Special Report
The Best and Worst States to Be Unemployed
Published:
Since it peaked at 9.6% in 2010, the U.S. annual unemployment rate has declined every year, reaching 6.2% in 2014. While the country may be on the path to full recovery from the recession, many job gains have been in part-time and lower wage employment.
Meanwhile, federal unemployment benefits have been reduced, and in many states unemployment insurance is more difficult to access. When the six-month federal unemployment insurance benefit expired more than two years ago, 27% of jobless Americans received benefits, an all-time low. Since 2011, nine states reduced the number of weeks individuals could receive benefits.
To identify the best (and worst) states in which to be unemployed, 24/7 Wall St. ranked each state based on four indicators: the annual unemployment rate, the unemployment insurance recipiency rate, the weekly benefit amount as a percentage of the state’s weekly wages (known as the replacement rate), and the one-year job growth rate.
A state’s unemployment rate is one of the strongest indicators of a labor market’s health and how challenging it can be to find work. The unemployment rate in all of the 10 best states to be unemployed was lower than the national rate of 6.2%. On the other hand, in the 10 worst states to be unemployed it was above the national rate.
Whether the generosity of a state’s unemployment insurance (UI) system affects the health of the job market, if at all, is debatable. On one hand, states need to tax employers to ensure unemployment insurance funds are adequately funded to assist unemployed residents. On the other hand, some argue that the high taxes on employers prevents potential investment that could create more jobs. According to Rick McHugh, senior attorney at the National Employment Law Project (NELP), all state systems employ a feedback mechanism where taxes on employers go up as more people are paid unemployment benefits.
The forces at work in the labor market are both complex and often outside the control of state officials and any given UI system. For example, McHugh said the national economy can impact a state’s dominant industry — such as Michigan’s auto industry, Pennsylvania’s steel industry, or the oil industry in Texas.
When these industries suffer, it has an outsized impact on the labor market. While employers may end up paying more in taxes to offset an increase in insurance claims, overall contribution to the fund can decline with the lowered revenues of these industries. As a result, state UI systems are liable to cuts at a time when workers need help the most.
The recipiency rate, that is, how likely were unemployed residents to receive unemployment insurance, was generally higher in the best states to be unemployed. Also, the benefit amounts tended to be larger as a percentage of the average weekly wage. Generally, the opposite was true in the worst states to be unemployed. McHugh said this is among the most important questions for a worker: “what is their weekly benefit going to be, and how much of their prior wage is that going to replace?”
Even so, coverage is not especially high nationwide. Fewer than half of unemployed residents received insurance in all but four states. Similarly, Hawaii was the only state where the average weekly benefit amount covered more than half of the average weekly wage.
The percentage of unemployment insurance claimants who use up all of their benefits — known as the exhaustion rate — and the average number of weeks eligible unemployed individuals receive benefits — known as the duration period — also reflect how challenging it is to recover from joblessness in each state. The exhaustion rate in eight of the 10 best states to be unemployed did not exceed the national percentage of nearly 44%, while UI recipients in the worst states to be unemployed were generally more likely to completely exhaust their benefits.
To identify the best (and worst) states to be unemployed, 24/7 Wall St. generated a rank composed of four measures of each state’s labor market: the annual unemployment rate, the recipiency rate, the weekly benefit amount as a percentage of weekly wages, and the one-year job growth rate. Annual unemployment and underemployment rates came from the Bureau of Labor Statistics (BLS). Non-farm job growth from June 2013 through June 2014 also came from the BLS. The recipiency rate and the replacement rate were measured over the 12 months through the first quarter of 2014 from the United States Department of Labor. The exhaustion rate and the duration claimants received UI benefits in weeks also came from the U.S. Department of Labor and were measured over the 12 months through the first quarter of 2014. Economic characteristics such as the poverty rate came from the U.S. Census Bureau’s American Community Survey (ACS) and are for 2013, the most recent period available.
These are the best (and worst) states to be unemployed.
The Best States to Be Unemployed
1. North Dakota
> Pct. unemployed getting benefits: 40.0% (tied -16th highest)
> Pct. average weekly wage covered: 45.1% (2nd highest)
> Unemployment rate: 2.8% (the lowest)
> 1-yr. job growth: 3.9% (the highest)
Of all 50 states, North Dakota has the most advantages and opportunities for its unemployed residents. North Dakota was home to both the lowest unemployment rate and the highest job growth rate in the country, at 2.8% and 3.9%, respectively. Due in part to the booming job market, a typical unemployed resident spent an average of 12.5 weeks looking for work, less time than in any other state except for Georgia and Idaho. Not only did unemployed residents spend less time finding employment, but those receiving unemployment insurance took home an average of $420.66 per week, the third highest benefit amount of all 50 states.
