The Worst States to Be Unemployed

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As a result of the sequester, which went into effect in early 2013 to help cut the U.S. budget deficit, a federal program intended to lengthen the amount of time jobless residents can receive unemployment benefits will be substantially reduced. Cutting Emergency Unemployment Compensation will mean an end to an important source of income for many out-of-work Americans.

Unemployment rates have fallen nationwide, but there are still nearly 12 million active job seekers who cannot find work. While unemployment is rarely a favorable situation, in certain parts of the country, the unemployed can expect to find a job more easily because of a favorable job market or at least receive good benefits. In other areas, job growth is slow, competition is high, and benefits are relatively poor.

Based on unemployment insurance benefits data and employment statistics from the Department of Labor, 24/7 Wall St. identified the states where residents had the worst chances of finding work and also received the worst benefits while they were looking for it.

Click here to see the worst states to be unemployed

Click here to see the best states to be unemployed

One of the biggest indicators of how difficult it is to find work is the unemployment rate. A low jobless rate in a given state usually means the area’s economy is doing relatively well, competition is limited, and workers have the skills necessary to qualify for available jobs. In all of the best states to be unemployed, the unemployment rate was well below the national rate of 7.6% for June. In North Dakota, one of the best states to be unemployed, just 3.1% of the workforce did not have a job.

In the worst states to be unemployed, job growth was relatively slow, and new opportunities to work took longer to materialize. In most of the these states, the number of nonfarm jobs grew slower than the 1.3% national rate between June 2012 and June 2013. In three of these states — Kentucky, Ohio, and Illinois — the total number of jobs grew by less than 1%.

Not surprisingly, it is far better to be unemployed in a state with healthy job growth. According to Rebecca Dixon, policy analyst at the National Employment Law Project, “in some of these states, people go back to work really quickly.”

However, even if employers are hiring and local economies are doing well, workers may still need time to find a job. This may mean relying on unemployment insurance benefits while looking for work. Nationally, unemployment benefits covered an average of 33% of the average weekly wages in the area. In six of the best states to be unemployed, this figure, known as the replacement rate, was more than 40% of average wages, with Hawaii covering a nation-leading 53%.

Dixon pointed out that a high replacement rate is not enough on its own to make benefits available to the unemployed. “A state can have a great program, but if they make it really, really hard for people to qualify for benefits, then it’s just a great program sitting there that no one can use,” said Dixon.

Known as the recipiency rate, just 45% of all unemployed workers received such benefits over the 12 months going through the first quarter of 2013. In five of the better states to be unemployed, a higher percentage of jobless residents received these benefits. In some of the worst states to be unemployed, these rates were even lower. In Louisiana and Tennessee, the two worst states to be unemployed, just 30% of unemployed workers received these benefits.

To determine the worst states to be unemployed, 24/7 Wall St. reviewed figures published by the Department of Labor’s Office of Unemployment Insurance (OUI) and Bureau of Labor Statistics (BLS). The recipiency rate and recovery rate from the OUI are for the 12 months running through the end of the first quarter of 2013. Unemployment rate from the BLS are for June 2013, with job growth numbers reflecting changes in the nonfarm payrolls measure from the year before. The final rank reflects a composite score of these four measures weighted equally. Data on change in Emergency Unemployment Compensation (EUC) benefits comes from NELP. Dixon noted that since the data was put together, North Carolina has made changes in its UI program to cut weekly benefits. Those changes are not reflected in our data.

These are the worst states to be unemployed.