Special Report

Best and Worst Run States in America: A Survey of All 50

Samuel Stebbins

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21. New Hampshire
> 2018 unemployment: 2.5% (2nd lowest)
> Pension funded ratio: 62.7% (14th lowest)
> 1 yr. GDP growth: 2.3% (21st lowest)
> Poverty rate: 7.6% (the lowest)
> Moody’s credit rating and outlook: Aa1/Stable

People living in New Hampshire are far less likely to face serious financial hardship than the typical American. The poverty rate in New Hampshire is just 7.6%, the lowest of any state and well below the 13.1% national rate. The lower incidence of poverty is partially the product of a strong job market. Just 2.5% of workers in New Hampshire were out of a job in 2018, a far smaller share than the 3.9% national unemployment rate.

New Hampshire relies heavily on credit to fund state operations, however. The state has an outstanding debt equivalent to $5,734 per resident, one of the highest debts per capita of any state.

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22. North Carolina
> 2018 unemployment: 3.9% (25th highest)
> Pension funded ratio: 90.7% (6th highest)
> 1 yr. GDP growth: 2.4% (25th highest)
> Poverty rate: 14.0% (15th highest)
> Moody’s credit rating and outlook: Aaa/Stable

North Carolina is one of the 15 states with a perfect triple A credit rating and a stable outlook from Moody’s. Indeed, the state has funding for over 90% of its pension obligations — far more than most states. The state also has relatively little overall debt.

Economic growth, however, has been modest in North Carolina lately. The state’s economy grew by just 2.4% in 2018, below the 2.9% national GDP growth last year. Stronger economic growth could help reduce poverty in the state. North Carolina’s poverty rate of 14.0% is slightly higher than the 13.1% national rate.

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23. Delaware
> 2018 unemployment: 3.8% (25th lowest)
> Pension funded ratio: 82.8% (11th highest)
> 1 yr. GDP growth: 0.0% (the lowest)
> Poverty rate: 12.5% (24th lowest)
> Moody’s credit rating and outlook: Aaa/Stable

Delaware was the only state to report no economic growth in 2018. Economic stagnation in the state stood in stark contrast to the national 2.9% GDP growth over the same period. Still, by other measures, Delaware’s economy is performing as well or better than the national economy as a whole. For example, the state’s 3.8% unemployment rate is slightly lower than the 3.9% national rate. Additionally, just 12.5% of state residents live below the poverty line compared to 13.1% of Americans nationwide. Delaware also has funding for 82.8% of its pension obligations, while most states have less than 75% of pension obligations funded.

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24. Michigan
> 2018 unemployment: 4.1% (20th highest)
> Pension funded ratio: 65.1% (20th lowest)
> 1 yr. GDP growth: 2.5% (22nd highest)
> Poverty rate: 14.1% (13th highest)
> Moody’s credit rating and outlook: Aa1/Stable

Financial insecurity is more common in Michigan than it is nationwide on average. Across the state, 14.1% of the population lives below the poverty line, compared to the national poverty rate of 13.1%. The higher poverty rate in the state may be partially attributable to a weaker than average job market. Michigan’s annual unemployment rate of 4.1% is slightly higher than the comparable 3.9% national rate.

Michigan is better prepared than most states to weather economic downturns and have emergency funding. The state has the equivalent of 9.9% of its annual budget saved in a rainy day fund, above the 8.3% average across all states.

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25. Hawaii
> 2018 unemployment: 2.4% (the lowest)
> Pension funded ratio: 54.8% (8th lowest)
> 1 yr. GDP growth: 2.4% (23rd lowest)
> Poverty rate: 8.8% (2nd lowest)
> Moody’s credit rating and outlook: Aa1/Stable

Just 8.8% of Hawaiians live below the poverty line, well below the 13.1% of Americans nationwide. The greater likelihood of financial security is likely due in part to the state’s strong job market. Just 2.4% of workers in Hawaii were out of a job in 2018, the lowest unemployment rate among states and well below the 3.9% national rate.

Like many other states that rank lower on this list, Hawaii may be facing a pension crisis. Currently, the state has funding for just 54.8% of its pension obligations. Across all states, the average pension funded ratio is 69.1%.

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