncertainties, and limited private-sector alternatives. Neighboring states like Maryland and Virginia offer stronger job prospects. While D.C. struggles, New Hampshire continues to perform well. Broader trends reveal long-term disparities, with states like Kentucky suffering from high unemployment tied to declining industries. Lupo warns that economic instability affects not only wages and tax revenue but also migration, political sentiment, and long-term wealth distribution across the U.S.
Scott Douglas Jacobsen: Now, the District of Columbia saw a 19.6% decrease in unemployment claims compared to the previous week, which sounds promising. But it’s still showing a 91.25% increase from the same time last year. So overall, it’s ranked 50th in the nation. Kentucky is doing the worst, and D.C. is second to last. In contrast, our last interview focused on New Hampshire, which is among the top performers. To clarify, is Sununu still the governor of New Hampshire?
Chip Lupo: No—Chris Sununu is no longer the governor. He left office at the end of his term, and Republican Kelly Ayotte was inaugurated as New Hampshire’s governor in January 2025. So, while there’s been a change in leadership, the party remained the same.
Jacobsen: Got it. So, the week-over-week improvement looks decent, but the year-over-year data is dramatically worse. What’s going on there?
Lupo: D.C. is a special case. The 19.6% week-over-week drop in claims is a strong short-term signal, but the over 91% year-over-year increase suggests some structural or policy-related disruptions that have unfolded over the past 12 months.
This could be linked to several factors, including leadership transitions and legal or bureaucratic processes that affect public employment. In D.C., federal employment dominates the job market, and when there’s turnover at the federal level—new leadership, changes in congressional funding priorities, and legal disputes—employment numbers can swing wildly.
There are also ongoing court cases regarding firing federal workers, which adds even more uncertainty. Depending on how those rulings go, we could see big shifts in either direction.
Jacobsen: Is D.C. affected by the same anticipated tightening of work requirements for public assistance that you mentioned with other states?
Lupo: Absolutely. However, D.C. may see a delayed or muted response compared to other states because it doesn’t have the same private-sector foundation that a place like New Hampshire or Utah might have. The surrounding states—Maryland and Virginia—offer more robust private-sector job markets, especially in tech, government contracting, and healthcare.
If you’re a federal worker in D.C. who loses your job, you may have better luck finding a similar position in state government in those neighbouring states. Unlike federal roles, most state-level positions aren’t targeted for large-scale cuts.
Jacobsen: And D.C. itself—just to be clear—it’s not technically a state, right?
Lupo: Correct. Washington, D.C., is a federal district, not a state. A mayor and a city council govern it. The current mayor is Muriel Bowser, a Democrat, and she’s been in office since 2015.
Jacobsen: Mayor Bowser. So we’ve got a federal district with strong Democratic leadership, dealing with instability from the federal level, while nearby Republican-led states like New Hampshire are pushing ahead with stronger economic indicators.
Lupo: Exactly. It highlights how regional dynamics, state policies, and federal employment dependencies create vastly different labour outcomes—even within a relatively small geographic area.
So, Washington, D.C. has been under Democratic leadership for generations, and it’ll likely continue in that direction. That’s one reason there’s always been a push to make it a state. Doing so would add two Senate seats, which would almost certainly go to the Democrats, potentially shifting the balance of power in Congress—at least that’s the prevailing theory.
Jacobsen: Looking at the numbers, D.C. has 208 unemployment claims per 100,000 people. What does that number tell us in context?
Lupo: Right—208 claims per 100,000 people is certainly not great, but it’s not quite dead last. It’s toward the bottom. California is slightly worse at 211, Oregon at 246, and Kentucky ranks last at 249 per 100,000.
Jacobsen: What economic impact do these high unemployment rates have on a state’s potential economy? And I use “potential” deliberately here—thinking about lost productivity, wages, and downstream effects.
Lupo: The economic gap is significant if you’re looking at a place like the District of Columbia or Kentucky compared to a high-performing state like New Hampshire. We’re talking hundreds of millions—if not billions—of dollars in lost wages, lost tax revenue, and reduced consumer spending over a year.
