- By Alexander E.M. Hess, Michael Sauter and Samuel WeigleyAugust 9, 2013
- By Alexander E.M. Hess, Michael Sauter and Samuel Weigley
This article is adapted from “The Best States to Be Unemployed,” which was originally published on the 24/7 Wall St. website.
Unemployment rates have fallen nationwide, but there are still nearly 12 million active job seekers who cannot find work. While unemployment is rarely a favorable situation, in certain parts of the country the unemployed can expect to find a job more easily because of a favorable job market – or at least receive good government benefits. In other areas, job growth is slow, competition is high and benefits are relatively poor.
Based on unemployment insurance data and employment statistics, the website 24/7 Wall St. identified the states where residents had the best chances of finding work and receiving the best benefits while looking for a job.
How the States Were Selected
One of the biggest indicators of how difficult it is to find work is the unemployment rate. A low jobless rate in a given state usually means the area’s economy is doing relatively well, competition is limited and workers have the skills necessary to qualify for available jobs. In all the best states to be unemployed, the unemployment rate was well below the national rate of 7.6 percent for June. In North Dakota, one of the best states to be unemployed, just 3.1 percent of the workforce did not have a job.
By contrast, in the worst states to be unemployed, job growth is relatively slow and new opportunities to work are taking longer to materialize.
In most of these states, the number of nonfarm jobs grew slower than the 1.3 percent national rate between June 2012 and June 2013. In three of these states – Kentucky, Ohio and Illinois – the total number of jobs grew by less than 1 percent.
Not surprisingly, it is far better to be unemployed in a state with healthy job growth. According to Rebecca Dixon, policy analyst at the National Employment Law Project, “in some of these states, people go back to work really quickly.”
However, even if employers are hiring and local economies are doing well, workers may still need time to find a job. This may mean relying on unemployment insurance benefits while they are looking. Nationally, unemployment benefits covered an average of 33 percent of the typical weekly wage in the area. In six of the best states to be unemployed, this figure, known as the “replacement rate,” was more than 40 percent of average wages, with Hawaii covering a nation-leading 53 percent.
Dixon pointed out that a high replacement rate is not enough on its own to make benefits available to the unemployed; the “recipiency rate” (the proportion of unemployed people receiving unemployment benefits) is also important. “A state can have a great program, but if they make it really, really hard for people to qualify for benefits, then it’s just a great program sitting there that no one can use,” Dixon said.
Just 45 percent of all unemployed workers received benefits over the 12 months through the first quarter of 2013. In five of the better states to be unemployed, a higher percentage of jobless residents received these benefits. In some of the worst states to be unemployed in, these rates were even lower. In Louisiana and Tennessee, the two worst states to be unemployed in, just 30 percent of unemployed workers received benefits.
Sources of the Data
To determine the best states to be unemployed, 24/7 Wall St. reviewed figures published by the U.S. Department of Labor’s Office of Unemployment Insurance (OUI) and the Bureau of Labor Statistics (BLS). The recipiency rate and recovery rate from the OUI are for the 12 months through the end of the first quarter of 2013. Unemployment rates from the BLS are for June 2013, with job growth numbers reflecting changes in the nonfarm payrolls measure from the year before. The final rank reflects a composite score of these four measures weighted equally.
Data on changes in Emergency Unemployment Compensation benefits comes from the National Employment Law Project. (Dixon noted that since the data were put together, North Carolina has altered its unemployment insurance program to cut weekly benefits, which is not reflected in our data.)
These are the five best states in which to be unemployed:
Percent of unemployed getting benefits: 55 percent (8th highest)
Percent of average weekly wage covered: 40.3 percent (9th highest)
Unemployment rate: 5.4 percent (12th lowest)
1-year job growth: 2.0 percent (tied for 7th highest)
Being unemployed in Montana does not look the same as it does in most of the country. On average, unemployment benefits covered more than 40 percent of the state’s average weekly wages in the 12 months ending with the first quarter of 2013, the ninth highest of all states.
In addition to an unemployment rate among the lowest in the country, nonfarm employment in Montana grew by 2 percent, higher than all but a handful of states.
Employment growth was most noticeable in the information field and in professional and business services, where the number of jobs grew by 7.4 percent and 7.1 percent, respectively. Montana was also in the top 10 for employment growth in the previous 12 months.
Percent of unemployed getting benefits: 51 percent (10th highest)
Percent of average weekly wage covered: 53.0 percent (the highest)
Unemployment rate: 4.6 percent (5th lowest)
1-year job growth: 1.3 percent (tied for 24th highest)
The average unemployment benefit in Hawaii was more than $422 per week, or 53 percent of average weekly wages; both are the highest in the country. Of those who were unemployed, 51 percent received benefits, a higher rate than all but nine other states.
Hawaii had only a 4.6 percent unemployment rate as of June 2013, lower than all but four other states.
There were 6.1 percent more tourists in the state in the first four months of 2013, compared to the same time in 2012. According to the Hawaii Tourism Authority, this translated into 3,000 more local jobs.
3. North Dakota
Percent of unemployed getting benefits: 36 percent (14th lowest)
Percent of average weekly wage covered: 43.9 percent (2nd highest)
Unemployment rate: 3.1 percent (the lowest)
1-year.job growth: 2.6 percent (4th highest)
The average weekly benefit for unemployed workers in North Dakota was more than $376 as of the first quarter of 2013, higher than all but five other states. However, just 800 people received unemployment insurance, the second fewest of all states.
North Dakota and its residents are benefiting from an oil boom, which is bringing many jobs to the area. The number of nonfarm workers grew 2.6 percent between June 2012 and June 2013, higher than all but four other states. This comes on top of 9.8 percent growth in the previous 12 months, the biggest growth of all states that year by far. The unemployment rate as of June 2013 was a mere 3.1 percent, lower than any other state.
Percent of unemployed getting benefits: 45 percent (tied for 19th highest)
Percent of average weekly wage covered: 43.2 percent (4th highest)
Unemployment rate: 4.6 percent (5th lowest)
1-year job growth: 1.6 percent (21st highest)
Iowa had one of the nation’s lowest unemployment rates; at just 4.6 percent, it is three percentage points lower than the national rate of 7.6 percent.
The unemployment insurance benefit was equal to 43.2 percent of the average weekly wage – tied for fourth highest in the nation. But according to The Des Moines Register, job growth in Iowa is expected to fall short of goals set by Gov. Terry Branstad, who aimed to add 200,000 jobs over five years ending in 2016.
Percent of unemployed getting benefits: 47 percent (tied for 14th highest)
Percent of average weekly wage covered: 39.3 percent (13th highest)
Unemployment rate: 5.2 percent (9th lowest)
1-year job growth: 1.7 percent (14th highest)
Job growth in Minnesota was in line with the rest of the nation. Similarly, the percentage of unemployed residents receiving benefits was only slightly above the national benchmarks. But the state’s low unemployment rate of 5.2 percent helped make Minnesota a top 5 state for unemployed workers seeking a job.
Also, Minnesota’s ability to support its unemployed residents is likely to be less affected by the sequester than other states. (As a result of the sequester, which went into effect in early 2013 to help cut the U.S. budget deficit, a federal program intended to lengthen the amount of time jobless residents can receive unemployment benefits will be substantially reduced.) While the average national cut in unemployment benefits is expected to drop by $43 per person, it is only expected to drop by $37 a person in Minnesota.
For the sixth through 10th best states to be unemployed, read the 24/7 Wall St. article “The Best States to Be Unemployed.”
Alexander E.M. Hess, Michael Sauter and Samuel Weigley are writers for 24/7 Wall St.
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