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States Start to See Growth, Hurdles Remain

Interactive Map and Analysis of State Employment Growth

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New jobs data for states and territories released today from the Bureau of Labor Statistics shows some indications that the labor market is gradually improving. Yet it also shows that improvements have been sporadic and uneven across states, with some faring far better than others. This data confirms the need for a continued focus in Washington on policies to protect state and local jobs and help to ensure that every state fully recovers from the recession’s devastating effects.

More states are seeing employment levels rise and unemployment rates decline compared to a year ago, but there is still a long way to go. Thirty-three states saw a one-month gain in payroll employment in March, and nine saw no change at all. The past three months have seen even larger gains, with 39 states showing employment growth, which indicates that these states may indeed be pulling out of a labor market slump. This is good news considering that there was not a single state with monthly increases in hiring at this time last year.

The sharp contrast in employment gains between now and a year ago is a testament to the success of the administration’s efforts to stabilize the economy and the financial and housing sectors. Economists estimate that the Recovery Act saved or created about 2.5 million jobs over the past year and that at least 1 million will be saved or created in 2010. And national data shows signs that job growth is resuming: The U.S. economy gained 162,000 jobs in March, and 123,000 of these were in the private sector. This is good news because it indicates that companies are gradually starting to hire again.

Some states are faring comparatively well, with consistent gains in payroll employment and unemployment rates stabilizing. The states with the largest percentage employment gains last month were Delaware, with a 0.9 percent increase in payroll employment but an unemployment rate that went up by 0.1 percentage points last month; Arkansas, with a 0.9 percent increase in payroll employment and an unchanged unemployment rate; Virginia, with a 0.7 percent increase in payroll employment but an unemployment rate up by 0.2 percentage points last month; and West Virginia, with a 0.7 percent increase in payroll employment but an increase in unemployment of 0.2 percentage points. Maryland saw the largest increase in the number of jobs, with more than 35,000 payroll jobs added for a 1.4 percent increase.

But many other states continue to see significant job losses. Nevada, for example, has lost 14.0 percent of its jobs since employment started declining in February 2007. March’s numbers don’t change that downward trend—employment declined by another 7,100 jobs, or 4.6 percent. Other states with continued high job losses last month include Michigan, which lost 9,500 payroll jobs in March; Florida, which lost 4,000 payroll jobs; New Jersey, which lost 3,100 jobs; Wisconsin, which lost 2,200 jobs; and New Mexico, which lost 2,200 jobs.

Other states are starting to show improvement, but have a much longer way to go to fill the gap left by the recession. California, for example, has lost 1,360,600 jobs since employment began to decline in July 2007—an 8.9 percent decline. It has started seeing job growth in the past few months, adding more than 4,000 payroll jobs last month, but the state will nevertheless face a difficult challenge in digging out of such a hole.

The sources of job growth in states are varied. Widespread regional trends have yet to develop, but the states that are doing well for extended periods of time rather than on a monthly basis have generally been able to offset widespread losses in other sectors. States that are showing long-term employment expansion, despite occasional losses on a monthly basis, include Alaska, New Hampshire, and South Carolina.

Alaska

Alaska lost 200 jobs last month, but the Alaskan economy has seen the most consistent employment expansion over the longest time overall, with an unemployment rate 1.8 percentage points lower than a year ago. The state lost 1,300 jobs since the start of the recession until its low point in May 2009. But Alaska’s employment has expanded by 8,000 jobs since then. And in January 2010, employment levels reached a new high of 326,500 nonfarm jobs, the highest level since BLS began collecting state-level data in 1990.

Much of this increase can be attributed to a booming manufacturing sector. This sector’s employment has grown by 2,600 jobs during the past three months, a 21.3 percent increase. Gains in this sector account for more than 60 percent of total payroll increases in Alaska.

The other key components of Alaskan employment growth are a growing trade and transportation and information sectors. Trade and transportation has seen a 1.57 percent increase over the past three months, and information services have seen a 1.56 percent increase during that same period.

These gains help offset the significant losses in other sectors, most notably in the leisure and hospitality sector. New Hampshire has seen a boom in this sector, but Alaska has seen the exact opposite. It has seen a decline of 1,200 jobs in the last three months—half of the gains made in manufacturing.

New Hampshire

New Hampshire first began seeing sporadic job growth in July 2009 after losing 3.62 percent of its jobs since peak employment in January 2008. Its unemployment has begun to stabilize, declining 0.1 percentage points last month. Payrolls have increased by 10,400 since last August, and most of this growth occurred in just the last three months.

The major contributor to this job growth is an expansion of the leisure and hospitality industry. This industry includes arts and entertainment, food services, and hotels. Jobs in this sector have grown by 2.51 percent in the past three months, which is more than a 10 percent increase.

Other industries showing strength are trade and transportation, temporary workers, manufacturing, and the construction industry. Three industries increased payrolls in the past three months by 1.20 percent, 1.42 percent, and 1.82 percent, respectively.

South Carolina

South Carolina started seeing job growth in November 2009, fueled by growth in various industries. South Carolina has added more than 12,700 jobs to its payrolls since last October, the low point in the recession. Last month, its unemployment rate declined 0.2 percentage points.

The industry that had the largest employment expansion is professional and business services, which began growing in June 2009. This industry has grown by 8.8 percent since that time, adding 17,200 jobs.

But South Carolina has also seen incremental but consistent growth, spread out fairly evenly across most sectors. Trade and transportation and information services all have seen gradual increases in employment in the last three months. Though none of these sectors grew by more than 1.0 percent in the last three months, there has at least been positive growth since last summer. Manufacturing has also seen a recent rebound, adding 2,100 jobs since it first started expanding in November.

Conclusion

Maintaining a focus on job creation in the private sector and government remains an important goal. Individual states will start to see employment growth, but they will still have to contend with the fact that their employment levels are much lower than they were a couple of years ago. Payroll employment in March 2010 was lower still than it had been in November 1999, which is an indication of just how few gains have been made in the past decade. Even states that are doing well are not doing nearly well enough, since most states across the country lost a significant percentage of jobs over the last two years. The continued weakness of populous states such as California and Michigan indicates that there are serious challenges ahead.

Congress and the administration must continue to focus on paving the way for more widespread and stronger economic growth. Legislation such as the Local Jobs for America Act, introduced by Rep. George Miller (D-CA), would create approximately 1 million jobs by providing $100 billion in funds over two years to protect state and local government jobs and create local government and nonprofit sector jobs. Lawmakers should address the employment situation seriously and look to give states the foundation needed.

Heather Boushey is a Senior Economist and Luke Reidenbach is a Research Assistant at the Center for American Progress

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