2. Hawaii
> Pct. unemployed getting benefits: 44.0% (tied– 11th highest)
> Pct. average weekly wage covered: 52.0% (the highest)
> Unemployment rate: 4.4% (tied– 9th lowest)
> 1-yr. job growth: 1.0% (14th lowest)
Unemployed workers receiving insurance benefits in Hawaii received an average of $429.24 per week. Not only was the benefit amount the second highest in the country, it also covered 52% of the average working Hawaiian’s weekly wage, the highest coverage rate of all 50 states, and the only state in which more than half of the average wage was covered. Still, the average amount of time a Hawaiian resident spent looking for a job was 16.7 weeks, the same as the corresponding national figure. The state also had relatively slow job growth, at a rate of 1%.
3. Utah
> Pct. unemployed getting benefits: 28.0% (tied– 9th lowest)
> Pct. average weekly wage covered: 43.9% (3rd highest)
> Unemployment rate: 3.8% (4th lowest)
> 1-yr. job growth: 2.8% (8th highest)
A high job growth rate coupled with a low unemployment rate make Utah one of the best states for eligible workers looking for a job. It took 13.4 weeks for unemployed Utah residents to find a job, 3.3 weeks less than the national average. While only 28% of Utah’s unemployed received insurance benefits, those who did received $352.41 per week, the 12th highest dollar amount in the country. Also, the benefit covered 43.9% of the average weekly wages, the third highest such coverage.
4. Minnesota
> Pct. unemployed getting benefits: 44.0% (tied– 11th highest)
> Pct. average weekly wage covered: 39.7% (10th highest)
> Unemployment rate: 4.1% (tied– 5th lowest)
> 1-yr. job growth: 1.5% (22nd highest)
Of the total unemployed Minnesota residents, 44% were eligible to receive unemployment insurance benefits, the 11th highest recipiency rate. The average weekly unemployment benefit amount was $386.77, more than the amount in all but a handful of states. Minnesota’s unemployment rate has been dropping every year since 2009 when it was 7.8%. In 2014 it reached 4.1%. And the estimated rate for April of this year was even lower, at 3.7%.
5. Iowa
> Pct. unemployed getting benefits: 40.0% (16th highest)
> Pct. average weekly wage covered: 43.6% (4th highest)
> Unemployment rate: 4.4% (tied– 9th lowest)
> 1-yr. job growth: 1.3% (23rd lowest)
At 4.4%, Iowa’s unemployment rate was 1.8 percentage points lower than the national rate. Similarly, underemployment was 8.4% in the state, more than 3.2 percentage points lower than the national rate. In addition, unemployed Iowa residents found jobs relatively quickly. It took unemployment insurance just 13.4 weeks to find a job in the state, the seventh lowest duration compared to other states.
6. Colorado
> Pct. unemployed getting benefits: 33.0% (tied– 22nd lowest)
> Pct. average weekly wage covered: 37.0% (22nd highest)
> Unemployment rate: 5.0% (15th lowest)
> 1-yr. job growth: 3.3% (2nd highest)
Colorado was one of only a few states where more than half of unemployment insurance recipients completely exhausted their benefits. This often indicates that recipients may have needed more time than the allotted insurance duration to find a job. However, the weekly payout for eligible unemployed persons was $357.69, the ninth highest figure. The benefit amount also made up 37% of Colorado’s average weekly wage, one of the higher proportions compared to other states. In addition, the state’s one-year job growth rate in June last year was more than 3%, the second highest growth rate nationwide.
7. Vermont
> Pct. unemployed getting benefits: 45.0% (tied– 9th highest)
> Pct. average weekly wage covered: 39.6% (11th highest)
> Unemployment rate: 4.1% (tied– 5th lowest)
> 1-yr. job growth: 0.9% (11th lowest)
Vermont had nearly the lowest exhaustion rate of any state, at less than 20%, indicating that many unemployed workers were able to find a job before running out of insurance payments. Also, unemployment insurance was relatively accessible compared to other state systems with 45% of unemployed workers qualifying for unemployment benefits, the ninth highest percentage. Not only was Vermont’s unemployment rate of 4.1% one of the lowest in the nation, but also the state’s underemployment rate of 8.6% was lower than all but a handful of states.
8. Kansas
> Pct. unemployed getting benefits: 35.0% (tied– 22nd highest)
> Pct. average weekly wage covered: 43.2% (5th highest)
> Unemployment rate: 4.5% (tied– 11th lowest)
> 1-yr. job growth: 1.7% (20th highest)
The average amount of money unemployment insurance claimants took home per week in Kansas was $351.69, the 13th highest in the country. What’s more, the average benefit amount was 43.2% of the average weekly wage, the fifth largest proportion. Not only was the unemployment relatively low in Kansas, but at 8.8%, the underemployment rate was also the 10th lowest in the country. The state’s relatively strong job growth rate of 1.7% may have helped make the job climate more favorable for unemployed residents seeking work. It took the average Kansas resident 15.6 weeks to find a job, among the shorter such durations.
