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Insight from the States on Economic Recovery

Analysis of New State Employment Data

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The media is focusing on possible “green shoots”—signs that indicate when the current economic recession will end and recovery will begin. They’re looking for glimmers of hope that the housing market is turning around or that the rapid pace of job loss is declining. The bad news is that the labor picture has been, and continues to be, grim. Federal and state governments are beginning to spend the dollars from the American Recovery and Reinvestment Act, but it will still be some time before we are able to see how this important effort is saving and creating jobs.

Today’s news from the Bureau of Labor Statistics reinforces that some states are faring better than others. States such as North Dakota, Nebraska, Wyoming, South Dakota, and Utah are experiencing job losses and rising unemployment, but the situation isn’t nearly as dire as it is in other states around the nation. Manufacturing and construction industries are still shedding jobs rapidly in these states, but these job losses are not resulting in the usual high unemployment rates because these industries are relatively small or because other sectors of the economy are seeing significant gains to limit the overall harm to local labor markets. The employment situation in the handful of states with relatively low unemployment may provide insight on where, when, and how recovery may occur.

The United States and its workers as a whole are still experiencing an exceptionally weak labor market. The country has lost 6 million jobs since the recession began in December 2007. Almost half of those jobs—around 2.9 million—were lost in the beginning of 2009. States around the country are inching closer to record unemployment numbers, and many face fiscal crises, which have led state leaders to cut programs that help low-income households, schools, and children.

Seventeen straight months of declines in payroll employment have left most states today with bleak employment conditions. Michigan continues to have the highest unemployment rate in the nation at 14.1 percent, followed by Oregon (12.4), South Carolina (12.1), Rhode Island (12.1), and California (11.5).

The largest cumulative job losses in May occurred in California, where employers laid off almost 69,000 employees, or nearly half a percent (0.5 percent) of the workforce. The sharpest job losses as a percent of the state’s total workforce occurred in Florida, where employers laid off 0.8 percent of employees over the past month; followed by Arizona, where 0.8 percent of employees lost their jobs; and Oklahoma, where employers shed 0.7 percent of the workforce.

Forty-one states—up from 39 in from April—have now surpassed peak unemployment highs from both the 2001 and 1991 recessions. And 11 states—up from eight last month—have reached rates above peak highs in the 1982 recession. Unemployment rates for North Carolina, South Carolina, and California are still the highest since 1976, when BLS first started collecting this data.

The budget crunches as a result of this recession are further hurting households already strained by job losses. According to the National Governors Association’s June fiscal survey, state revenue collections are down 6.1 percent in fiscal year 2009, and the Center on Budget and Policy Priorities says that at least 21 states have instituted cuts that reduce access to health care or limit health insurance eligibility for low-income families and children. Half of all states have implemented the unemployment insurance modernization reforms needed to take advantage of the increase in benefits from the stimulus package, but more is needed to help struggling households.

States with comparatively low unemployment rates

This recession has been difficult for both states and individual households, but some states have managed to weather the storm better than others. North Dakota, Nebraska, Wyoming, Utah, and South Dakota are all doing comparatively well, and all have unemployment rates lower than 5.5 percent, far below the current national rate of 9.4 percent.

North Dakota is tied with Nebraska for the lowest unemployment rate in the nation, and it has had the smallest unemployment increase since the start of the recession—state unemployment has risen only 1.3 percent points since December 2007. In fact, there has been an increase of 8,900 nonfarm jobs in this same period, with the education and health sector seeing an increase of 1,600 jobs. According to MainStreet.com, North Dakota has the most job opportunities per capita in the nation.

Nebraska had the lowest unemployment rate at the start of the recession, tied with South Dakota at 2.7 percent. The state lost 800 jobs in May, but the unemployment rate declined to 4.4 percent, a .1 percent point decrease from April. Manufacturing, which currently makes up 9.9 percent of nonfarm jobs, shed 400 jobs in May, while health and education services employers added 300 jobs.

Wyoming has lost 1,600 jobs since the start of the recession, or 0.5 percent of its workforce, bringing its unemployment rate to 5.0 percent. Manufacturing accounts for 12.5 percent of total job losses in Wyoming since the start of the recession, but since this sector makes up only 3.4 percent of total nonfarm payrolls, it has not affected overall unemployment as much as in other states. Wyoming is also one of the only states that has not surpassed the peak unemployment of the 1990 recession, which was 5.4 percent for in January 1991.

South Dakota has the third lowest unemployment rate in the nation, but has already surpassed the peak unemployment rates of the past two recessions by more than a percentage point. This month, 400 manufacturing jobs were lost. At the same time, education and health services jobs, which make up a little more than 15 percent of nonfarm jobs, added 200 jobs.

Utah has lost more than 25,000 construction jobs this recession, which accounts for half (50.5 percent) of the jobs lost in the state so far. At the same time, Utah has seen a significant increase in health and education services, with over 6,500 jobs in education and health added to the payrolls in this same period, which has helped to keep Utah’s unemployment rate relatively low at 5.4 percent.

Today’s data show that the overall employment picture across the states remains grim: payrolls continue to decline and unemployment continues to rise. But these declines are not spread evenly across the country; states like Iowa, Nebraska, Wyoming, and the Dakotas are finding relative economic success during these tough economic times, while their neighbors’ job markets crumble. Looking at their economies may show us a sampling of what recovery may look like in the future.

To speak with our experts on this topic, please contact:

Print: Katie Peters (economy, education, poverty, Half in Ten Education Fund, women's issues)
202.741.6285 or kpeters@americanprogress.org

Print: Tom Caiazza (foreign policy, health care, LGBT issues, gun-violence prevention, the National Security Agency)
202.481.7141 or tcaiazza@americanprogress.org

Print: Chelsea Kiene (energy and environment, Legal Progress, higher education)
202.478.5328 or ckiene@americanprogress.org

Spanish-language and ethnic media: Tanya Arditi
202.741.6258 or tarditi@americanprogress.org

TV: Rachel Rosen
202.483.2675 or rrosen@americanprogress.org

Radio: Chelsea Kiene
202.478.5328 or ckiene@americanprogress.org