Special Report

Cities With the Highest (and Lowest) Unemployment Rates

The U.S. unemployment rate hit 4.8% in December, down from 5.4% the year before. Job market improvements across the country point to a broad recovery from the Great Recession. The recovery, however, is anything but uniform. While unemployment rates in 23 metro areas are lower than 3%, they are greater than 10% in 12 metro areas.

24/7 Wall St. examined the U.S. metropolitan areas with the lowest and highest jobless rates from the Bureau of Labor Statistics (BLS). Ames, Iowa leads the nation with an unemployment rate of 2.2% as of December of 2015, while the weakest job market among the nation’s metros is El Centro, California, which reported a jobless rate of 19.6%.

Job markets in the vast majority of the 381 U.S. metro areas — 291 urban regions — recorded job market improvements compared to December 2014. While the unemployment declines are a positive sign for the nation’s economy, full recovery from job losses during the Great Recession is a long way off in far more areas. In fewer than half of all U.S. metro areas — 156 — the December unemployment rate remains higher than the area’s jobless rate 10 years ago.

Click here to see the cities with the highest unemployment rates.

Click here to see the cities with the lowest unemployment rates.

The Great Recession did not just bruise the job market, but it also crippled the housing market. According to Martin Kohli, chief regional economist at the BLS, the two are interlinked. The best job markets weathered the housing crisis relatively well, while areas with the highest jobless rates were among the hardest hit by the housing crisis.

When a labor market is weak and the housing market is failing, numerous trickle-down factors take effect. While out-of-job workers would frequently relocate, they may not be able to if a mortgage ties them down and they cannot sell their house. This, in turn, puts further strain on an already depressed housing market. Further, unemployed consumers spend less, which increases the likelihood of more job cuts at local businesses who cannot stay afloat. For these reasons, Kohli said, an area’s job market tends to be very closely tied to its housing market.

Indeed, in 14 of the 23 weakest metro area job markets, home prices fell by more than 20% from the fourth quarter of 2005 through the same period in 2015. By contrast, home prices in all but three of the 23 best job markets increased over that time.

A delayed recovery from the housing crisis is only one of the problems afflicting the nation’s struggling local economies. Kohli noted the ongoing drought in California and parts of the Midwest as a major driver of unemployment in those areas. The state is in its fifth year of drought, and this year’s El Nino storms have not come close to meeting the hopes of businesses and residents.

A majority of the regions with the highest unemployment rates are located in California, away from the coast or in neighboring states. Inland California is home to some of the country’s most concentrated agricultural industries. In El Centro, for example, the concentration of farm workers is 21 times greater than the national average.

Compared with the nation’s weakest job markets, the metro areas with the lowest jobless rates are far more likely to have a major university. Ames, Iowa; Burlington, Vermont; Provo, Utah; Ann Arbor, Michigan; and Iowa City, Iowa all have some of the strongest job markets and are also home to at least one major university system. Kohli explained that a university is often a very economically healthy addition to an area’s community as companies interested in attracting skilled workforces frequently locate there. “[Universities] create environments that other types of companies seem to want to be in.”

To identify the best and worst job markets in the United States, 24/7 Wall St. reviewed the metropolitan statistical areas (MSA) with the highest and lowest unemployment rates as of December 2015 from the Bureau of Labor Statistics (BLS). Only the 381 metro areas reviewed by both the BLS and the U.S. Census were considered. Labor force changes also came from the BLS. Median household incomes, poverty rates, educational attainment rates, the percentage of households receiving SNAP benefits (food stamps), and the proportions of households earning less than $10,000 and more than $200,000 annually all came from the Census Bureau’s 2015 American Community Survey (ACS), the latest period available. Workforce composition also came from the ACS. Quarterly median home prices since 2005 came from the Federal Housing Finance Agency (FHFA).

These are the cities with the highest (and lowest) unemployment rates.

Sponsored: Find a Qualified Financial Advisor

Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.