In this article, we will be taking a look at the 15 States with the Largest Declines in Unemployment in 2022. To skip our detailed analysis, you can go directly to see the 5 States with the Largest Declines in Unemployment in 2022.
Since there was a worldwide state of instability in the year 2022, chances of a global recession in the year 2023 kept increasing. Inflation and impending recession have led to higher rates of unemployment in some parts of the world. Since February 2022, the invasion of Ukraine by Russia, there have been large impacts on the economic and business conditions of the world.
“Russia’s invasion of Ukraine has triggered one of the biggest human displacement crises and exacted a heavy toll on human and economic life,” stated Anna Bjerde, World Bank Vice President for the Europe and Central Asia region. The destruction caused by wars doesn’t only include human beings, but also physical capital. International trade and capital flows get diverted and it also weighs heavily on hiring, investments in firms, and financial conditions. A lot of companies in the United States of America depend on Russia and Ukraine for materials like platinum, palladium and pig iron. Even though these might feel like niche commodities, there is still a snowball effect because of this. According to an Economic Outlook report published by Deloitte in 2022, the growth of the global economy will slow down as a result of the Ukraine-Russia war. It reported, “Global Stagflation, a period of both weak growth and elevated inflation, could cause damages to the global economy and, especially, to emerging market and developing economies.” Every war has dire consequences, and the impacts caused by the Ukraine-Russia war are still being felt a year later.
Photo by Campaign Creators on Unsplash
However, despite all these circumstances, some states in America have managed to decrease their rates of unemployment and that’s quite remarkable in the economic conditions we are currently living in. Compared to December 2021, 36 states actually showed a decline in unemployment. The Bureau of Economic Analysis reported that the U.S. economy had an annual growth rate of 2.9% in the last quarter of 2022, and the nationwide unemployment percentage was 3.5%. Based on the reports by the National Association for Business Economics, the January 2023 survey shows higher possibilities of a global recession in 2023. Even though there have been multiple rounds of layoffs in the biggest tech companies in the world, the unemployment rate has still been considerably low.
Microsoft (NASDAQ:MSFT) laid off approximately 10,000 people in the year 2022, but announced at the same an investment of $10 billion in Open AI, which is responsible for ChatGPT, one of the most popular applications in 2022. Google (NASDAQ:GOOG), Facebook’s parent company, Meta (NASDAQ:META), Amazon (NASDAQ:AMZN) and Twitter have also been responsible for laying off tens of thousands of employees. Big Tech’s layoffs are considered to be historic due to the massive numbers. Despite all of these cutbacks, there is still a decline in unemployment.
Unemployed include all the people who do not have a job but are actively searching for one, and hence low unemployment rates make for a healthier economy. However, one reason for this could be a decline in the participation rate of labor in America. The labor participation rate is calculated as the percentage of civilians who are actively either working or in search of a job, and only those who are 16 or above are considered to be part of the labor pool. This is why it is also not considered the best of news, as companies then have to fight to find the best labor if the labor pool is very restricted, and this leads to higher costs faced by companies.
Even though most of the states listed are on the list due to the number of job opportunities they have created, thus creating an overall decline in unemployment, a lot of them are also on the list due to the decrease in the labor participation rate. With a large number of people either moving from the state, and also an increase in the ages of the working people, they are no longer part of the labor pool. Therefore, it is also said that an unemployment rate of 4-5% is considered healthy for an economy because that means that there is a large pool of people actively searching for work at all times. According to economists in the United States of America, the rise of this percentage is necessary to help bring down the inflation rate. Even though there is a decline in unemployment, the Bureau of Labor Statistics reported that employment growth will slow down, and that would in turn affect the U.S. economy. They also mentioned that it is going to be the service industries that will provide the most employment in the next decade. Also, an aging population would result in creating demand in places like healthcare and social services, and thus create opportunities in that sector as well. The IMF (International Monetary Fund) gave an analysis in 2023 where they stated that keeping interest rates high would temporarily increase unemployment but that would lead to softening the high inflation rates. This would result in the economy growing at a stable and healthy rate.
