12 States Hit Their Lowest Unemployment Rates of All Time

Yesterday’s State Employment and Unemployment report provides much-needed detail to supplement the monthly jobs report and underscores what an unusual economic recovery this has been so far.

12 states have now recovered all of the jobs lost at the start of the pandemic. And 22 states are back to their pre-pandemic unemployment rates, with twelve at their lowest rates of all time. And yet labor force participation has been slow to recover in the vast majority of states, with only 4 states back at pre-pandemic participation rates.

1. Utah leads the economic recovery with a working population that is 4% larger than before the pandemic, while Hawaii’s lags behind, 7.3% smaller, due to slow recovery in leisure and hospitality industry

Employment is up at least 2% compared to pre-pandemic levels in Utah (4.0%), Arizona (2.8%), Idaho (2.4%), Oregon (2.3%), and South Dakota (2.0%), but still down nearly 7% in Hawaii, Connecticut, and Vermont. 

South Dakota was the first state to recover the jobs lost early in the pandemic as early as December 2020. The state’s employed population has since grown and is now almost 9,000 larger than in February 2020.

2. States continue to establish new unemployment rate records

With New Hampshire, Ohio, Tennessee, and Vermont joining the pack, there are now 22 states with pre-pandemic-level unemployment rates or better. The low unemployment rates both reflect robust hiring and depressed labor force participation.

In December, twelve states recorded their lowest unemployment rates in history. The rapid drop in unemployment rates is great news for unemployed people, who are finding opportunity and transitioning to employment at an unusually rapid pace. But it has quickly altered the hiring conditions for employers, many of whom are struggling to find the talent they need to solve their staffing shortages. 

3. Labor force participation is improving at a snail’s pace

Only four states (Wisconsin, South Dakota, Alaska, and Oregon) have seen their labor force participation rates recover since the pandemic began. 

In most states, recovery has been delayed by each subsequent COVID-19 wave. In fact, labor force participation in Arkansas, Alabama, Tennessee, South Carolina, and Oklahoma initially recovered by the end of the summer of 2020, but fell again during the winter of 2020/2021, when Covid cases surged.

Vermont and Nevada are the farthest from recovery, with participation rates down 4.8 and 4.2 percentage points, respectively. Overall nationwide, participation is only down 1.5 percentage points, on average. 

Written by

Sinem Buber is an economist at ZipRecruiter with a focus on US labor market insights and trends. Previously, she worked at ADP Research Institute where she published the ADP National Employment Report. She holds a PhD in Economics from The Graduate Center, CUNY.

More Articles by Sinem Buber