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:

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.

An banker in a suit shaking hands with a small business owner. Editorial photo for a financial news article. 8k. --ar 16:9

Our Methodology

To list the states with the lowest unemployment rates, we utilized the unemployment rates provided by the Bureau of Labor Statistics, ensuring that the list is based on reliable and objective statistics. The unemployment rates were acquired from BLS data for the most recent month, i.e., August 2023, for all 20 states. In the case of identical unemployment rates, the state with a lower population was ranked higher. 

Here is a list of states with the lowest unemployment rates

20. Wyoming

Unemployment Rate: 2.9%

As of August 2023, Wyoming's unemployment rates in various counties ranged from 1.5% in Teton County to 3.3% in Fremont County. However, the unemployment rate by state in 2023 for Wyoming has been exceptionally low at 2.9%.

19. Missouri

Unemployment Rate: 2.8%

Tyson Foods Inc (NYSE:TSN) plans to close two plants in Missouri which will result in the loss of more than 2,200 jobs. The Noel, Missouri plant, near the Arkansas border, is set to cease production around October 20 and is likely to impact 1,533 workers. In addition, the Dexter, Missouri plant shut down on October 13 and left 683 workers without jobs.  Walmart Inc (NYSE:WMT) is the largest employer in Missouri.

18. Oklahoma

Unemployment Rate: 2.8%

Tulsa Innovation Labs (TIL) in Oklahoma, supported by the George Kaiser Family Foundation, is set to bring 10,000 tech jobs to Tulsa by the early 2030s. These jobs will generate over $1 billion in capital investment and increase the tech workforce by 5% annually. They will have an average annual wage of $67,000, and more than half of the workforce won't require a bachelor's degree. 

17. Hawaii

Unemployment Rate: 2.8%

Hawaii is launching the Good Jobs Hawai'i initiative which is a $35 million program providing free skills training and job-placement support for 3,000 residents. The initiative targets four critical sectors of health care, technology, clean energy/skilled trades, and creative industries. It is one of the states with the lowest unemployment rates. 

16. Florida

Unemployment Rate: 2.7%

Florida has recently overtaken New York in terms of job opportunities as the sunshine state now has more jobs than many other states. Flordia saw a huge influx of over 400,000 new residents between July 2021 and July 2022, many of whom were younger individuals looking for jobs. It is one of the states with the best employment rates. 

15. Arkansas

Unemployment Rate: 2.7%

Gun manufacturer SIG SAUER is planning a $150 million expansion of its ammunition manufacturing facility in Jacksonville, Arkansas, which is set to create 625 new jobs over the next five years. 

14. Kansas

Unemployment Rate: 2.7%

In August 2023, Kansas experienced a loss of 2,700 private sector jobs while adding 5,000 government jobs, according to data from the Bureau of Labor Statistics. This contrasts with neighboring states, where both private and public sector employment have increased. 

13. Rhode Island

Unemployment Rate: 2.7%

The Rhode Island Department of Education has launched Educate401.org, an online recruitment and resource hub, to address teacher shortages. The platform is funded by over $132,000 in federal funds, provides job seekers and districts with information about job opportunities. 

12. Massachusetts

Unemployment Rate: 2.6%

Despite increasing cannabis sales in Massachusetts, the cannabis industry is experiencing job cuts. The state has reached $5 billion in recreational sales since 2018, but the strict regulations, high taxes, and operational costs are pressuring companies to downsize and cut jobs. It is one of the states with the lowest unemployment rates. 

11. Virginia

Unemployment Rate: 2.5%

Amazon.com, Inc (NASDAQ:AMZN) is set to open two new operations facilities in Virginia Beach, creating over 1,000 jobs, according to Virginia Governor Glenn Youngkin. The facilities will include a robotics fulfillment center expected to launch in 2025 and a delivery station planned for the 2024 holiday season.

10. Utah

Unemployment Rate: 2.5%

Utah has been a hub for remote work even before the pandemic. It ranked third in the country for the proportion of residents working from home in 2019, but temporarily fell to 12th during the pandemic. By 2022, Utah was back in the top 10, with 18% of residents primarily working from home. 

9. Maine

Unemployment Rate: 2.5%

Maine has enacted a paid family and medical leave law, becoming the 13th state to do so. The program will start on May 1, 2026, and will cover nearly all employees in the state by offering medical, caregiving, parental, safe, and deployment-related leave. Maine is one of the most productive states in the US.

8. Montana

Unemployment Rate: 2.5%

Montana's unemployment rate has been below 3% for 22 consecutive months. Over 40,000 jobs have been created since January 2021 and have reduced unemployment to around 13,000. Montana is one of America’s top business states. 

7. Alabama

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. 

Click here to see the 5 States with the Lowest Unemployment Rates.

Suggested Articles:

• 25 Countries with the Lowest Unemployment Rates in the World

• 25 Countries with the Highest Rates of Unemployment

• 20 Countries That Have the Most Job Opportunities for Foreigners

Disclosure: None. 20 States with the Lowest Unemployment Rates is originally published on Insider Monkey.