The U.S. labor market has improved remarkably in recent years, as the unemployment rate has fully returned to pre-recession levels. The national unemployment rate reached 4.7% in December, the same as it was in November 2007, the month before the recession officially began.
That recovery, of course, has been far from even. In many U.S. metropolitan areas unemployment is now at or below pre-recession levels, and in some metros it remains 4 or 5 percentage points higher than at the end of 2007. Across the country, unemployment rates vary significantly.
Ames, Iowa leads the nation with an unemployment rate of just 2.3% as of December 2016. In El Centro, California, 20.9% of the labor force is unemployed, the highest jobless rate in the country. Based on seasonally-adjusted December unemployment figures from the U.S. Bureau of Labor Statistics, 24/7 Wall St. reviewed the cities with the highest and lowest unemployment rates.
While job losses as a result of the recession certainly drove up unemployment in most metro areas, many of the metros that currently have the highest unemployment rates were struggling well before the recession began. In December 2006, when the national economy was still going strong, all but two of the 20 metro areas currently with the highest unemployment rates had above average jobless rates at the time. During the recession and after it officially ended, unemployment increased even further, to more than 20% in some cases. In El Centro, unemployment reached 30% in November 2011. While in many of these metropolitan areas the unemployment rate has substantially declined since reaching a peak, it remains among the highest in the country.
In an interview with 24/7 Wall St., Martin Kohli, chief regional economist at the BLS, explained, “High and low unemployment rates in different areas reflect both the supply side, such as attributes of the labor force, and the demand side, such as how well the industries in an area are doing.” It is clear that areas with the highest unemployment suffer both due to the structure of their economies and the composition of their labor forces.
Agriculture has been an uncertain industry in recent years, Kohli explained, and economies that are too dependent on crop production continue to struggle. Nearly all of the metropolitan areas with the highest unemployment rates are relatively dependent on agriculture. In the United States, about 2% of workers are employed in the sector that includes agriculture. In half of the cities with the highest unemployment, the concentration is at least five times as high, and in all but two of the 20, the concentration of sector workers exceeds the national share.
The skillsets of labor force participants can also help explain the high unemployment in these areas. “People who have college degrees have more choices about what kinds of jobs to pursue, whereas people with less education have fewer career opportunities,” Kohli explained. Nationwide, 30.6% of adults have at least a bachelor’s degree. In many of the metro areas with the highest unemployment, less than half the national share have a college degree, and all but one have below-average shares of college-educated adults.
While struggling labor markets tend to share particular concentrations of jobs and less optimal skill sets, these characteristics are notably absent in the metro areas with thriving economies. As Kohli noted, the 20 metros with the lowest unemployment areas have more diversified economies. They also tend to have greater employment in more stable industries. In all but one of the areas with the lowest unemployment, educational attainment rates exceed the corresponding national rate. In Ames, over half the adult population has a bachelor’s degree.
Many of the metropolitan areas with the lowest unemployment rates have at least one major university, which can help explain both the high educational attainment rates as well as low unemployment. “Some of these areas really reflect the importance of universities in affecting local economic conditions,” Kohli said.
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 2016 from the Bureau of Labor Statistics (BLS). Labor force changes also came from the BLS. Median household incomes, poverty rates, and educational attainment rates all came from the Census Bureau’s 2015 American Community Survey (ACS), and are for the latest period available. Workforce composition also came from the ACS.
These are the cities with the highest and lowest unemployment rates.
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