This morning’s release of monthly state employment and unemployment numbers by the Bureau of Labor Statistics was a welcome bit of good news.  Just as the national jobs report showed surprisingly good job growth in November, most states experienced reasonably strong employment growth and nontrivial declines in unemployment over the past 3 months. There are a few states where the falling unemployment rate has coincided with substantial declines in the labor force, but the majority of states are showing consistent signs of an improving labor market.

From August to November, 45 states and the District of Columbia added jobs, with South Carolina (+1.7 percent), Vermont (+1.6 percent), and Delaware (+1.6 percent) making the largest percentage gains. To put those percentages in context, this is the first time all year where any states other than North Dakota have experienced a three-month gain of this size, and the first time that more than one state has had job growth greater than 1.5 percent.  Five states lost jobs since August: Maine (-0.3 percent), Montana (-0.3 percent), Nevada (-0.2 percent), Mississippi (-0.1 percent), and New York (-0.1 percent.)

Over the same period, unemployment fell in 43 states and the District of Columbia, with Kentucky (-1.1 percentage points), North Carolina (-1.0 percentage points), and Colorado (-1.0 percentage points) having the largest declines.  In most cases, these reductions in the unemployment rate are unambiguous improvements, although a handful of states continue to show significant losses to their state’s labor force.  Kentucky and North Carolina, in particular, have had labor force reductions of 3.3 percent and 1.4 percent, respectively, over the past 6 months—raising questions about whether the entire drop in unemployment is due to workers finding jobs or simply giving up the job search.

While these numbers certainly give reason to be optimistic, there should be no illusions that state labor markets are entirely back to pre-recession health. Only five states (Colorado, Michigan, Minnesota, North Dakota, and Ohio) have achieved their pre-recession unemployment rates; 19 states still have unemployment levels above 6 percent, and five states still have unemployment rates above 7 percent. Moreover, workers are still not seeing wage growth at rates that would indicate a tight labor market – one in which employers are raising wages in order to attract new workers and retain the staff they have.  Today’s report suggests better days may be ahead, but we’re not there yet.