Late last year, the federal government allowed its emergency unemployment compensation benefits program to expire. This decision has left much of the nation’s long-term unemployed without access to unemployment insurance after their standard eligibility ended. Efforts to revive the program have not been successful so far.
While the nation’s unemployment rate has improved in recent years, dropping to 6.3% in May, the lowest its has been since September 2008, there are still nearly 12 million Americans who are out of work. In some states, the unemployed have to contend with slow job growth, extreme competition, and limited benefits. In other parts of the U.S., the situation is markedly better. Based on Department of Labor data for unemployment insurance benefits and employment statistics, 24/7 Wall St. identified the 10 best (and worst) states to be unemployed.
A state’s unemployment rate is one of the strongest indicators of a labor market’s health and how easy or challenging it can be to find work. Indeed, the unemployment rate in all of the best states to be unemployed was below the 6.3% national rate. On the other hand, it was above the national rate in seven of the worst states to be unemployed.
According to Rebecca Dixon, policy analyst at the National Employment Law Project (NELP), unemployment is affected by both the supply of capable workers and the demand for labor. “You could have a state where there are lots of openings but people are not qualified, or a state where there are lots of people out of work and very few job openings,” Dixon said.
The unemployed can also benefit from faster job growth. Higher job growth can indicate employers are opening and filling positions quicker. A relatively high job growth gives people the opportunity to reenter the labor market. On the other hand, “If you have a very slow job growth, you can have workers with skills, but there is not an opportunity for them,” Dixon said.
The best states to be unemployed generally had fast job growth. North Dakota and Utah’s job growth was a remarkable 5.2% and 3.0% in the 12 months through April. On the other hand, the worst states to be unemployed generally had slower job growth.
However, not all states fell into this pattern. Job growth in three of the worst states to be unemployed was roughly in line with the national growth rate of 1.7%. Among the best states, job growth in three states was just 1.0% or less.
The best states to be unemployed generally had fast job growth. North Dakota and Utah’s job growth was a remarkable 5.2% and 3.0% in the 12 months through April. On the other hand, the worst states to be unemployed generally had slower job growth. However, not all states fell into this pattern. Job growth in three of the worst states to be unemployed was 1.6% or more year-over-year, at least in line with the national growth rate. Among the best states, job growth in three states was just 1.0% or less.
But even when employers are adding to payrolls and competition for jobs is modest, it still takes many workers time to land a job. This may mean relying on unemployment insurance benefits for that period of time. Nationally, unemployment insurance benefits covered an average of 33% of the average weekly wages for the unemployed. In all but one of the worst states to be unemployed, workers received less coverage. Across the best states to be unemployed, this figure, known as the replacement rate, was above 38% in all but one of the top 10.
According to Dixon, an appropriate replacement rate can help people get back to work faster. If the replacement rate is good then the worker can focus on their job search,” Dixon said. They “have funds to go on job interviews, [for] transportation, [and] to meet their basic needs in the mean time.
The number of unemployed workers that receive unemployment insurance is also a critical factor in determining how favorable a state is for the unemployed. Known as the recipiency rate, all but one of the best states to be unemployed had a rate above the national rate of 27% in the 12 months through the first quarter of 2014. In five of these states — Hawaii, Minnesota, Montana, Wisconsin, and Vermont — at least 38% of the unemployed received benefits.
Conversely, some of the worst states to be unemployed provided benefits to comparatively few residents. Just 16% of the unemployed workers in Georgia and Tennessee received regular 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 rates and replacement rates from the OUI are for the 12 months running through the end of the first quarter of 2014. Unemployment rates from the BLS are for April 2014, with job growth figures reflecting preliminary changes in the nonfarm payrolls measure during the 12 months through April. Both measures are seasonally adjusted. We also utilized additional measures from the Department of Labor.
These are the best (and worst) states to be unemployed.