More than a quarter million jobs were added to the U.S. economy in July, and the official unemployment rate remained unchanged at just under 5%, according to the latest jobs report from the Bureau of Labor Statistics. However, some of these jobs were undesired part-time positions, and the official unemployment rate often gives an incomplete picture of the nation’s labor market.
24/7 Wall St. reviewed the underemployment rate in every state. Nevada is the hardest state in which to find full-time work, with an underemployment rate of 13.1%. South Dakota is arguably the best state for job seekers, with an underemployment rate of 5.0%.
The underemployment rate, includes the standard unemployed population, as well as marginally attached workers and persons employed part-time for economic reasons. Marginally attached workers are neither employed nor looking for work, but those who have indicated their desire for employment. Discouraged workers, a subset of the marginally employed, believe there are no jobs available to them and have given up looking as a result. Finally, the underemployment rate accounts for involuntarily part-time employed workers who could only find part-time work but would like a full-time job.
After rising sharply during the recession, which began in 2007, the national underemployment rate peaked in December 2009, at just over 17%. Today, 9.9% of Americans who desire and are able to work are underemployed or out of a job, a significant improvement. Still, the underemployment rate is a testament to the lingering effects of the recession.
> Underemployment rate: 10.8%
> June unemployment rate: 4.6% (24th lowest)
> Median wage: $35,400 (22nd highest)
> Labor force growth: 2.2% (12th largest growth)
At one time during the recession, Michigan had the highest unemployment rate in the country. Since the peak of the crisis, the state’s unemployment rate has fallen by 7.2 percentage points — more than any other state. Today the state has a below average unemployment rate, rather than the highest. However, as is the case in a number of states, a post-recession improvement in the overall unemployment rate may paint a misleadingly positive picture of the state’s economic recovery. As the unemployment rate went down, Michigan’s underemployment rate — 10.8% — remained above average, as workers gave up looking for full-time work. An estimated 4.6% of the state’s workers are employed part-time because they cannot find full-time jobs, the fourth highest share in the country.
In an interview with 24/7 Wall St., Martin Kohli, chief regional economist with the U.S. Bureau of Labor Statistics, described the underemployment rate as “a valuable reminder that people can suffer during a recession even if they have jobs.”
Further, state labor markets have not improved evenly. “The recession still seems to be casting a shadow in some places,” said Kohli. Arizona, California, Florida, and Nevada were each among the hardest hit by the housing crisis. All of these states have some of the nation’s highest underemployment rates. In these and many other areas, home values have not fully recovered, which prevents people from relocating. This means higher unemployment rates could be due to restricted mobility of some jobless people, Kohli explained.
Because companies operating in certain sectors are far more likely than others to offer part-time jobs, the industry composition of states also influences the underemployment rate. Close to one in every 10 workers in the leisure and hospitality sector are employed part-time for economic reasons — meaning they would prefer to work full-time. This is the highest proportion of all industries, for which the average percentage of involuntary part-timers is 4.4%.
Employees in 11 of the most difficult states in which to find full-time work are more likely than workers nationwide to be employed by the arts, entertainment, and recreation and accommodation and food services sectors.
To determine the states where it is hardest (and easiest) to find full-time work, 24/7 Wall St. examined average underemployment rates for the 12 months through the second quarter of this year as measured by the BLS. We also considered the official unemployment rate as of June 2016, as well as the jobless rate for June of last year. Also from the BLS, we reviewed median annual wages, employment, unemployment, and the size of the labor force from 2005 through 2015. Socioeconomic indicators including poverty rates and educational attainment rates came from the U.S. Census Bureau’s 2013 American Community Survey.