The best (and worst) states to be unemployed

Unemployment in the United States has steadily improved over the past six and a half years. The unemployment rate today is half its mid-recession peak, and non-farm payroll employment has increased for more than 60 straight months.

Despite the lower unemployment rate, millions of Americans still continue to search for work without luck. To support themselves and their families, many apply for unemployment insurance while they remain out of work.

Unemployment is far from an ideal situation, but the prospects for out-of-work residents depend a great deal on where they live. In North Dakota, which has a very healthy job market, nearly 75% of the jobless workforce receives benefits — at an average of $520.64 weekly. In Louisiana, where work is generally harder to come by, just 13.5% of the unemployed population receives benefits — at an average of $217.64 weekly.

Based on employment growth, unemployment rates, the proportion of jobless residents receiving UI benefits, and the average weekly UI payment, 24/7 Wall St. reviewed the best and worst states to be unemployed.

24/7 WALL ST.:The 10 best states to be unemployed

In no state does the entire unemployed population receive unemployment insurance. A state’s recipiency rate, or share of the unemployed population receiving UI benefits, depends on a number of factors and varies greatly from state to state. In Florida, the recipiency rate is just 10.2%, while in North Dakota it is 74.0%, the highest share.

Recipiency depends on a number of factors, such as the state’s UI eligibility requirements, state and federal funding, and the public’s awareness about UI programs. In an interview with 24/7 Wall St., Claire McKenna, senior policy analyst at the National Employment Law Project, explained that more restrictive UI programs tend to have fewer unemployed residents who receive benefits. “In states that have reduced benefit amounts and duration and that have restricted eligibility, we have seen reductions in recipiency,” she said.

States determine the amount a worker receives in benefits based on a proportion of the wages earned at his or her last job. The higher the lost wages, the higher the stipend. However, states also set a maximum amount for how much can be doled out on a weekly basis, ranging from $679 in Massachusetts to just $221 in Louisiana, the highest and lowest benefit amounts respectively. The maximum set in each state appears to also have a direct impact on the average benefit amount. All 10 of states with the lowest average weekly payments also have among the lowest maximum weekly benefits set.

24/7 WAL ST.:  The 10 worst states to be unemployed

For those who are unemployed, just as important as the benefits are the chances of finding a job before benefits run out. While not a perfect measure, the unemployment rate can be a rough indication of these chances. In states with higher unemployment rates, job seekers will likely have a harder time finding work. The same is true in states where employment is declining meaningfully. On the other hand, in states with low unemployment and healthy job growth, the prospects are likely better for the unemployed.

Many of the worst states to be unemployed in today made drastic cuts to their UI schemes in the aftermath of the Great Recession. Since 2011, a number states have cut the maximum durations people can receive unemployment benefits. North Carolina, for example, reduced the maximum number of weeks a recipient could stay on UI from 26 to just 13 weeks. “A number of states favored benefit reductions and eligibility restrictions at the expense of sensible financing reforms,” McKenna said. As a result, in every state that cut benefits availability by more than one week the recipiency rate declined significantly.

To identify the best (and worst) states to be unemployed, 24/7 Wall St. generated a rank comprised of four measures: the most recent unemployment rate, the unemployment insurance recipiency rate, the average weekly benefit amount as a percentage of the average weekly wage in the state, and the one-year job growth rate. Unemployment rates, non-farm payroll employment figures, and the average duration of unemployment came from the Bureau of Labor Statistics. The recipiency rate, the proportion of recipients who exhaust their benefits before leaving UI recipiency, average weekly benefits, average benefits duration, initial claims to receive benefits, and total recipients came from the U.S. Department of Labor. Average weekly wages, used to calculate the replacement rate — the average share of UI recipient lost wages covered by benefits — came from the BLS. All data are for the most recent period available.

These are the top five worst states to be unemployed:

5. North Carolina
>Pct. unemployed getting benefits: 11.4% (2nd lowest)
> Pct. average weekly wage covered: 28.1% (10th lowest)
> Unemployment rate: 5.4% (15th highest)
> 1-yr. job growth: 2.3% (15th highest)

The North Carolina legislature enacted in 2013 a law that prematurely cut all funding from the federal Emergency Unemployment Compensation program — which provided benefits to individuals that had exhausted their regular state benefits — before the program was set to expire. As a result, an estimated 170,000 unemployed residents lost their UI benefits by the second half of the year. The bill also cut the amount many claimants can receive and established more restrictive UI eligibility rules.

