Editor's Note: This report is based on survey data from December 2021 that was published in December 2021. This is the most recent data available. (Source: Bureau of Labor Statistics)

The national unemployment rate fell below 4% for the first time since the pandemic began taking its toll on the U.S. economy.

This reduction was experienced across the country, with nearly 85% of states reporting a month-to-month decrease in the unemployment rate, with the other states remaining stable. 

Despite the widespread unemployment rate improvement last month, however, only 17 states experienced significant growth in new jobs, indicating that some of the unemployment rate reduction could be attributed to a drop in the labor pool of active job seekers. 

Below is the breakdown of the Bureau of Labor Statistics’ (BLS) market employment summary for January 2021.

States With the Highest Unemployment Rates

California and Nevada continue to be the states with the highest unemployment rates, as they have been for the past several months at 6.5% and 6.4% unemployment, respectively.

It’s worth noting, however, that both California and Nevada saw 0.4% reductions in their unemployment rates last month, outpacing the national unemployment rate drop of 0.3%.

In total, 17 states had an unemployment rate higher than the national average last month, with 16 states reporting lower unemployment rates and the remaining states on par with the national rate at 3.9%. 

States With the Lowest Unemployment Rates

Nebraska has been the state with the lowest unemployment rate for the better part of a year–that rate is now down to 1.7%, clocking only a 0.1% reduction in the unemployment rate over the month. This indicates that a reduction is occurring at a pace that’s three times slower than the national average over the same timeframe.

Unlike the past couple of months, however, when Nebraska was joined by five other states that set the record for the all-time low unemployment rate, Nebraska is now joined by 11 other states reporting record low unemployment. 

Beyond Nebraska, the states currently experiencing record low unemployment rates are: Arkansas (3.1%) Georgia (2.6%), Idaho (2.4%), Indiana (2.7%), Kentucky (3.9%), Mississippi (4.5%), Montana (2.5%), Oklahoma (2.3%), Utah (1.9%), West Virginia (3.7%), and Wisconsin (2.8%). 

In total, that’s nearly 25% of states currently experiencing their lowest unemployment rate since the late 1970s, or when these numbers were first collected and recorded. 

States With New Job Gains

California retook the top spot from Florida among states with the most new jobs added over the month, with just over 50,000, followed by Texas and New York with 5,000 and 45,000 each. 

The states with the largest percentage gain of new jobs were Iowa and West Virginia, each of which increased the number of jobs in their state by 0.8%. Massachusetts, Missouri, and Montana were next on the list with a 0.6% increase across the board. 

Mployer Advisor’s Take: 

With the unemployment rate seemingly back on track and nearly a quarter of all states reporting record unemployment rates, the economy seems to be in a good place.

Numbers aside, however, this optimism is not matched by polling around consumer confidence and economic optimism. This rift could perhaps be attributed to the cumulative impact of lingering supply chain issues, escalating geopolitical tensions, and recent stock market wobbles, combining to create an understandable skepticism when considering the months ahead.  

Looking for more exclusive content? Check out the Mployer Advisor blog, or review last month's market employment summary here.