No one wants to be unemployed, but recent reports show that certain places in the U.S. are even less conducive to it than others. While we’ve already considered what states have the highest unemployment rates and which ones are tax havens for the unemployed based on a Tax Foundation report, it is now time to look at the other side of the spectrum. Which are the 8 worst states for the unemployed? Using three criteria, Bloomberg ranked the 50 U.S. states and the District of Columbia on the quality of life for the unemployed.
The three criteria considered for ranking were income replacement, or average unemployment benefits (as of 4Q 2012) as a percentage of average state income per capita; unemployment rate (as of March 2013); and wealth disparity, the ratio of households with incomes of at least $200,000 to those with incomes of less than $10,000 (as of 2011 Census ACS). Each state was ranked on the three criteria and the ranks were averaged.
We begin with Alaska. Though it is the 8th worst state for the unemployed, it bears a 6.2 percent unemployment rate that is more than a full percentage point below the national average of 7.5. What are Alaska’s other claims to fame? While it is the 15th worst state for minimum-wage workers, it also boasts the #1 spot for the most female senior workers. Careful inspection of where Alaska falls in the three criteria shows that its income replacement rank is what largely accounts for its status as #8 worst place to live. It bears a relatively low unemployment rate and its average income per capita isn’t significantly lower than the other seven. However, its income rank of #3 is what influences its bad reputation.
7. New Jersey
New Jersey holds down the stop at #7 and is also one of the five states on our list of havens for the unemployed. It does not tax the insurance benefits of its 414,973 unemployed persons, but unlike Alaska, the Garden State has a high unemployment rate, sitting at 9.0. New Jersey is also the second worst state for minimum-wage workers. Additionally, it is the sixth highest state with the most million-dollar tax filers, elucidating the state’s wealth disparity, the factor that helped it earn its #7 spot.
Next on our list is Illinois, the state that also suffers from the second highest unemployment rate in the U.S. at 9.5, two full percentage points above the national average. While right below New Jersey, it is the 5th state with the most million-dollar tax filers. Unemployment insurance covers 36.4 percent of lost income.
Delaware is next in line, holding the #5 spot. Its unemployment rate of 7.3 is only slightly lower than the national average and it ranks #7 on income replacement. The state’s average weekly unemployment benefits of $243 are also noticeably lower than its neighbors on the list. The two states that flank Delaware on the list, Illinois and New York, have weekly benefits much higher at $315 and $305, respectively.
4. New York
Speaking of New York, it’s next on the list at #4. Like its fellow neighbors on the list, it has an unemployment rate sufficiently above the national average, at 8.2. It is also ranked #8 on income replacement, right behind the aforementioned Delaware. The state that is home to the city that never sleeps is the second highest with the most million dollar tax filers. It also holds the #2 spot among states that earn the most tax revenue from alcohol, tobacco, and betting. It is the third worst state for minimum-wage workers.
California, ranked third, is the only state that falls into all three of our lists in that it suffers one of the highest unemployment rates, serves as a tax haven for those unemployed, but still remains one of the top worst places to be it. What is it about the Golden State that warrants it all these titles? Barring Nevada, California bears the highest employment rate of any U.S. state., but it is also the state with the greatest growth in jobs for techies, most showbiz jobs, and most million-dollar take filers. Thus, the wealth disparity and the high unemployment rate help earn it its #3 status.
Connecticut comes in second for worst places to be unemployed, with an 8.0 unemployment rate and 147,031 unemployed persons as of April. Not only is it ranked #6 on income replacement, but excluding the District of Columbia, it has the highest average income per capita. It also is the fifth worst place for minimum wage workers.
1. District of Columbia
Not only does Washington, D.C., rank #1 on income replacement, it also has the highest average income per capita, by far. It also blows its neighbors on the list out of the water. While each of the other seven states differ in their average rank of all three criteria by 1 or 1.5 points, District of Columbia differs from the #2 spot, Connecticut, by 2.3. Its average rank on the three criteria is 5.7, while Connecticut’s is 8.0. Alaska, the #8 state on our list, has a rank of 15.7, a full 10 points higher than D.C. Now, what else does the state hold the #1 spot for? Aside from the worst place to be unemployed, it has the greatest gain in associate-degree pay, largest wage increases, most male senior workers, highest pay for tech jobs, and is the worst place for minimum-wage workers. Moral of the story: if you’re unemployed, stay away from D.C.