The Best and Worst States to Find a JobReviewAdvice

The Best and Worst States to Find a Job

Is your state a good place to work? This study explores the data to determine which states have strong economies for job seekers.

Since the recession ended, unemployment rates have slowly and steadily started to go down but still, there are people struggling to find work. Finding a job or developing a career has a lot to do with your environment. In the same way, that the country's economy ebbs and flows, a state's economic standing can fluctuate. Costs of living, unemployment rates and average salaries are all important to pay attention to even at state and even municipal levels. U.S. unemployment rates have been on a steady decline over the past few years and some states have seen more new jobs than others.

If you are looking for a new job, a place to start a business or a brand new location to start a career, it may be helpful to look at the states with the highest job growth. It's also important to look at what influences the growth of jobs and what factors can help or hurt your state's employment rates.

Key Findings

If you are looking for a job, there are a number of factors that you can take into account to bolster your chances to find gainful employment. This article looks at a number of factors that contribute to a state's job availability and quality. We looked at the states with the lowest and highest unemployment rates, average salaries by state and the cost of living in each state. Here are some significant findings.

  • There are a variety of factors that affect unemployment.
  • The population of a state correlates with unemployment rates in some cases but not all.
  • The cost of living and salary averages generally rise and fall together but some states had better than average ratios while others had worse.

Employment by State

The average unemployment rate for each state in the U.S. is around 4.8%. This rate has some caveats, however. Unemployment rates do not reflect the total number of jobless people in each state. Rather, this refers to people who are out of work and seeking employment. If you are unwilling or unable to actively seek employment, you are not considered in this rate. Also, an employed person, by this definition, does not necessarily earn an income. If you help a family member with their business but you do not earn an income, you are considered employed on tax forms even if you don't receive any money.

If you look at the graph below, you can see the top five states with the highest number of people that are unemployed and how they compare to the U.S. average.

Top 10 States with the Highest Unemployment Rates

Conversely, the states with the lowest rates have unemployment numbers that are well under the national average.

Top 10 States with the Lowest Unemployment Rates

What Contributes to Unemployment Rates?

Unemployment rates are collected as a way to gauge the country's overall economic health. When enough workers are unemployed it can lead to a chain reaction that leads to more job loss. Because unemployment means less buying power, fewer goods are produced which causes more retailers to lose jobs. This is why, when one industry fails, it affects the whole economy.

The Bureau of Labor statistics, a branch of the U.S. department of labor, collect statistics of the total number of unemployed people by surveying a sample group every month. They also break that information into categories

It makes sense that you'd expect a state with a high population to have a higher unemployment rate right? The more people that are in an area, the more competition there is to find jobs. While there is some correlation between joblessness and population, it may only be one of many variables that contribute to unemployment.

If you look at each state's (plus the District of Columbia) unemployment versus the national average and compared that to population their population, 32 of the 51 followed a pattern you might expect. That means, states with higher than average populations had higher than average unemployment rates and states with lower populations had lower rates. However, 19 states didn't follow suit. For instance, Alaska, with only 738,432 residence has a much lower than average population, yet it has an unemployment rate of 6.7%, which is above the national average. Conversely, states like Pennsylvania had a higher than average population and a lower than average unemployment rate.

This could mean that while the population is a variable in a state's unemployment rates, it's only a small factor in the overall health of its economy.

State Unemployment and Population

There are a number of economic factors that have big impacts on the overall health of a state's economy which can affect your ability to find a job in that state. Here are some factors that can change the unemployment rates in a state:

  • New legislation that requires new regulations or taxes a big industry. Sometimes even positive industry reforms can translate to fewer jobs in that industry. When the government causes a company to pay more, they will make up for that by letting go of employees or closing down branches and locations.
  • Consumer taste can sometimes be unpredictable. If a major industry in a given state starts to lose its consumer base, there may be fewer jobs overall.
  • Technological advances can put workers out of a job. If the advance is groundbreaking enough to affect a whole industry, it can affect unemployment rates.
  • Joblessness begets joblessness. As previously mentioned, when one industry starts to lose employees it can affect other industries as well. If the above factors cause enough people to lose their jobs, there are fewer consumers in your state, which can affect retail and manufacturing jobs as well.

Average Income vs. Cost of Living

Whether or not you can find a job isn't the only consideration when thinking about which state is the best for your job search. It's also important to consider which states offer the best job opportunities and how those careers will allow you to grow within the context of that State. In which states are you most likely to get paid more? Which states have high costs of living?

Highest Average Income

Wealth in the U.S varies widely from state to state and city to city. The economic health of the state has a significant impact on the salaries that its citizens are paid. Although incomes are largely varied based on industry averages, the area you live plays a role. For one thing, the country, your state and possibly even your city, have their own minimum wage laws. Though many states follow the federal standard of $7.25 per hour, some states have minimums in the $8, $9, and even $10 range. Washington D.C. tops the list with $11.50. D.C. also makes the top five states with the highest average income. It's also important to note that high average incomes may be more an indication that the state attracts high incomes than it means the state has a healthy economy. For instance, Hawaii is number three on the list of highest incomes but it also has the highest cost of living.