9. Montana
> Pct. unemployed getting benefits: 44.0% (tied– 11th highest)
> Pct. average weekly wage covered: 41.5% (7th highest)
> Unemployment rate: 4.7% (13th lowest)
> 1-yr. job growth: 1.3% (24th lowest)
Montana’s unemployment rate of 4.7% was the 13th lowest compared to all states, and the relatively strong job market likely improved the prospects of job seekers in the state. The average weekly wage in Montana was $706.34, nearly the lowest wage nationwide. However, the average benefit amount in the state was equal to 41.5% of the weekly wage, the seventh highest coverage in the country. Unemployed Montana residents were also among the most likely to qualify for unemployment insurance, with a recipiency rate of 44%, the 11th highest in the nation.
10. South Dakota
> Pct. unemployed getting benefits: 16.0% (the lowest)
> Pct. average weekly wage covered: 40.2% (8th highest)
> Unemployment rate: 3.4% (3rd lowest)
> 1-yr. job growth: 1.4% (24th highest)
South Dakota had an exceptionally low recipiency rate compared to many of the best states in which to be unemployed. Just 16% of the state’s unemployed population received benefits, the lowest such percentage in the nation. However, the state had a number of redeeming factors. For unemployed insurance recipients, more than 40% of the average weekly wage was covered, the eighth highest percentage. The state’s labor market was also relatively healthy, with an unemployment rate of just 3.4%.
The Worst States to Be Unemployed
41. Indiana
> Pct. unemployed getting benefits: 28.0% (tied–9th lowest)
> Pct. average weekly wage covered: 30.8% (16th lowest)
> Unemployment rate: 6.0% (25th lowest)
> 1-yr. job growth: 1.8% (17th highest)
Less than 32% of unemployment insurance claimants in Indiana exhausted their benefits before finding a job, one of the lowest such percentages nationwide. In contrast, nearly 44% of recipients across the country exhausted their benefits. While the relatively low exhaustion rate suggests the state’s unemployment insurance system may be adequate for many residents trying to return to full employment, the state is still not especially favorable for the unemployed. For example, 28% of unemployed Indiana residents qualified for benefits, one of the lower recipiency rates. In addition, claimants recouped $253.93 per week in benefits, less than 31% the state’s average weekly wage — both among the lower figures nationwide.
42. Michigan
> Pct. unemployed getting benefits: 34.0% (tied–24th lowest)
> Pct. average weekly wage covered: 32.6% (18th lowest)
> Unemployment rate: 7.3% (5th highest)
> 1-yr. job growth: 2.1% (15th highest)
Beyond Michigan’s unemployment insurance system, which is not especially generous, the state’s job market is relatively weak. More than 7% of Michigan’s workforce was unemployed and 13.1% were underemployed, each the fifth highest rate nationwide. On the other hand, the state’s one-year job growth rate as of June last year was more than 2%, one of the higher growth rates. Job growth likely helped improve job prospects for job seekers. Unemployment insurance claimants spent just over 13 weeks collecting benefits, less time than most unemployed job seekers across the country.
43. Illinois
> Pct. unemployed getting benefits: 37.0% (tied–20th highest)
> Pct. average weekly wage covered: 32.3% (17th lowest)
> Unemployment rate: 7.1% (7th highest)
> 1-yr. job growth: 1.3% (18th lowest)
In Illinois, 37% of unemployed workers received unemployment benefits, more than most states and significantly higher than in the worst states to be unemployed. People in Illinois remained unemployed for a longer duration than in many other states. On average, it took an unemployed worker in Illinois nearly 18 weeks to find a job, the 10th longest period of time in the country. At 7.1% the unemployment rate in Illinois was the seventh highest in the country and almost a full percentage point higher than the rate nationwide.
44. Missouri
> Pct. unemployed getting benefits: 32.0% (tied–18th lowest)
> Pct. average weekly wage covered: 29.5% (12th lowest)
> Unemployment rate: 6.1% (tied–23rd highest)
> 1-yr. job growth: 1.0% (13th lowest)
Missouri residents receiving unemployment insurance benefits took home an average of $245 per week. This was the eighth lowest amount in the country and was about $574 less than the average weekly earnings for employed state residents. The money paid out for unemployment insurance is meant to ease financial hardship over a designated period of time while an individual finds work. However, the state’s annual job growth rate was just 1%. This may have contributed to the nearly 46% of unemployed Missouri residents receiving benefits who exhausted their coverage.
