The States With the Best and Worst Economies

New York state is up against one of the worst unemployment crises in the country. An estimated 8.5% of the state’s labor force are out of work, the second largest share of any state and well above the 6.0% U.S. unemployment rate. Much of the state’s current unemployment problems are the result of the pandemic as just a year ago, New York’s jobless rate was just 3.9%. Since then, the number of people working in the state has fallen by nearly 400,000.

Even before the pandemic, New York’s economy lagged behind that of most other states in its ability to lift people out of poverty. New York’s 13.0% poverty rate is higher than the 12.3% national rate.

Arkansas is one of the poorest states in the country. An estimated 16.2% of state residents live on poverty level income, the fifth largest share among states and well above the 12.3% U.S. poverty rate.

Stronger GDP growth, broadly shared across all income levels, would likely go a long way to reducing financial hardship in the state. Over the last five years, Arkansas’ economy has expanded at an average pace of only 0.6% annually, well below the comparable 1.4% national growth rate. Since 2015, the state’s resource extraction, agriculture, and hospitality industries have been significant drags on economic growth.

Alaska is one several states with a dependence on resource extraction that proved to be a liability during the COVID-19 pandemic. Due in part to falling oil prices and reduced demand during the pandemic, economic output in Alaska’s mining, quarrying, and oil and gas extraction industry fell by over 15% between the fourth quarter of 2015 and the fourth quarter of 2020. Partially as a result, the state’s GDP contracted at an average rate of 0.8% a year over the same period.

Alaska also shed nearly 9,000 jobs in the last year, and partially as a result, unemployment in the state stands at 6.6%, above the 6.0% national unemployment rate.

Connecticut is shedding jobs faster than every other state. There are over a quarter of a million fewer people working in the state now than there were at the same time last year, and over the last half decade, the number of people working in the state has declined by a nation-leading 11.5%. Falling employment in the state is attributable not only to the COVID-19 pandemic, but also to longer-term population decline. Nearly 73,000 more people left Connecticut than moved to the state between 2010 and 2020.

Population decline, as well as the pandemic, are also contributing factors to the state’s sluggish economic growth. Over the last half decade, Connecticut’s GDP grew at an average annual rate of just 0.1%. Meanwhile, the U.S. economy grew at a 1.4% annual rate over the same period.

Kentucky’s economy has lagged behind that of most U.S. states in its ability to lift people out of poverty. The poverty rate in Kentucky stands at 16.3%, higher than in all but three other states and 4 percentage points higher than the national rate.

Job growth has been weak in the state in recent years as well. In the last year alone, Kentucky shed over 97,000 jobs. Still, Kentucky’s unemployment rate rate of 5.0% is below the 6.0% national jobless rate.