Sunday, December 21, 2008
The Bureau of Labor Statistics (BLS) released its November regional and state employment report. Not surprisingly, the news was generally poor: the unemployment rate is rising across the 50 states (including D.C.). The national labor cycle will likely rival the carnage that occurred in the 1980’s, but a different pattern is emerging at the state level: it's possible that some states will weather the labor storm better than they did in the 1980s.
Here are some of Friday’s headlines following the BLS report:
California posts 8.4% jobless rate, third highest in U.S.
State's unemployment rate hits 25-year high (South Carolina)
Tiny State, Huge Pain R.I. Has Lost Jobs 11 Months in a Row
State's unemployment rate took hit in November (Indiana)
State Unemployment Figures Remain Steady (Ohio)
And for a static view of state-level unemployment rates, click here?: Unemployment state by state
In November, Michigan had the highest unemployment rate, 9.6%, while Wyoming had the lowest unemployment rate, 3.2%. But this is just November's data; a more thorough data set would include statistics across states AND time. However, a pretty 51-column table including each state’s unemployment rate since 1976 (the beginning of the series) is hard to come by. It is a cumbersome process to sift through the massive state-level data; but don't worry, I did this (partially) for you all.
According to the BLS (see Table 1 above, which is a sorted version of Table C here), the worst 5 state labor markets – the states with the largest annual increase in the unemployment rate – are:
- Rhode Island
- North Carolina
The chart illustrates the monthly unemployment rates for the worst 5 states + California (number 7) and the national unemployment rate (civilian unemployment rate in chart) spanning the years Jan. 1976 to Nov. 2008. As expected, the unemployment rates for all six states are surging with the national unemployment rate. For every state except for Idaho, the state unemployment rate has risen above the national average, 6.7% in November.
Currently, the worst 5 states (plus California) are experiencing a larger labor contraction compared to November 1982. In November 2008, the national unemployment rate increased 2.0% since November 2007, while the unemployment rate surged 3.2% on average across Rhode Island, North Carolina, Georgia, Idaho, Florida, and California. That is a severe cycle for those 6 states compared to November 1982, when the national unemployment rate grew 2.5% over the year and the state-level unemployment rate averaged a 1.7% increase.
The top 5 most resilient states – the states with the smallest annual increase in the unemployment rates – are:
- South Dakota
This chart illustrates the monthly state unemployment rates for the top 5 resilient states. In the spring of 2008 – roughly March through May – each state’s unemployment rate surged, but has been quite stagnant since. To be sure, except for in Wisconsin (November saw a surge), the unemployment rates are not rising precipitously as is the national unemployment rate.
Currently, the 5 most resilient states are experiencing a lesser labor contraction compared to November 1982. In November 2008, the national unemployment rate rose 2.0% since November 2007, while the unemployment rate grew just 0.6% on average across Utah, Wisconsin, Iowa, South Dakota, and Nebraska. That is a very mild cycle for those 5 states compared to Novmber 1982, when the national unemployment rate grew 2.5% over the year and the state-level average advanced 1.8%.
In the 1980s, state labor markets jointly contracted, while in 2008, the dispersion of contraction is more heavily weighed in key states. I will be keeping a close eye on the state-level trends to gather further evidence on this phenomenon.