20 States with the Lowest Unemployment Rates

Published on October 18, 2023 at 11:17 am by Afifa Mushtaque in Lists, News

This article will look at the 20 states with the lowest unemployment rates. We have also extensively discussed the job market in the US along with some key players. If you want to skip our detailed analysis, head straight to the 5 States with the Lowest Unemployment Rates.

In 2023, global unemployment is expected to be 191 million, translating to a 5.3% unemployment rate. Low-income countries in Africa and the Arab region face higher unemployment rates, with North Africa at 11.2%, Sub-Saharan Africa at 6.3%, and the Arab States at 9.3%. Low-income countries have a huge ‘jobs gap’ rate of 21.5%, middle-income countries have an 11% rate, and high-income countries have the lowest rate at 8.2%. It is worth highlighting the country with the lowest unemployment rate is Qatar whereas country with the highest unemployment rate is South Africa.

In September 2023, the United States saw a phenomenal job increase as nonfarm payrolls increased by 336,000. This marked the biggest increase in number of jobs in eight months and spoke volumes about the strength of the US labor market. The unemployment rate in the US has stood at 3.8%, and average hourly earnings have so far grown by 0.2%, resulting in a year-on-year increase of 4.2%. The lowest unemployment rate in US history was recorded in May 1995 at 2.5%.

The unexpected strength of the US economy in the face of rising interest rates and high inflation has defied gloomy predictions. Last year, the country experienced a spike in inflation, reaching its highest level in four decades. Economists expected that as the Federal Reserve raised interest rates to combat inflation, it would result in reduced consumer and business spending, job cuts, and the potential for unemployment to increase, possibly reaching 7% or more, double its level when the Fed began tightening credit.

Contrary to expectations, as interest rates have increased, inflation has dropped from its peak of 9.1% in June 2022 to 3.7%, and the unemployment rate has remained low at 3.8% since March 2022. This situation has raised the possibility of a rare and challenging “soft landing,” where inflation is controlled without causing a severe recession.

Several factors have contributed to this positive state of employment in the US, like consumer savings, and business adaptability. As the US economy continues to navigate these dynamics, it remains to be seen how long this resilience will persist, especially as the Federal Reserve intends to maintain high-interest rates into 2024.

Tech corporations, on the other hand, have laid off a huge number of employees amid inflationary pressures. Alphabet Inc (NASDAQ:GOOG) has initiated another round of layoffs for its recruiting division, with plans to let go of hundreds of recruiters. This action comes as Google continues with its cost-cutting, which began earlier in the year. The recruiting department, once comprising over 3,000 employees, had previously witnessed layoffs this year.

While these layoffs are not part of a broader workforce reduction, other areas within the company may also consider reducing their workforce. Google’s CEO, Sundar Pichai, has been driving efforts to cut expenses and enhance productivity for over a year, following huge job cuts announced in January, where 12,000 jobs, or 6% of the workforce, were eliminated. As of June 30, Alphabet Inc (NASDAQ:GOOG) employed 181,798 people, and the company has been striving to offset the high costs of its AI investments through strategic cost management.

It is worth highlighting how its cost management and prioritization of AI has been appreciated as Oakmark Global Select Fund made the following comment about Alphabet Inc. (NASDAQ:GOOG) in its Q3 2023 investor letter:

“Alphabet Inc. (NASDAQ:GOOG)(U.S.) was the top contributor for the fiscal year. Alphabet reported multiple strong sets of earnings releases over the past year, and its results generally exceeded consensus estimates across key metrics. Most recently, search revenue growth accelerated from 5% to 6.5% sequentially in the second quarter, a notable development given lingering economic uncertainty and broader advertising weakness. Cloud growth remained at 30%, stable versus the previous quarter, despite continued headwinds from customers optimizing cloud usage. Margin progression also continued, and cloud margins reached 5%. CFO Ruth Porat emphasized that the largest impact of the company’s cost[1]saving initiatives will not be felt until 2024. YouTube continues to prioritize its Shorts segment, which is experiencing strong viewership growth. Although this is a near-term revenue headwind, we believe Shorts’ monetization will accelerate over time. Addressing the year’s hottest topic, CEO Sundar Pichai said Alphabet is an “AI-first company” that is “extremely well-positioned as AI reaches an inflection point.” At Alphabet’s annual developer conference in May, it showcased an impressive array of new AI-powered consumer tools to be rolled out over the course of the year. Investors reacted positively to these presentations, which highlighted the company’s impressive innovations in AI technologies. Overall, we believe the company is positioned well to reap the benefits of the scale of its search business and years of its investment into AI capabilities. We also appreciate that the company is undergoing a transformation on how it views cost discipline and efficiency.”

On the other hand, International Business Machines Corp (NYSE:IBM) is set to freeze its hiring activities as the CEO expects AI replacing approximately 7,800 jobs within the company. Around 30% of non-customer-facing roles at International Business Machines Corp (NYSE:IBM), which amounts to roughly 26,000 workers, could be supplanted by AI and automation over the next five years.

While International Business Machines Corp (NYSE:IBM) is based in Armonk, New York, and has a workforce of about 260,000 employees, it has continued to fill roles despite letting go of 5,000 workers in other areas. International Business Machines Corp (NYSE:IBM) responded to these revelations by stating that there is no blanket hiring pause, but the company is being selective when filling positions that don’t directly involve clients or technology. To read more about Ai disruptions, check our article about the industries being revolutionized by AI and automation.

On the financial end, in the second quarter of 2023, International Business Machines Corp (NYSE:IBM) reported earnings that exceeded analysts’ expectations, primarily due to an expansion in its gross margin. However, the company’s revenue fell slightly short of consensus estimates. International Business Machines Corp (NYSE:IBM)’s adjusted earnings for the quarter were $2.18 per share, and surpassed the anticipated figure of $2.01 per share. Meanwhile, the company’s revenue for the same period amounted to $15.48 billion, slightly missing the expected $15.58 billion.

Regarding profitability, International Business Machines Corp (NYSE:IBM) demonstrated a 13% increase in net income which reached $1.6 billion, compared to $1.4 billion in the same quarter the previous year. This translated to earnings of $1.72 per share. However, the company experienced relatively flat revenue growth compared to the corresponding period in the prior year.

20 States With the Lowest Unemployment Rates

Unemployment Rate: 2.1%

While the unemployment rate in the state has been low, Alabama is facing a nursing crisis as approximately 20% of registered nursing positions in the state remain vacant. To read more about nurse shortages, check our article about the highest paying states for nurses.

6. Nebraska

Unemployment Rate: 2.0%

Nebraska’s leisure and hospitality industry has rebounded like a storm after suffering a sharp decline during the COVID-19 pandemic. Employment in this sector surpassed pre-pandemic levels and exceeded 97,000 jobs in the state. It is one of the states with the lowest unemployment rates.

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