The worst states to be unemployed

Nashville, Tennessee (iStockphoto)

As a result of the sequester (which went into effect in early 2013 to help cut the U.S. budget deficit), a federal program that was intended to lengthen the amount of time jobless residents can receive unemployment benefits will be substantially reduced. Cuts to so-called Emergency Unemployment Compensation will mean an end to an important source of income for many out-of-work Americans.

Unemployment rates have fallen nationwide, but nearly 12 million active job seekers still cannot find work. While unemployment is rarely a favorable situation, in certain parts of the country, the unemployed can expect to find a job more easily because of a favorable job market, or at least they can expect to receive good benefits. (Click here to see "The Best States to Be Unemployed.") In other areas, job growth is slow, competition is high, and benefits are relatively poor.

Based on unemployment insurance benefits data and employment statistics from the Department of Labor, 24/7 Wall St. identified the states where residents have the worst chances of finding work and also receive the worst benefits while they are looking for it. (Click here to see more details on the methodology.) Yahoo! Homes is publishing the worst five; to see the rest of the 10 worst, go to 24/7 Wall St.'s website:

One of the biggest indicators of how difficult it is to find work is the unemployment rate. A low jobless rate in a given state usually means the area’s economy is doing relatively well, competition is limited, and workers have the skills necessary to qualify for available jobs. In all of the best states to be unemployed, the unemployment rate was well below the national rate of 7.6% for June. In North Dakota, one of the best states to be unemployed, just 3.1% of the workforce did not have a job.

In the worst states to be unemployed, job growth was relatively slow, and new opportunities to work took longer to materialize. In most of the these states, the number of nonfarm jobs grew slower than the 1.3% national rate between June 2012 and June 2013. In three of these states — Kentucky, Ohio, and Illinois — the total number of jobs grew by less than 1%.

Not surprisingly, it is far better to be unemployed in a state with healthy job growth. According to Rebecca Dixon, policy analyst at the National Employment Law Project, “in some of these states, people go back to work really quickly.”

However, even if employers are hiring and local economies are doing well, workers may still need time to find a job. This may mean relying on unemployment insurance benefits while looking for work. Nationally, unemployment benefits covered an average of 33% of the average weekly wages in the area. In six of the best states to be unemployed, this figure, known as the replacement rate, was more than 40% of average wages, with Hawaii covering a nation-leading 53%.

Dixon pointed out that a high replacement rate is not enough on its own to make benefits available to the unemployed. “A state can have a great program, but if they make it really, really hard for people to qualify for benefits, then it’s just a great program sitting there that no one can use,” said Dixon.

Known as the recipiency rate, just 45% of all unemployed workers received such benefits over the 12 months going through the first quarter of 2013. In five of the better states to be unemployed, a higher percentage of jobless residents received these benefits. In some of the worst states to be unemployed, these rates were even lower. In Louisiana and Tennessee, the two worst states to be unemployed, just 30% of unemployed workers received these benefits.

Click ahead to see the fifth-worst state to be unemployed.

5. Arizona
> Pct. unemployed getting benefits: 33% (9th lowest)
> Pct. average weekly wage covered: 24.9% (2nd lowest)
> Unemployment rate: 8.0% (15th highest)
> 1 yr. job growth: 2.0% (7th highest)

Arizona experienced 2% employment growth over the 12 months ending in June, a faster pace than all but a half dozen states. However, skilled job opportunities may be scarce, with three-quarters of all job openings in Arizona requiring only a high school diploma or less. The state also was unable to significantly reduce unemployment during the past year. From June 2012 to June 2013, the unemployment rate fell just 0.4 percentage points from 8.4% to 8.0%. Just one-third of jobless workers received unemployment insurance benefits during the 12 months ending with the first quarter of 2013, well below the 45% of the unemployed nationwide. Also, the average weekly benefit received was just $214, or less than 25% of the average weekly wage in the state, worse than in any other state except Louisiana.

Click ahead to see the fourth-worst state to be unemployed.