However, the effects go beyond the purely economic. High unemployment and rising poverty tend to create political consequences. Voters get frustrated. When people are out of work, struggling to make ends meet, and watching the cost of living increase, there’s often a groundswell of discontent that leads to a call for new leadership—or at least a serious shift in policy.
We’ve seen signs of that in California, for instance. Even if the dissatisfaction isn’t strictly about unemployment, broader discontent—over affordability, public services, and housing—can quickly be linked to economic indicators.
Jacobsen: That makes sense. For context, I’m still here—just following along and reading some numbers on my end. Daniel Goldberg, an associate professor and the academic director of the Business Management BBA Program at Temple University, pointed out that even when unemployment numbers appear relatively stable, we’re still not back to pre-pandemic levels—roughly late 2019 or early 2020 benchmarks. In many regions, unemployment remains higher than five or six years ago.
Lupo: That’s exactly right. While weekly unemployment claims are an important measure of short-term changes, broader economic health requires considering multi-year trends. Even in states that have improved, such as New Hampshire, we’re still watching to see whether these gains are sustainable and whether workers are entering quality jobs, not just temporary ones.
In places like D.C. or Kentucky, where unemployment claims remain high, it’s not just about recovering jobs—it’s about building an economy that supports long-term stability and growth. Without that, a temporary drop in claims won’t improve poverty, productivity, or voter satisfaction.
Jacobsen: So if this disparity has played out over half a decade or more, especially in what is still the largest economy in the world, then we are talking about billions of dollars in lost potential—not just for the national economy but for the improved livelihoods of Americans, particularly in struggling regions like D.C. and Kentucky. Does this disparity in unemployment rates eventually lead to disparities in wealth distribution across states in the U.S.? Is that just a natural consequence?
Lupo: Absolutely. That’s a direct consequence. Over time, high unemployment leads to lower household income, less investment, and fewer opportunities for upward mobility in those states.
People also tend to begin relocating. When job opportunities and tax burdens become untenable, residents move to job-friendly or tax-friendly states. That migration creates a feedback loop—states losing population also lose tax revenue, which limits their ability to invest in services and infrastructure, making the economic outlook even worse.
So when individuals are cash-strapped, the state eventually becomes cash-strapped, too. Fewer residents mean a smaller tax base, which makes recovery even harder.
Jacobsen: I’d like to ask you one more before we wrap up. Yalcin Asik Goz, an associate professor at Appalachian State University, pointed out that unemployment figures should also be analyzed by industry, not just at the macro level. So, in places like D.C. and Kentucky, are specific industries relatively unaffected while others see significantly higher unemployment rates?
Lupo: Yes, and that’s a crucial point. One of the core challenges is that certain states are more concentrated in industries vulnerable to economic shifts. For instance, D.C. is heavily dependent on government employment, so changes in federal staffing levels or budget constraints hit the region especially hard. On the other hand, Kentucky has historically relied on energy sectors like coal and some agriculture and manufacturing, which are often sensitive to global market trends and policy shifts.
In contrast, high-tech continues to be more resilient. Sectors like AI are poised to grow, creating massive demand for energy infrastructure—especially power data centers and AI systems. If those states can adapt to support the transition, that could benefit the energy sector.
At the same time, we’re starting to see a reshoring trend in blue-collar jobs, particularly in automotive manufacturing. If tariff strategies from the current administration work out, we could see more factories reopening in states like Kentucky—especially from car companies and other manufacturers that had previously offshored operations. That would be a substantial economic boost.
Jacobsen: Those are all the questions I have today. As always, I appreciate your time, and I’m sure I’ll follow up soon.
Lupo: I appreciate the conversation, Scott. It’s always a pleasure. And just one more thing—our team recently published a financial literacy study that took off. I’ve seen people all over that, and it’s great to see because we have a financial literacy problem in this country.
Jacobsen: Absolutely. It’s great that it’s getting attention. George Carlin put it best: “People are spending money they don’t have on things they don’t need.”
Lupo: [Laughing].
Jacobsen: That’s a brutal but accurate summary. Fantastic. Thanks, Chip.
Lupo: You’re welcome. Bye now.
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