Initial claims for unemployment benefits have been trending downward. Last week, the Department of Labor reported that first-time claims for unemployment benefits dropped to pre-recession levels and a six-year low. But the Employment Situation Report showed that the U.S. economy created fewer-than-expected jobs in July, with the majority of the gains coming in the low-wage retail and restaurant sector.
The 162,000-job gain did push the unemployment rate down to 7.4 percent, the lowest in more than four years, but a shrinkage in the labor force also contributed to the decline, making it less impressive.
The nature of the jobs report, which averages data from across the United States, obscures a concerning fact. The Labor Department said Monday that jobless rates dropped in only eight states in July from the previous month and rose in 28 states — proof that employment gains are faltering.
While July represented the 34th consecutive month of job creation, the current pace of employment gains is nowhere near enough to absorb the backlog of unemployed workers. According to the Hamilton Project at the Brookings Institution, it will take more than seven years at the current rate of job creation to close what is known as the jobs gap left by the recession.
Still, this data may be the exception, not the trend. For the majority of the year, states have registered declines in monthly jobless rates; since July 2012, unemployment rates dropped in 36 states and the District of Columbia, and increased in nine. In addition, rates dropped in 25 states in May and fell in 40 states and Washington, D.C., in April.
Better news for the labor market is the fact that the number of jobs filled in July jumped in 32 states, while they decreased in just 17 states and the District of Columbia. California added the most jobs with 38,100 positions. Georgia followed with 30,900 new jobs, but the state’s unemployment rate edged up to 8.8 percent from June’s 8.5 percent.
As at the national level, ebbs and flows in the labor force are cited as the reason for the swings in states’ unemployment levels. Rising job loss among federal workers, stemming from sequester-related spending cuts, and fluctuating education jobs have not helped.
Mississippi led the employment gains in July, with the jobless rate falling from June’s 9 percent to 8.5 percent. In Alabama, the unemployment rate dropped to 6.3 percent from 6.5 percent while its labor force contracted. In Hawaii, Montana, Nevada, New Jersey, North Dakota, and Utah, the unemployment rate decreased 0.1 percent. At 9.5 percent, Nevada had the highest jobless rate of states in July, followed by Illinois at 9.2 percent. New Jersey lost the most jobs with 11,8000, while Nevada lost 10,200.
At 3 percent, North Dakota continued to have the lowest unemployment rate.
In Virginia, the jobless rate rose to 5.7 percent in July from 5.5 percent in June, but the state’s unemployment department attributed the increase to an expanding labor force. The government’s 4,500 job cuts also hurt.