In fact, each state that top 5 states with the highest average incomes have higher than average costs of living.

How Cost of Living Factors in

Cost of living refers to a number of expenses that contribute to the overall cost to live in an area. When calculating a cost of living index (or COLI), you would look at costs like food, housing, transportation, utilities, clothes, education healthcare, child care and even entertainment. A state's COLI is important to consider; even there are jobs available at a decent wage, the cost of living may make it difficult to pay the bills. For instance, Hawaii has lower than average unemployment rates, meaning there are fewer Hawaiians out of work and looking for jobs than the national average. However, they have the highest COLI in the country. Here's how each state's cost of living compares to the 100 average:

Cost of Living Index by State (2015)

Generally, by looking at each state's average salaries next to each state's average cost of living, it appears that COLI and the state's average salary go hand in hand. Similar to inflation, the more people make, the more things cost (or visa versa). However, there are a few states that have lower than average COLIs and higher than average salaries. This means, in states like Illinois, Iowa, Missouri, Texas and others, you are more likely to be paid a salary that more than meets your cost of living requirements.

However, there are a few states that have negative COLI to income ratios. For instance, Florida has a lower than average salary at $46,140 and a slightly higher than average COLI at 100.5. This could mean that some people find it generally expensive to live in Florida on their salaries. This means, not only are people generally paid less, it also costs generally more to pay for living costs.

States with above average incomes and below average costs of living, meaning that people who make close to the average income will be able to enjoy living costs that are affordable relative to the country as a whole.

Keep in mind, however, that averages don't necessarily mean everyone one is rich or poor in these states. If a state has a decent number of very wealthy people and a majority of lower middle incomes, the average may reflect a higher income.

As you can see 35 of the 50 states (plus D.C.) were not included in either list as they follow typical patterns. The average income is higher where it costs more to live and less in states with below-average living costs.

Who is the Best and Worst Overall?

To decide which states have the best environments for jobs and careers, we looked at how they measured up in each category combined. The ideal environment for working and looking for work is one where you are paid more, living in the state is cheap and jobs are available. By looking at average income, cost of living and unemployment rates, we can see a general picture of the economic health of the state. Here are the top ten states to find a job:

Top 10 Best States to Find a Job

RankStateAverage IncomeCOLIUnemployment
Rank:1State:UtahAverage Income:$63,383COLI:92.4Unemployment:3.4%
Rank:2State:NebraskaAverage Income:$56,870COLI:92.3Unemployment:3%
Rank:3State:North DakotaAverage Income:$60,730COLI:101.2Unemployment:2.8%
Rank:4State:IowaAverage Income:$57,810COLI:92Unemployment:3.5%
Rank:5State:New HampshireAverage Income:$73,397COLI:118.2Unemployment:2.9%
Rank:6State:VirginiaAverage Income:$66,155COLI:94.5Unemployment:4.1%
Rank:7State:IdahoAverage Income:$53,438COLI:88.2Unemployment:3.9%
Rank:8State:MinnesotaAverage Income:$67,244COLI:101.5Unemployment:3.7%
Rank:9State:ColoradoAverage Income:$60,940COLI:101.9Unemployment:3.2%
Rank:10State:KansasAverage Income:$53,444COLI:90.9Unemployment:4%

Being above average in every category, Utah earned the top spot with a rank of 15 in cost of living, 7 in unemployment and 10 in average income. In the same way, we combined the three categories to determine the ten lowest scoring states. West Virginia earned the lowest rank with below average numbers in every category.

10 Worst States to Find a Job

RankStatesAverage IncomeCOLIUnemployment
Rank:51States:West VirginiaAverage Income:$39,552COLI:103.7Unemployment:6.3%
Rank:50States:New MexicoAverage Income:$46,686COLI:101.1Unemployment:6.5%
Rank:49States:NevadaAverage Income:$49,875COLI:106.5Unemployment:6.2%
Rank:48States:LouisianaAverage Income:$42,406COLI:93.4Unemployment:5.9%
Rank:47States:New YorkAverage Income:$54,310COLI:135.6Unemployment:4.9%
Rank:46States:South CarolinaAverage Income:$44,929COLI:97.5Unemployment:5.5%
Rank:45States:MississippiAverage Income:$35,521COLI:83.5Unemployment:6.7%
Rank:44States:AlaskaAverage Income:$67,629COLI:133.5Unemployment:6.6%
Rank:43States:District of ColumbiaAverage Income:$68,277COLI:146.8Unemployment:6.5%
Rank:42States:CaliforniaAverage Income:$60,487COLI:134.3Unemployment:5.7%

Methodology

To do this, we ranked each state in all three categories and added their ranks together. For instance, Mississippi was ranked the number one state in cost of living but it was ranked 51 in both average income and unemployment, giving it a combined score of 103. With a score of 103, Mississippi was ranked number 45 out of the 51 states (and D.C.).

If there were two states with the same score, unemployment was the tie breaker because, to enjoy the income and cost of living averages of the state, it is assumed that you would be able to find an available job in that state.

Sources:

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