Economic Indicators | Jobs and Unemployment

Many States Experience a Summer Slump in Job Growth

The state and local employment and unemployment data released this morning by the Bureau of Labor Statistics show modest employment growth for most states in August, although there has been slower growth in many states over the last three months than we’ve seen for most of the year. Unemployment rates ticked up in more states over the past three months than they went down in, and the labor force shrank in all but twelve states.

Over the period from May 2014 to August 2014, 43 states added jobs, with Arizona (+1.1 percent), Montana (+1.1 percent), and North Dakota (+1.1 percent) seeing the largest percentage gains. Over that same time, 19 states lost jobs: Alaska (-1.7 percent), West Virginia (-1.4 percent), and New Hampshire (-1.0 percent) had the largest percentage losses. In 20 states, the 3-month rolling rate of job growth was slower in August than its average for the preceding seven months of the year.

From May to August, the unemployment rate rose in 27 states and the District of Columbia, with states in the Southeast showing the greatest weakness. South Carolina (+1.1 percentage points), Tennessee (+1.0 percentage points), Georgia (+0.9 percentage points), and Louisiana (+0.9 percentage points) had the largest unemployment rate increases. Unemployment fell in 19 states, with Illinois (-0.8 percentage points), Colorado (-0.7 percentage points), and Kentucky (-0.6 percentage points) seeing the largest declines. Four states had no appreciable change in their unemployment rates: Florida, Nebraska, New Hampshire, and Utah.

Unfortunately, much of the decline in unemployment rates was not for the right reasons. The labor force shrank in 17 of the 19 states where unemployment went down—meaning that at least some of the decrease in the unemployment rate was due to people giving up looking for work rather than finding jobs. Only Hawaii and New Jersey showed declines in unemployment, growth in jobs, and growth in the labor force.

Today’s state job numbers reiterate that we are still a long way away from true labor market health and that the Fed should keep its foot off the brake until low unemployment starts translating into real wage growth. State policymakers also need to keep full employment as their number one goal, and not sabotage themselves with foolhardy cuts to vital safety net and job-boosting programs.

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