Methodology
To find out the 15 states with the largest declines in unemployment in 2022, we have used the official statistics published by the Bureau of Labor Statistics. We used the unemployment rates in December 2021, and the rates in December 2022, and calculated the percentage change in the decline in unemployment. We ranked the highest percentage change as the number one state in this list. We rounded off the ratio to two figures which is why some states may seem to have the same ratio but the actual rankings have been determined without rounding. Hence, we now take a look at the 15 States with the Largest Declines in Unemployment in 2022.
15. South Dakota
Rate of unemployment in Dec 2021: 2.9%
Rate of unemployment in Dec 2022: 2.3%
South Dakota has experienced an increase of 15,200 workers in the total nonfarm wage and salaried level over this one-year period. The current 2.3% rate of unemployment is a record low for the state.
14. Colorado
Rate of unemployment in Dec 2021: 4.2%
Rate of unemployment in Dec 2022: 3.3%
Colorado’s unemployment has been on a decline since the pandemic. According to a report by CDLE Principal Economist Ryan Gedney, there was an increase of employment-to-population growth to 66.9% which is one of the highest in the United States of America. It’s currently one of the strongest growing economies in the country.
13. Alaska
Rate of unemployment in Dec 2021: 5.5%
Rate of unemployment in Dec 2022: 4.3%
Even though Alaska has seen a decline in unemployment, the labor force, especially between the ages of 15 and 64, is also shrinking and thus impacting the economic conditions of the state.
12. Rhode Island
Rate of unemployment in Dec 2021: 4.5%
Rate of unemployment in Dec 2022: 3.5%
In this year, approximately 9,500 jobs have been created in Rhode Island, which are in construction, professional and technical services in addition to health care and social assistance.
10. Hawaii
Rate of unemployment in Dec 2021: 4.3%
Rate of unemployment in Dec 2022: 3.2%
With a 1.1 percentage points decrease in unemployment rate, Hawaii reported job gains majorly in construction and professional and business services. The island’s tourist sector is growing with people visiting from all over the world and also domestically. This will help Hawaii grow economically in 2023 as well.
9. North Dakota
Rate of unemployment in Dec 2021: 3.1%
Rate of unemployment in Dec 2022: 2.3%
Even though there is a decrease in unemployment, North Dakota is also undergoing a reduction in its labor force. The state has trouble attracting people to work there since the pandemic hit. However it is great for the people looking for jobs in North Dakota, because there is a great demand for the labor force.
8. Maryland
Rate of unemployment in Dec 2021: 5.4%
Rate of unemployment in Dec 2022: 4%
Number 8 on the list of states with the largest declines in unemployment in 2022, Maryland managed to get through and decrease the rate of unemployment through a rise in jobs in the hospitality sector, as well as the mining, logging and construction sector.
7. Missouri
Rate of unemployment in Dec 2021: 3.9%
Rate of unemployment in Dec 2022: 2.8%
With increasing employment, Missouri had a 1.3 percentage points difference in the rate of unemployment between December 2021 and 2022. Around 2,933,300 people had jobs in Missouri in the month of December 2022.
6. Massachusetts
Rate of unemployment in Dec 2021: 4.6%
Rate of unemployment in Dec 2022: 3.3%
With a difference of 1.3 percentage points, Massachusetts earns its place in the list of states with the largest declines in unemployment in 2022. A major reason for this decline is the fact that more than 56m000 people have left the labor market, which means that they are now not part of the official unemployment rate. Even though the state has created a lot of job opportunities and managed to decline the number of unemployment claims as well, the large decrease in the rate isn’t only because of these reasons.
Click to continue reading and see the 5 states with the largest declines in unemployment in 2022.
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Disclosure: None. 15 States with the Largest Declines in Unemployment in 2022 is originally published at Insider Monkey.