4. Alabama
> Pct. unemployed getting benefits: 32% (8th lowest)
> Pct. average weekly wage covered: 26.2% (6th lowest)
> Unemployment rate: 6.5% (18th lowest)
> 1 yr. job growth: 1.2% (22nd lowest)

Alabama’s unemployment rate rate fell from 7.6% in June 2012 to 6.5% in June 2013. But despite these improvements, being unemployed likely is still very difficult for Alabama workers. Just 32% of unemployed job seekers received unemployment benefits, with these payments averaging just 26.2% of the average weekly wage, both among the lowest figures in the nation. Governor Robert Bentley has made reducing joblessness in the state a top priority and has pledged not to take any salary until the state’s unemployment rate reaches 5.2%.

Click ahead to see the third-worst state to be unemployed.

3. Illinois
> Pct. unemployed getting benefits: 43% (25th highest)
> Pct. average weekly wage covered: 32.1% (16th lowest)
> Unemployment rate: 9.2% (2nd highest)
> 1 yr. job growth: 0.8% (12th lowest)

While the $987 in average weekly wages in Illinois was higher than all but six other states, the average unemployment benefit of about $317 was just the 17th highest in the nation. Illinois has struggled with job growth as well, with the number of nonfarm jobs growing just 0.8% between June 2012 and June 2013, well below the 1.7% growth across the country. The number of jobs in both the public sector and manufacturing industry, which both have a sizable presence in the state, actually decreased during that time. The Illinois unemployment rate of 9.2% in June was higher than that of any other state except for Nevada.

Click ahead to see the second-worst state to be unemployed.

2. Louisiana
> Pct. unemployed getting benefits: 30% (tied-5th lowest)
> Pct. average weekly wage covered: 24.6% (the lowest)
> Unemployment rate: 7.0% (25th lowest)
> 1-yr. job growth: 1.1% (19th lowest)

Jobless individuals in Louisiana should not expect generous unemployment insurance benefits. The average weekly payout in the state for the year ending in first quarter of 2013 was just $201, lower than any other state except for Mississippi. When taken as a percentage of the average weekly wage, Louisiana’s benefits become the stingiest in the country, paying out less than 25% of the average. Fortunately for those out of work, the unemployment rate was 7.0% as of June 2013, below the national rate, indicating less competition for jobs. However, the state is one of a minority where the unemployment rate actually rose from the previous year.

Click ahead to see the worst state of all to be unemployed.

1. Tennessee
> Pct. unemployed getting benefits: 30% (tied-5th lowest)
> Pct. average weekly wage covered: 28.6% (9th lowest)
> Unemployment rate: 8.5% (10th highest)
> 1-yr. job growth: 1.2% (22nd lowest)

Tennessee is the worst state in the country to be unemployed. The average weekly unemployment insurance payout totaled just 28.6% of the average weekly wage, lower than all but eight other states. Meanwhile, just 30% of the unemployed received those benefits, also among the lowest in the country.The state enacted a new law in 2012 that required the unemployed to make “a reasonable effort to secure work” by demonstrating they have reached out to at least three employers per week. In addition, the law requires people receiving benefits to take any job offering 100% of prior wages in the first 13 weeks. After this, to continue receiving benefits they may not turn down any job offering 75% of past wages. By the 38th week of unemployment, this standard falls to 65% of past wages. The state’s unemployment rate of 8.5% in June 2013 was the 10th highest in the country and up from 8.2% in June 2012, despite a decline across the country.

Click here to see the rest of the 10 worst states to be unemployed, on 24/7 Wall St.'s website.

Click ahead to see 24/7 Wall St.'s methodology.

Methodology: To determine the worst states to be unemployed, 24/7 Wall St. reviewed figures published by the Department of Labor’s Office of Unemployment Insurance (OUI) and Bureau of Labor Statistics (BLS). The recipiency rate and recovery rate from the OUI are for the 12 months running through the end of the first quarter of 2013. Unemployment rate from the BLS are for June 2013, with job growth numbers reflecting changes in the nonfarm payrolls measure from the year before. The final rank reflects a composite score of these four measures weighted equally. Data on change in Emergency Unemployment Compensation (EUC) benefits comes from NELP. Dixon noted that since the data was put together, North Carolina has made changes in its UI program to cut weekly benefits. Those changes are not reflected in our data.