There are ten states which have had unemployment rates consistently above 10% for the first six months of the year. Many also have desperate budget problems, a combination of high social services costs–driven to a large extent by unemployment benefit costs, and low tax receipts–resulting from a troubled business environment and the large number of people who are no longer taxpayers.
Most of these states are in a doing very poorly. And things are not improving very much, if at all. Their costs to maintain roads, public services, and social services have not dropped since the beginning of the recession. The burden of low receipts into their treasuries has gotten so great that many state employees are being laid off, further compounding the problem.
Two states that most people will not be surprised are on the list are Michigan, bludgeoned by the deep depression in the auto industry, and Nevada, hurt by a collapse of construction due to falling real estate prices and a loss of jobs in the cyclical gaming industry.
1. Michigan. The unemployment rate in Michigan was 13.2% and has averaged 14% in the first half of the year. The crippled auto industry’s problems have also hit auto suppliers and municipal budgets. The state and a number of large cities have fired workers. Flint, one of the largest cities in the state, is in receivership.
2. Nevada. The state’s 14.2% unemployment rate in June was the highest in the nation. Nevada is unusual because its jobless rate has continued to rise as the national unemployment rate has fallen slightly. The casino business relies heavily on discretionary spending, which has dropped as the economy has worsened. Home prices have been halved in many sections of Nevada, putting a significant part of the construction industry out of work, as the real estate bubble burst.
3. Illinois. Unemployment in the large industrial state was 10.4% and has averaged over 11% for the first five months of the year. Illinois has been because it was home to many manufacturers. Manufacturing productivity in the state has typically been more than $100 billion. Chicago is the “second city” after New York in the financial services industry, another sector badly damaged by the credit crisis.
4. Rhode Island. One of the smallest states in America, both in size and population, had an unemployment rate of 12% in June and averaged over 12.3% for the first five months. Rhode Island has little more than one million people. Providence, Warwick and Cranston, among the largest cities in the state, have been manufacturing centers for decades. And the state’s second largest industry is tourism, which has been damaged by a steep cutback in travel.