There are ten states which have had unemployment rates consistently above 10% for the first six months of the year.  Many also have desperate budget problems, a combination of high social services costs–driven to a large extent by unemployment benefit costs, and low tax receipts–resulting from a troubled business environment and the large number of people who are no longer taxpayers.

Most of these states are in a doing very poorly.  And things are not improving very much, if at all. Their costs to maintain roads, public services, and social services have not dropped since the beginning of the recession. The burden of low receipts into their treasuries has gotten so great that many state employees are being laid off, further compounding the problem.

Two states that most people will not be surprised are on the list are Michigan, bludgeoned by the deep depression in the auto industry, and Nevada, hurt by a collapse of construction due to falling real estate prices and a loss of jobs in the cyclical gaming industry.

1. Michigan. The unemployment rate in Michigan was 13.2% and has averaged 14% in the first half of the year. The crippled auto industry’s problems have also hit auto suppliers and municipal budgets. The state and a number of large cities have fired workers. Flint, one of the largest cities in the state, is in receivership.

2. Nevada. The state’s 14.2% unemployment rate in June was the highest in the nation. Nevada is unusual because its jobless rate has continued to rise as the national unemployment rate has fallen slightly. The casino business relies heavily on discretionary spending, which has dropped as the economy has worsened. Home prices have been halved in many sections of Nevada, putting a significant part of the construction industry out of work, as the real estate bubble burst.

3. Illinois. Unemployment in the large industrial state was 10.4% and has averaged over 11% for the first five months of the year. Illinois has been because it was home to many manufacturers. Manufacturing productivity in the state has typically been more than $100 billion. Chicago is the “second city” after New York in the financial services industry, another sector badly damaged by the credit crisis.

4. Rhode Island. One of the smallest states in America, both in size and population, had an unemployment rate of 12% in June and averaged over 12.3% for the first five months. Rhode Island has little more than one million people. Providence, Warwick and Cranston, among the largest cities in the state, have been manufacturing centers for decades. And the state’s second largest industry is tourism, which has been damaged by a steep cutback in travel.

5. California. The state had an unemployment rate of 12.3% in June. Its jobless rate has averaged 12.5% over the first five months of the year. California is the largest state by population, with 40 million residents. The GDP of California is nearly 10% of national GDP. The housing bubble in California was spectacular with home prices in some areas more than tripling from 2003 to 2006. Some of those values have come back down to 2003 levels, decimating the construction industry. California is also the nation’s supplier of computers and electronics. Those sectors were hurt by the pullback in corporate IT spending and a drop in consumer demand for PCs, consumer electronics, and game consoles. California lost 186,000 jobs in June compared to the same month in 2009.

6. Florida. The state is another victim of two trends. The first is the collapse of real estate prices, which rose rapidly for the last half decade. The other is a sharp drop in tourism. Many people who plan to retire at 65 or 70 years old had a great deal of their savings wiped out in the stock market crash.  Senior citizens in the state need jobs, which has increased the pool of job seekers in a state where the number of jobs has declined.

7. Ohio. The state had an unemployment rate of 10.5%. Joblessness has averaged nearly 11% in the first five months. Ohio is home to several large industrial cities  such as Cleveland and Toledo. Each has been hit hard because they are home to many  auto suppliers. Ohio is also home to many workers in the transportation industry, both trucking and rail. As industrial production has dropped, so has the amount of freight shipped each month.

8. Mississippi. Unemployment was 11% in this, one of the poorest states in the nation, in June. The figure has hovered around that level for the entire first half of the year. Per capita income, at $26,908, is the lowest in the nation. An agricultural state, Mississippi has never entirely recovered from Katrina, which nearly destroyed large potions of the state and put a huge burden on social services.  Fluctuations in the price of crops, especially cotton, has made the income of farmers unsteady.

9. South Carolina. Unemployment was 10.7% in June and has averaged over 11% for the first half of the year. The economy is dependent on agriculture, especially tobacco products, cattle, and grain. As deflation has hit food prices in a troubled economy, crop yields have fallen. The state also has many companies that supply auto parts and lumber, both used in the most damaged part of the national economy–car manufacturing and construction.

10. North Carolina. The state managed to hang on to a double-digit jobless rate of 10% in June after averaging about 10.4% for the first five months. The state has lost many of its manufacturing jobs overseas to lower cost countries such as Mexico and China. The state is home to several large banks, which were hurt by the credit crisis, and its agricultural businesses have been damaged by drops in food prices.

Douglas A. McIntyre

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