Special Report
States Where It's Hardest to Find Full-Time Work
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While the labor market has improved significantly since the depths of the recession in 2009, high underemployment may be an indication that the economy is still struggling. As of the first quarter of 2014, 13.4% of the nation’s labor force was considered underemployed, meaning they were unemployed, were working only part-time despite wanting full-time jobs or would like a job but had given up on actively looking.
The underemployment rate has dropped from its peak of 16.7% in 2010, which indicates that the labor market has improved. However, underemployment is still well above its pre-recession levels. Based on underemployment data for the first quarter of 2014, we identified the states where it is hardest to find full-time work.
Click here to see the states where it’s hardest to find full-time work
High underemployment is not unusual for many of these states. Even prior to the recession, five of the states where it is hardest to find full-time work had underemployment rates at or above the national rate of 8.3%.
In many cases, high underemployment rates do not mean that people are losing their jobs. According to Martin Kohli, chief regional economist with the Bureau of Labor Statistics (BLS), rather than making large-scale cuts, “employers in retail or hospitality sectors cut people’s hours back so people who had been working full-time were cut back to part-time.”
In many of the states with high underemployment, the labor force has contracted. As the number of workers falls, the underemployment rate might be expected to fall as well, since fewer people would be looking for jobs. However, in most of the states where it’s hardest to find full-time work, underemployment rates are rising. Between 2007 and 2014, five of the states on this list saw their labor forces grow by less than 1%. This may be because poor job markets are discouraging many people from looking for jobs in these states.
Kohli added that the situation is especially bad when job seekers struggle to find work, despite a shrinking pool of applicants. “If your labor force is shrinking and your unemployment rate is going up … that’s really a bad sign,” Kohli told 24/7 Wall St.
The gross domestic product (GDP) also provides a picture of the weak economic climate in many of these states. All but one state on this list had annualized GDP growth below the national average between 2007 and 2013. In Nevada, the state with the highest underemployment rate, GDP grew at an annualized rate of 0.8% over the same period. Kohli noted that a state’s economic output is a major component of underemployment rates.
Additionally, states that rely heavily on housing and construction sectors continue to feel the effects of the housing crisis. For example, in four states — Arizona, Nevada, Florida and California — construction employment contracted more than 30% from its pre-recession peak through June 2014. According to Kohli, depressed housing markets can have a big effect on the economy. “Lots of people’s wealth was largely tied up in their homes.” As a result, “people in these areas are not going to be spending as much money as they otherwise would.”
To determine the states where it is hardest to find full-time work, 24/7 Wall St. examined the first quarter underemployment rate measured by the BLS. We also considered U-3, the conventional measure of unemployment, and U-6, the underemployment rate, from 2007 through the first quarter of 2014. The underemployment adds part-time and marginally attached workers to the traditional unemployment rate. Also from the BLS, we reviewed average weekly wage growth, and labor force growth from 2007 to 2013. Housing data are for the second quarter of each year from 2007 through 2013 and are from the Federal Housing Finance Agency (FHFA). GDP growth figures are from the Bureau of Economic Analysis, and are not adjusted for inflation.
These are the states where it’s hardest to find full-time work.
10. New Jersey
> Underemployment rate: 14.2%
> Unemployment rate: 6.4% (19th highest)
> GDP growth 2012-2013: 2.7% (14th lowest)
> Labor force growth 2007-2014: 1.0% (20th lowest)
While New Jersey’s relatively slow recovery from the 2008 global financial crisis has picked up recently, home prices have yet to return to pre-crisis levels. In 2013, average home prices were still down nearly 30% from 2007, among the larger declines in the nation. The state’s job market has not fared much better in recent years. Average weekly wages were nearly 1% lower this year than they were in 2013, and the labor force has remained stagnant since 2008. There may be hope for New Jersey, however, as the unemployment rate has declined over the past several years, falling to 6.4% in June from a peak of 9.7% in 2012. State officials have also made attempts to improve the situation. Governor Christie has introduced $1.95 billion in tax incentives over the past several years.
9. Florida
> Underemployment rate: 14.3%
> Unemployment rate: 6.2% (22nd highest)
> GDP growth 2012-2013: 4.1% (18th highest)
> Labor force growth 2007-2014: 4.2% (10th highest)
The housing crisis hit Florida especially hard, with average home prices bottoming out in 2011. As of 2013, home prices in Florida had lost over 38% of their value since 2007. The troubled housing market had a strong impact on the state’s economy. Unemployment, which was 4.1% in 2007, rose to 11.3% in 2010, one of the higher rates in the country. Similarly, underemployment peaked in 2010 at 19.3%, before falling to 14.3% at the beginning of this year. Not only have unemployment and underemployment rates increased, but the labor force also contracted during the recession as workers became discouraged and stopped looking for work. For those who have been able to find employment, wages have been slow to recover to pre-recession levels. Between 2007 and 2013, weekly wages grew at an average annual rate of 0.8%, the fifth lowest rate in the country.
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8. Kentucky
> Underemployment rate: 14.7%
> Unemployment rate: 7.4% (6th highest)
> GDP growth 2012-2013: 3.0% (17th lowest)
> Labor force growth 2007-2014: 0.1% (15th lowest)
Kentucky’s economic performance has been inconsistent in recent years. Wage growth remained positive throughout the recession, growing at an average annual rate of 1.3%, although this was one of the lower rates nationwide. Between 2006 and 2007, GDP growth was 2.0%, also one of the lowest rates in the country. However, GDP grew by more than 6.5% between 2009 and 2010, the sixth-highest rate in the country, before slowing again in later years. In June 2014, underemployment was still five percentage points above its pre-recession levels, indicating that state residents continue to struggle to find full-time, satisfactory work.
