Unemployment Is Increasing and Decreasing In These States

The good news is in – unemployment is starting to decline, at least in half of the states.

Nationally, unemployment claims fell by 1.3% week-over-week earlier this month, and matched that same 1.3% drop year-over-year, showing steady progress. Unemployment rates varied per state, however. Nearly half of the U.S. (24 states) saw higher unemployment claims than the same week last year, while the rest either held steady or improved.

To rank where unemployment claims are dropping up the quickest rate, WalletHub analyzed changes in initial claims across several key weeks, factoring in both short-term and year-over-year shifts, as well as the number of claims per 100,000 workers in each state’s labor force.

EMPLOYMENT INCREASES AND DECREASES BY STATE

States Where Unemployment Decreased the Most

Iowa
Arkansas
Alabama
Montana
Wisconsin
Louisiana
Maine
Arizona
New Hampshire
Indiana and Mississippi (Tie)

States Where Unemployment Decreased the Least

50. District of Columbia
49. Oregon
48. Connecticut
47. California
46. Wyoming
45. Massachusetts
44. Illinois
43. Kentucky
42. Minnesota
41. New Jersey

COMMENTARY FROM THE EXPERTS

WalletHub turned to leading economists to unpack what they believe is behind the unemployment shift.

WalletHub asked several other questions. One was, “What trends do you expect to see in terms of unemployment in the foreseeable future?” Cathy Carey, Ph.D., professor at the University of Southern Indiana, says she sees policy-driven growth ahead.

“Over time, I expect to see increased employment in the manufacturing, energy, and service sectors.”

She also believes that deeper structural forces will shape the labor market. “Automation, the rise of AI, current immigration policy, and broader sectoral shifts like an aging population and the growth of the gig economy will continue to shape employment patterns.”

WalletHub also asked, “What are your predictions for the job market as we move forward during 2025 (job gains, hiring confidence, quit rates, etc.)?

Ernie Goss, Ph.D., professor at Creighton University, commented, “Uncertainty breeds volatility and volatility pushes individuals to reduce their propensity to quit and forces companies to be less likely to hire. Tariffs, inflation and AI will be the factors pushing companies to the hiring sidelines.”

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