State Employment Trends Continue to Diverge

States where employment has grown rapidly over the past year continue to outperform, and those where employment has been sluggish continue to lag behind. Three of the states with the largest employment gains since the pandemic continued to experience the fastest job growth rates—Nevada (+3.9% YoY), Texas (+3.0%), and Florida (+2.8%). Meanwhile, Hawaii, still in last place in the post-pandemic jobs recovery, received an extra dose of bad luck in August in the form of the Lahaina wildfire, which pushed the state’s tenuous recovery into reverse.

That said, August unemployment data for the states came as a relief to many observers. Data for the prior months had shown an uptick in the share of states and metro areas triggering the Sahm rule, a measure that tends to indicate the start of a recession. Labor economists had worried that rising unemployment in certain states could set off a spiral in which increased unemployment would reduce consumer spending, which would in turn lead to falling demand for labor and more unemployment. Rather than getting a soft landing, some analysts worry, we might have a soft landing in some industries and areas, paired with localized recessions in others. 

So far, however, negative spirals in state labor markets do not appear to have taken hold. Employment was stable in most states in August, and the share of states triggering various versions of the Sahm Rule either held steady or fell. Unemployment did tick higher in 10 states in August, which is cause for concern. But many of the increases were in low-unemployment states and could be statistical noise rather than a concerning signal. Even as certain states lost ground, state unemployment rates fell to all-time lows in Maryland (1.7%), North Dakota (1.9%), and Louisiana (3.3%). 

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Julia Pollak is Chief Economist at ZipRecruiter. She leads ZipRecruiter's economic research team, which provides insights and analysis on current labor market trends and the future of work.

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