7. Michigan
> Underemployment rate: 15.2%
> Unemployment rate: 7.9% (2nd highest)
> GDP growth 2012-2013: 3.8% (21st highest)
> Labor force growth 2007-2014: -6.0% (the lowest)
Michigan’s labor market has been struggling for some time. Since at least 2007, the state has had among the highest underemployment and unemployment rates in the nation. And more than 15% of the state’s workforce was unable find adequate employment as of the middle of this year. Perhaps due in part to improvements in the state’s manufacturing sectors, Michigan’s GDP has grown by an average annual rate of 4.2% between 2010 and last year, which is exceptionally strong given the impact of the recession on the state. Wage growth, however, has continued a trend of extreme volatility and state housing prices remain consistently low. Michigan’s labor force is nearly 6% smaller than it was in 2007, the largest contraction in the nation, making the state’s persistently high underemployment and employment especially troubling.
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6. Rhode Island
> Underemployment rate: 15.5%
> Unemployment rate: 7.1% (tied, 10th highest)
> GDP growth 2012-2013: 3.1% (20th lowest)
> Labor force growth 2007-2014: -3.0% (4th lowest)
Rhode Island’s 2013 underemployment rate of 15.5% was nearly double its 2007 level. High underemployment is an indication that finding any work — part-time or otherwise — remains difficult, even as the country has slowly begun to recover from the recession. Between 2007 and 2014, the state’s labor force contracted by 3%, indicating that workers may have stopped looking for employment. This drop in the labor force, paired with high underemployment, is evidence of a troubled economy. State GDP grew at an annualized rate of 1.6% between 2007 and 2014, the fourth lowest rate in the country. Rhode Island homeowners are also worse off than those in many other states, as housing prices fell more than 20% during the crisis, one of the large declines in the country. By 2013, average home prices had yet to recover to pre-recession levels.
5. Illinois
> Underemployment rate: 15.6%
> Unemployment rate: 7.1% (tied, 10th highest)
> GDP growth 2012-2013: 2.4% (7th lowest)
> Labor force growth 2007-2014: -2.3% (6th lowest)
More than 15.5% of working-age adults in Illinois were underemployed as of the first quarter of 2014, the fifth-highest rate in the country. State GDP grew at an annualized rate of 2.1% between 2007 and 2014, one of the lower rates in the country. Slow output may be due in part to the state’s troubled housing market. Between 2007 and 2011, housing prices, according to the FHFA, fell by over 20% and, as of 2013, had not yet recovered to 2007 levels. From 2007 to 2014, the labor force contracted more than 2%, one of the largest declines in the country.
4. Oregon
> Underemployment rate: 15.8%
> Unemployment rate: 6.7% (14th highest)
> GDP growth 2012-2013: 4.5% (14th highest)
> Labor force growth 2007-2014: 0.7% (18th lowest)
Like most states with struggling labor markets, Oregon’s underemployment rate has been at least 15% each year since 2009. Statewide unemployment rates have been routinely above the national average over the same period. However, unlike other states where it’s hard to find work, Oregon’s GDP growth was among the strongest in the country, growing at an annualized rate of 4.3% between 2007 and 2014. And while housing prices fell by nearly 28% during the recession, Oregon homes had regained much of their pre-recession value as of 2013.
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3. Arizona
> Underemployment rate: 16.1%
> Unemployment rate: 7.5% (5th highest)
> GDP growth 2012-2013: 2.8% (15th lowest)
> Labor force growth 2007-2014: 1.4% (23rd lowest)
While housing prices in Arizona improved in 2013 compared to the year before, home values were just 70% what they were in 2007, among the largest declines in the nation. As Kohli explained, Arizona’s construction sector was hit particularly hard as housing prices fell. This has likely not helped the state’s labor market, which has been slow to recover. Arizona’s unemployment rate of 7.5% is one of the highest in the nation. The average weekly wage for those who are employed recently dropped 1.5%, the second-steepest wage decline in the country.
2. California
> Underemployment rate: 16.7%
> Unemployment rate: 7.3% (8th highest)
> GDP growth 2012-2013: 2.6% (25th highest)
> Labor force growth 2007-2014: 3.7% (13th highest)
California’s GDP grew at an annualized rate of 2.4% between 2007 and 2014, one of the lower rates in the country. Low GDP growth is likely related to a poor job market. During the peak of the recession, underemployment rose above 22%, second only to Nevada. Unlike other states on this list, California’s underemployment rate and labor force are both rising, which is an indication that the job market is improving moderately. California cities were among the hardest hit by the recession. California’s housing market was hit very hard during the recession. As of 2013, statewide housing prices were still 28% lower than their 2007 levels.
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1. Nevada
> Underemployment rate: 17.4%
> Unemployment rate: 7.8% (4th highest)
> GDP growth 2012-2013: 2.4% (9th lowest)
> Labor force growth 2007-2014: 4.9% (6th highest)
Nevada’s underemployment rate more than doubled between 2007 and the first quarter of 2014, where it currently stands at 17.4%, the highest rate in the country. State GDP growth was nearly stagnant between 2007 and 2013, growing at an annualized rate of 0.8%, the lowest rate in the country. Slow GDP growth was likely caused by the collapse of Nevada’s housing market in 2008, when average home prices fell 27%. Between 2011 and 2013, however, home prices rebounded, growing by 25%. And while construction jobs also appear to be returning to the state, housing and related sectors still have a long way to go before they return to pre-recession levels. Wage growth may provide a glimmer of hope for Nevada’s employed residents. In the year prior to June 2014, wages grew at nearly 3%, the eighth-highest rate in the country.
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