The States With the Best and Worst Economies

In a time when much of the country is struggling to put people back to work, Indiana’s job market is a bright spot. Just 3.9% of the labor force in the state are unemployed, well below the 6.0% national jobless rate and only about half a percentage point higher than the unemployment rate in the state this time in 2019, before the pandemic hit.

GDP growth has also been strong in Indiana in recent years. Over the last half decade, the state’s economy grew at an average rate of 1.5% a year — slightly more than the 1.4% national growth and higher than all but 13 other states — even after weathering a 1.1% contraction during the pandemic.

In several key measures, South Carolina’s economy is on better footing than much of the rest of the country. For example, the state’s 5.1% unemployment rate is lower than the 6.0% national jobless rate. Additionally, the state’s economy expanded at an average annual rate of 1.8% over the last five years, faster than all but 10 other states.

Still, in other ways, there is significant room for improvement, such as in the share of South Carolina’s population who face serious financial hardship. The state’s poverty rate of 13.8% is well above the 12.3% share of Americans nationwide who live below the poverty line.

The COVID-19 pandemic took a heavy toll on Maine’s job market. Due largely to job cuts in the past year, overall employment has fallen at an average annual rate of 0.7% over the last half decade. Over the same period, employment climbed by 0.1% annually nationwide. Still, because Maine’s job market started from such a strong position, the state’s 4.8% unemployment rate is considerably lower than the 6.0% national rate.

Even in the face of job losses, Maine reported modest GDP growth over the last five years. The state’s relatively strong economic conditions contributed to residents being less likely than the average American to face serious financial hardship. Only 10.9% of Maine residents live below the poverty line compared to 12.3% of all Americans.

Alamaba suffered a greater than average public health toll during the COVID-19 pandemic, with a high concentration of infections per capita. Still, its job market has emerged in better shape than most of the country, with unemployment standing at 3.8%, well below the national jobless rate of 6.0%. The state’s low unemployment is partially attributable to rapid job creation. Employment climbed at an average annual rate of 1.3% over the last half decade, compared to the national average annual growth of 0.1%.

Despite strong job growth and low unemployment, many in Alabama are struggling financially. Alabama’s poverty rate of 15.5% is among the highest of any state and well above the 12.3% U.S. poverty rate.

Tennessee reported some of the strongest job growth of any state in recent years. Overall employment in the state climbed at an average annual rate of 1.2% over the last half decade, while nationwide, employment grew at just a 0.1% pace, due largely to the COVID-19 pandemic. Today, 5.0% of the state’s labor force are out of work, below the 6.0% national unemployment rate.

Economic growth in Tennessee over the last five years falls in the middle of all states and is not especially strong or weak. A more rapid economic growth that all state residents benefit from would likely help reduce the share of residents living below the poverty line, which, at 13.9%, is among the 10 highest state poverty rates.