45. Tennessee
> Pct. unemployed getting benefits: 23.0% (tied–3rd lowest)
> Pct. average weekly wage covered: 27.6% (tied–8th lowest)
> Unemployment rate: 6.7% (12th highest)
> 1-yr. job growth: 1.9% (16th highest)
Tennessee had one of the least generous unemployment insurance systems. The average weekly benefit amount was $223.44, one of the lowest wage figures, and it covered less than 28% of the average weekly wage of employed residents. It was fairly uncommon to qualify for unemployment benefits in the first place, as just 23% of unemployed Tennessee workers received benefits, the third lowest recipiency rate nationwide. On the other hand, the state had relatively strong job growth, which increases the likelihood of job prospects for unemployed Tennesseans.
46. Virginia
> Pct. unemployed getting benefits: 22.0% (2nd lowest)
> Pct. average weekly wage covered: 30.7% (15th lowest)
> Unemployment rate: 5.2% (17th lowest)
> 1-yr. job growth: 0.6% (5th lowest)
While Virginia’s unemployment rate was lower than in most states, life was tougher for those who were unemployed. Only 22% of Virginians looking for work received unemployment insurance, the second lowest rate nationwide. Though unemployment benefits help relieve some financial stress, the state’s average weekly benefit amount was less than 31% of the average weekly wage across the state, the 15th lowest proportion in all 50 states. In addition, 48% of unemployment insurance recipients used up all of their benefits, the seventh highest exhaustion rate in the country. It may be more difficult to find a job in Virginia than in many other states, as jobs in the state grew at one of the slowest rates compared to the rest of the country.
47. Arizona
> Pct. unemployed getting benefits: 24.0% (tied–5th lowest)
> Pct. average weekly wage covered: 25.3% (3rd lowest)
> Unemployment rate: 6.9% (tied–8th highest)
> 1-yr. job growth: 1.8% (18th highest)
Nearly 7% of Arizona’s workforce was unemployed, one of the highest jobless rates in the country. The state’s underemployment rate was more than double the unemployment figure, at 14.3% — the third highest nationwide. Underemployed workers such as those working part-time despite needing full-time work and people no longer looking for jobs are not eligible for unemployment insurance benefits. Less than one-quarter of the state’s unemployed population qualified for unemployment benefits, tied with Oklahoma for the 5th lowest recipiency rate in the country.
48. Louisiana
> Pct. unemployed getting benefits: 23.0% (tied–3rd lowest)
> Pct. average weekly wage covered: 24.8% (2nd lowest)
> Unemployment rate: 6.4% (tied–18th highest)
> 1-yr. job growth: 1.3% (25th highest)
As in most of the 10 worst states to be unemployed, Louisiana’s poverty rate of nearly 20% was among the highest in the nation. Just 23% of unemployed workers received unemployment insurance, the third lowest recipiency rate. And those who received the benefit received relatively little at $210.95 per week, the fourth lowest wage figure. The benefit amount was also less than 25% of the average weekly wage of employed residents, the second smallest proportion after Delaware. While finding a job while unemployed in Louisiana is more difficult than in many other states, less than 31% of insurance recipients completely exhausted their benefits, one of the lowest percentages. This suggests that many jobless Louisiana residents receiving benefits were at least able to find a job in a reasonably short period of time.
49. Alabama
> Pct. unemployed getting benefits: 31.0% (tied–16th lowest)
> Pct. average weekly wage covered: 26.2% (6th lowest)
> Unemployment rate: 6.8% (tied–10th highest)
> 1-yr. job growth: 0.8% (8th lowest)
A typical eligible unemployed Alabama resident received $209.54 per week, the third lowest benefit amount nationwide. This was also just 26.2% of the average weekly wage of employed residents, the sixth smallest such proportion. While Alabama’s jobless rate of 6.8% was the 10th highest in the nation, only 31% of unemployed residents received insurance benefits, one of the lower recipiency rates. The employment outlook was also not especially good in the state — the total number of jobs had grown slower than in all but seven other states from June 2013 to June 2014.
50. Mississippi
> Pct. unemployed getting benefits: 32.0% (tied–12th lowest)
> Pct. average weekly wage covered: 28.3% (10th lowest)
> Unemployment rate: 7.8% (tied–the highest)
> 1-yr. job growth: 0.7% (7th lowest)
Based on a range of labor statistics, Mississippi is the worst state in the nation to be unemployed. Nearly 8% of the state’s workforce was unemployed last year, tied with Nevada for the highest jobless rate nationwide. The job market has not improved meaningfully, either. The number of jobs has grown at one of the slowest rates in the country from June 2013 to June 2014. Working Mississippians earned the lowest average weekly wage in the country at $686.42. Those relying on unemployment benefits received an average weekly benefit amount of $196.84, the second lowest in the nation. The benefit amount was equal to 28.3% of the average weekly wage, one of the lowest such proportions.
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