Today, just 11.4% of unemployed North Carolinians receive UI benefits, the second lowest recipiency rate nationwide. For the minority of jobless residents who receive benefits, the average payment covers just 28.1% of the state’s average weekly earnings, one of the lower replacement rates in the country.

4. Alaska
>Pct. unemployed getting benefits: 50.6% (2nd highest)
> Pct. average weekly wage covered: 26.5% (6th lowest)
> Unemployment rate: 6.6% (tied- the highest)
> 1-yr. job growth: -1.0% (3rd lowest)

Alaska’s unemployment benefits program is not as unfavorable as many of the worst states to be unemployed. More than half of the state’s unemployed are currently receiving benefits, the second highest recipiency rate in the country. The maximum weekly UI payout of $370 is worse than the majority of states but still higher than 13 states. The greatest negative for the state’s unemployed population is the difficult job environment Alaskans face. The state’s unemployment rate of 6.6% is tied with Illinois for the highest in the country. In the past 12 months, as the number of U.S. jobs increased by 1.9%, the number of Alaskan jobs declined by 1.0%, worse than in all but two other states. In both 2014 and 2015, Alaska meaningfully reduced the taxes intended to fund unemployment insurance in the state.

3. Mississippi
>Pct. unemployed getting benefits: 13.1% (3rd lowest)
> Pct. average weekly wage covered: 28.8% (11th lowest)
> Unemployment rate: 6.0% (7th highest)
> 1-yr. job growth: 1.4% (21st lowest)

Mississippi residents seeking work face one of the harshest job markets in the country. Despite falling by 0.5 percentage points in the past year, the state’s 6.0% unemployment rate is the seventh highest nationwide.

Only 13.1% of Mississippi’s unemployed receive UI benefits, the third lowest recipiency rate in the country. For the few who receive unemployment insurance, the benefits are relatively thin. The maximum weekly UI payment is set at $235, lower than in any state except for Louisiana. An average UI payment in Mississippi accounts for only 28.8% of the average weekly wage, much less than the national 33.9% replacement rate.

2. Alabama
>Pct. unemployed getting benefits: 16.9% (10th lowest)
> Pct. average weekly wage covered: 26.4% (5th lowest)
> Unemployment rate: 6.1% (6th highest)
> 1-yr. job growth: 1.3% (20th lowest)

Just 16.9% of Alabama’s unemployed population receives UI benefits compared to a national recipiency rate of 27.3%. Those who receive benefits get a maximum of $265 weekly, the fourth smallest amount in the country. On average, Alabamians receive significantly less than that at just $219.37, $116 less than the national average weekly benefits. The state’s jobless likely have a harder time than most finding work — the state’s unemployment rate of 6.1% is the sixth highest in the country.

1. Louisiana
>Pct. unemployed getting benefits: 13.5% (5th lowest)
> Pct. average weekly wage covered: 25.0% (2nd lowest)
> Unemployment rate: 6.3% (4th highest)
> 1-yr. job growth: -0.6% (5th lowest)

An unfavorable job market and an inadequate unemployment insurance program makes Louisiana the worst state for the unemployed. The state’s 6.3% unemployment rate is the fourth highest in the country, and its 0.6% decline in employment over the past year was the fifth worst. Louisiana residents filed 12.2% more unemployment claims in 2015 than in 2014, while UI claims nationwide fell by 6.8% last year.

Only 13.5% of Louisiana’s unemployed receive UI benefits, the fifth lowest recipiency rate in the country. For those who do, the benefits are relatively scant. The maximum weekly UI payment is set at $221, the least of any state. An average week’s UI payment covers just one-fourth of the average weekly wage in the state, the lowest replacement rate of any state except for Arizona.

MORE:See the rest of the top 10 worst states

24/7 Wall St. is a Paste BN content partner offering financial news and commentary. Its content is produced independently of Paste BN.