Special Report

Best (and Worst) States to Be Unemployed

Detailed Findings and Methodology:

Unemployment insurance is perhaps more important today than it has ever been. Due to changes in the workforce and the economy, Americans are spending more time unemployed than during any other period on record. While in 1970 the average unemployed U.S. worker spent 8.6 weeks between jobs, today the average duration of unemployment is 27.5 weeks.

While unemployment lasts nearly three times as long today, on average, as it did 50 years ago, a much smaller share of jobless Americans receive UI benefits. The recipiency rate — the share of unemployed workers receiving UI benefits — has fallen from around 40% in 1972 to 28% today, just slightly higher than the historic low reached in 2014. Some state UI programs, however, have a much wider reach than others. The recipiency rate is below 20% in 13 states, and above 40% in seven.

The degree to which unemployment insurance is effective depends on how much benefit payments compensate for lost wages. States determine the amount an involuntarily unemployed worker receives in benefits based on a preset proportion of the wages earned during his or her previous job, as well as a number of other factors. The replacement rate — the average weekly UI benefit amount as a share of average weekly earnings — is 34.1% nationwide.

Replacement rates are often higher in states with low unemployment, where UI claims are relatively low and UI benefits are spread across fewer recipients. Of the 15 states where the replacement rate is 40% or higher, 11 have unemployment rates below the 4.9% national figure.

In states with high unemployment and negative job growth, the chances of finding employment are worse, and the time spent on unemployment insurance is longer. Similarly, job seekers in states with the lowest unemployment likely have the best chances of returning to work in the shortest time. In 13 of the 15 states where unemployment is 4.0% or less, the average duration of UI recipiency is shorter than the 15.5-week national figure.

To identify the best (and worst) states to be unemployed in, 24/7 Wall St. generated a rank comprised of four measures: the UI recipiency rate, the average weekly benefit amount as a share of the average weekly wage, the unemployment rate, and one-year job growth. Data on unemployment, duration of unemployment, total employment, and employment by industry came from the Bureau of Labor Statistics and are for 2016. One-year job growth was calculated using annual employment figures for 2015 and 2016. Data on UI recipiency, income replacement, and UI benefit exhaustion came from the U.S. Department of Labor and are for the 12 months ending Q4 2016.

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