Unemployment Up in 31 States Despite ‘Recovery’


NEW YORK (MainStreet) — Unemployment rates increased in the majority of states throughout 2010, according to new data from the Bureau of Labor Statistics, in a further sign that the economic recovery has yet to reach the job market.

In the country’s first full year out of the recession, 31 states saw their average annual unemployment rate increase compared to 2009, while just 18 experienced year-over-year improvements and one state remained unchanged. On the whole, the unemployment rate for the U.S. was 9.6%, up from 9.3% the year before.

“The unemployment rate is certainly still high, but it often keeps going up after a recession ends,” said Ken LeVasseur, senior economist at the Bureau of Labor Statistics. “We saw big year-over-year increases in unemployment in 2008 and in 2009. By comparison, the increase this year was relatively modest.”

Several of the states that experienced the biggest annual increases in unemployment were the same ones that had already been particularly battered during the recession years. Florida and California, which both had double digit unemployment throughout 2009, saw their unemployment rates continue to rise by more than 1 percentage point in 2010, and Nevada saw its unemployment go up by more than 2 percentage points, averaging 14.9% on the year.

As LaVasseur notes, these three states also helped to drive down their surrounding regions, as the Mountain and Pacific regions experienced the steepest increases in unemployment for the year, with the South Atlantic region around Florida not far behind. Indeed, this coincides with previous reports speculating that the Sun Belt regions – the South and Southwest – would experience more long lasting hardships from the economic downturn, as these areas were particularly vulnerable to the housing market.

For some states though, the numbers in this report may be a bit deceptive.

“The downside of looking at unemployment rates over the course of the full calendar year is that it masks some of the improvements we’ve seen. When you look at the full year, the rates are higher, but a number of states are showing improvement in the monthly data,” LeVasseur said.

By the end of the year, for example, the unemployment rate in Nevada tapered off around 14.5%, about half a percentage point below their annual average. Many other states may have experienced a similar improvement in their job markets as 2010 came to a close, but their overall annual averages were still weighed down by a tough first half of the year.

The states whose job markets fared the best last year were mainly in the New England area and in the Midwest. Vermont’s unemployment rate dropped by .7 percentage points while Michigan and Minnesota both had a .8 percentage point decrease, tying for the most of any state. The change in Michigan’s unemployment rate is particularly notable as this was one of the hardest hit states during the recession due to the collapse of the auto industry, but both the state and the industry have begun to rebound in recent months.

The job market in the Midwest, on the whole, was largely insulated from the worst of the recession, in part because this region was the least invested in the housing boom, and therefore less susceptible to the collapse of the housing industry. Likewise, LeVasseur explains that the housing market in New England was also not quite as volatile as elsewhere in the country.

“Unlike the Sun Belt areas, the housing market in New England was already fully built up [before the recession], so when the bubble burst, it didn’t have much of an impact,” he said. “Also, it’s an area that lost some of its manufacturing base in earlier recessions, so the region didn’t have that much in the way of durable goods manufacturing to lose.”

As for the rest of the country, LeVasseur suggests there is good reason to be cautiously optimistic going forward.

“The labor market as it stands today is a little bit better than the 2010 annual average,” he said. “If all of the states stay where they are right now for the rest of this year, the annual unemployment will go down for 2011.”

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