Businesses. Workers. Investors. The government. Everyone uses the unemployment rate to measure how well the economy is doing. You might keep an eye on the national rate, but what about unemployment rates by state?
Read on to learn the unemployment rate per state and why it matters.
What is the unemployment rate?
The Bureau of Labor Statistics (BLS) defines unemployment as the number of people who are jobless, actively seeking work, and available to work. The unemployment rate shows the number of unemployed individuals as a percentage of the entire labor force (which counts both the employed and unemployed).
The unemployment rate goes beyond the number of individuals receiving unemployment benefits. In fact, only about one-third of unemployed individuals receive unemployment benefits, according to the BLS. To get a more accurate count, the government conducts a monthly survey: the Current Population Survey (CPS).
Here’s the bottom line: The unemployment rate is not the same number of people who receive unemployment benefits. However, it still is a factor in state unemployment tax rate ranges, which we’ll get to next.
Why the state-by-state unemployment rate matters
So, what does the unemployment rate have to do with business? Besides being a central focus on the news, you may want to know how the unemployment rate impacts your business.
Unemployment rates by state could affect:
SUTA (State Unemployment Tax Act) tax rate ranges Talent pool Business profits Employee morale Unemployment benefits 1. SUTA tax rate ranges
Employers are responsible for paying federal and state unemployment taxes for their employees. That way, your employees can apply for unemployment benefits if you have to lay them off.
Most states assign a standard new employer SUTA tax rate for new employers. After some time (typically a year), the state assigns employers an individual SUTA tax rate, which falls within a set contribution rate range. This rate varies by employer and depends on factors such as:
Industry How many former employees received unemployment benefits Experience
So, how do states arrive at the contribution rate ranges? Cue economic conditions and filed unemployment claims. Many states have varying tax schedules, which determine the minimum and maximum contribution rates.
The schedule a state uses in a given year depends on how the state is doing economically. And, remember what is one of the biggest economic indicators? That’s right: the unemployment rate.
Although your individual SUTA tax rate is specific to your business, the range it falls in is based on the economy.
2. Talent pool
The unemployment rate also impacts your available talent pool for hiring. And, it could affect your ability to retain employees.
Typically, the higher the unemployment rate, the easier it is to find job-seeking workers. And the lower the unemployment rate, the harder it could be to find talent.
Likewise, you could have a more challenging time with retaining employees when unemployment is low. During this time, workers have more job options, which may cause them to job hop. According to one survey, low unemployment rates created this job-hopping trend.
So when unemployment rises, you may notice employees planting down roots more so than during low unemployment.
Keep in mind that your ability to hire and retain employees doesn’t depend solely on how the economy is doing. There are a number of ways youContinue reading