Top 5 States with the Highest Unemployment Rate

In this article, you'll explore:

• The top states with the highest unemployment rates and their economic challenges.
• How high unemployment in California, DC, Nevada, Washington, and Illinois reflects broader economic issues.
• The impact of state-specific factors like housing costs, tourism reliance, and manufacturing decline.
• Insights into labor market disparities and their implications for businesses and job seekers.

Nationally, the percentage of working age population dealing with unemployment is 4%. Although it may not sound like much, the current month had the highest unemployment rate recorded in ten months.

And while the labor market is still relatively stable, the rising percentage of unemployed Americans, is a warning to be heeded. Because with cooling inflation prolonging rate cuts from the FED, the economy appears to be entering a more balanced state.

The only condition that threatens to disrupt this delicate ecosystem is if the national unemployment rate suddenly rises. So with the unemployment rate climbing as it is, some are afraid that the country is headed for dangerous territory: stagflation.

But unemployment rates are not totally consistent across the country. Some states are deeper in the trenches, with weaker labor statistics.

And when it comes to corporate interests, the labor force is usually at the top of the list. Both a business' highest consideration and cost and consideration are usually personnel.

And additionally labor statistics reveal a lot of challenges and opportunities that an area brings.

Companies considering potential locations need to first assess local economic conditions. Because while high unemployment suggests certain economic headwinds, it also presents opportunities. For corporations this could mean larger talent pools to recruit from, revitalization projects, and even potential government incentives for job creation.

So, to get an idea of which areas are grappling with the highest unemployment rates and the challenges associated with them, we will turn to the Bureau of Labor Statistics.

In this context, the latest data on unemployment primarily comes from the Current Population Survey (CPS), which is a monthly survey of households conducted by the Bureau of Census for the Bureau of Labor Statistics (BLS).

So let's look at the states with the highest unemployment rates and discuss why the number translates into how business-friendly the area is.

And remember, navigating state unemployment is a symptom of a post-COVID, apocalyptic office market.

Not only do businesses need to stay on top of new considerations for where and how long leases should be, but a financial flux is rippling through the economy, changing the way businesses see work thanks to hybrid capability. Luckily that's why Surviving the Office Apocalypse was written. Download your complimentary copy today to receive the blueprint for corporate tenants and businesses on how to stay afloat in this new working era.

States With the Highest Unemployment Rates

The unemployment rate data refers to the percentage of the working age population without a regular job.

The following high numbers highlight dynamics under the surface that create more unemployed citizens when compared to the national average.

Essentially, a high unemployment rate usually marks an economy that is struggling to provide sufficient job opportunities for its workforce. This can indicate underlying issues such as economic instability, structural industry changes, fiscal challenges, and potential mismatches between the skills of the labor force and the demands of employers.

1. California

The state with the highest unemployment rate is California. 5.3% of its labor force is struggling with unemployment, according to the Bureau of Labor Statistics. This percentage point translates to around 2 million Californians who don't have a job.

And unfortunately for California, it is also the leader of a lot of other negative dynamics. It consistently ranks among the states with the most external migration, highest cost of living, most stringent regulations, highest homelessness, etc.

During the COVID-19 pandemic, California lost population for the first time since gaining statehood in 1850.

And this is no coincidence, because traditionally, a significant driver of state unemployment is population loss.

Ex-Californian residents have largely migrated to other states, with Texas, Oregon, Nevada, South Carolina, and Arizona being popular destinations. Skyrocketing housing costs play a crucial role in this dynamic.

Estimates suggest that a third of Californians are considering leaving the state due to housing costs.

2. District of Columbia

While not an official state, the national capital earns one of the foremost spots on this list due to it's challenged labor statistics. Out of the 671,803 citizens of the District of Columbia, 5.2% are unemployed.

This marks about 35,000 Americans on unemployment. But a look under the surface reveals extreme disparities in DC's labor statistics.

Black workers in DC experience chronically higher levels of unemployment and are much more likely to be underemployed than white workers, and nearly half of unemployed black workers experience it for long periods of time.

"Black unemployment in DC is nearly 7 times higher than white unemployment and geographically concentrated. In 2022, average Black unemployment was 9.6 percent, compared to only 1.4 percent among DC’s white workers, a ratio of nearly 7 to 1, the worst in the nation." Fiscal Policy Institute

3. Nevada

According to the Bureau of Labor Statistics, the percentage of unemployed Nevadans is 5.1%.

A big part of the high unemployment rate is because state employment in Nevada heavily relies on tourism-related jobs. Of course, this industry was significantly affected during the pandemic due to travel restrictions and reduced visitor numbers

The disruption in employment has been pronounced, particularly in the hotel and casino industry. The latest data reflects that a lot of this hurt has been concentrated in Southern Nevada (Clark County).

4. Washington

Ranking fourth out of the states with the highest unemployment rates, is Washington.

The unemployment rate of its working age population is above the national average, at 4.8%, according to the Bureau of Labor Statistics. Citizens living in this West Coast state will likely have a harder time finding a job.

And like the other states on this list, Washington is home to a major blue city, Seattle. Of course, these population-dense hubs are also inflated with living costs and (not so coincidentally) the highest unemployment rates.

5. Illinois

State unemployment is high in Illinois for several reasons. According to data from the Bureau of Labor Statistics, the percentage of workers without a job is 4.8%.

Largely, Illinois' significant manufacturing sector has faced long-term decline in demand due to automation, globalization, and outsourcing. This has resulted in job losses, reduced employment opportunities, and a subsequent rise in unemployment.

Additionally, Illinois has been witnessing a significant population decline for years. With 67% of moves outbound, those leaving have quality of life concerns, including crime, traffic, and weather.

Similarly, Chicago, the state's largest city, has faced broad economic challenges, including financial mismanagement and mass-business relocations. Read more about Why Fortune 500 Copanies are Leaving Illinois

The high unemployment rate is also a big reason why the state consistently earns a spot on the list of the worst states for business. (11 years in a row)

States with the Lowest Unemployment Rates

The list would not be complete if we didn't provide the states with the lowest state level unemployment.

The state with the lowest unemployment rate is actually a tie. Both North Dakota and South Dakota boast an unemployment rate of 2%, which is half the national average.

Third place in lowest state unemployment is Vermont, which was ranked right under them, with a 2.1%.

Data suggests these states have more solid economies, but they are also environments where the demand for skilled workers is certainly tighter.

Takeaways for Corporate Tenants

State unemployment rates reveal crucial dynamics within the working ecosystem, indicating that states with the highest rates may face more significant challenges and prolonged recovery periods.

Consequently, businesses must adapt to new factors when determining lease locations and durations. The economic fluctuations and the rise of hybrid work models are reshaping business strategies. To navigate these changes effectively, Surviving the Office Apocalypse offers a comprehensive guide for corporate tenants and businesses. Download your complimentary copy today to access essential strategies for thriving in this evolving work environment.