Unemployment Decreased in Nine U.S. States in January

Originally Posted on BusinessWeek.com.  Click here to view original article.

March 10, 2010, 11:49 AM EST
By Timothy R. Homan


 March 10 (Bloomberg) -- The unemployment rate decreased in nine U.S. states in January and climbed in 30, signaling the thawing of the labor market is not broad-based.

The jobless rate in Michigan showed the biggest drop, falling to 14.3 percent, still the highest in the nation, from 14.5 percent in December, according to figures issued today by the Labor Department in Washington. New York and New Jersey were among eight states where unemployment decreased by a tenth of a point.

A national unemployment projected to average 9.8 percent this year signals state budgets will be strained by decreases in tax revenue and rising jobless insurance payments. The loss of 8.4 million jobs since the recession began in December 2007 means the labor market in the world's largest economy will take years to rebound.

'This is a recovery that's really kind of concentrated,' said Steven Cochrane, director of regional economics at Moody's Economy.com in West Chester, Pennsylvania. 'It still portends weakness in income-tax revenue and sales-tax revenue into fiscal year 2011.'

'Underemployment' Rate

The underemployment rate -- which includes part-time workers who'd prefer a full-time position and people who want work but have given up looking -- rose to 16.8 percent in February from 16.5 percent, last week's report also showed.

Payrolls fell by 36,000 last month following a 26,000 decline in January. The loss of jobs during the recession has been the biggest of any economic slump in the post-World War II era.

Today's state breakdown showed employment, which is calculated by a survey of businesses, increased in 31 states, led by California, Illinois and New York. Missouri and Ohio showed the biggest payroll decreases at the start of the year.

The state and local employment data are derived independently from the national statistics, which are typically released on the first Friday of every month. The state figures are subject to larger sampling errors because they come from smaller surveys, making the national figures more reliable, according to the government's Bureau of Labor Statistics. State totals showed the economy gained 135,000 jobs in January.

Detroit Area

Unemployment in the Detroit area, home to General Motors Co. and Ford Motor Co., dropped to 15.3 percent from 16 percent in December, contributing to the decrease in Michigan's jobless rate.

States showing the most improvement in coming months will probably be those with a large manufacturing base, said Moody's Economy.com's Cochrane. The need to rebuild inventories and growing exports is propelling a factory rebound that will help some parts of the country over others, he said.

GM said it may fill most of the 5,500 jobs created by its $1.4 billion retooling of 18 U.S. factories with laid-off workers, Diana Tremblay, the automaker's manufacturing and labor chief, said in an interview Feb. 23.

The company's 5,000 to 6,000 workers on indefinite layoff have first rights to any openings from the factory upgrades, including a third shift in Lordstown, Ohio, announced last month.

National Average

Sixteen states in January had an unemployment rate that exceeded the 9.7 percent national average, today's report showed.

New York City's unemployment rate declined to 10.4 percent from 10.5 percent the previous month, the state's Labor Department reported March 4. The state's jobless level fell to 8.8 percent from 8.9 percent in December, while New Jersey's decreased to 9.9 percent from 10 percent.

Unemployment in California, Florida, Georgia, North and South Carolina and the District of Columbia climbed to the highest levels since records began in 1976.

State revenue shortfalls are translating into job cuts. New Jersey Transit, the third-busiest U.S. commuter-rail service, will cut 200 jobs, reduce executive salaries by 5 percent and trim contributions into employees' 401(k) retirement plans by one-third to help close a $300 million budget deficit.

The firings of both unionized and non-union employees will total about 2 percent of the workforce, the biggest one-year reduction in agency history, Executive Director James Weinstein said last week in a statement.