Illinois Saw the Largest Unemployment Rate Decline in U.S.

Hiring sign at a Starbucks in the Loop Area of Chicago. (Medill/Lucy Ren)

By Lucy Ren

Thirty states had statistically significant unemployment rate declines over the year of 2014, the largest of which occurred in Illinois, while the only significant rate increase occurred in Louisiana, according to a release by the Bureau of Labor Statistics (BLS).

Illinois saw the largest unemployment rate decline over 2014 (-2.7 percent). (Bureau of Labor Statistics, Medill/Lucy Ren)

Scott Brown, senior vice president of Raymond James & Associates, said he was not surprised by Illinois’ 2.7 percentage points decline in unemployment rate. “There is usually a bit of noise in the state data,” Brown said.

BLS independently developed the national employment statistics, while each state series was subject to larger sampling and non-sampling errors than the national series, according to the BLS release.

Every region and most states in the U.S. saw unemployment rates decline in December, according to a monthly report issued by the BLS on Tuesday. For the non-farm payroll employment, the largest significant job gains in the month of December occurred in Texas, New York and Illinois, and the largest over-the-year job increase occurred in Texas, Californian and Florida.

U.S. unemployment rate has dropped to 5.6 percent in December. (Bureau of Labor Statistics, Medill/Lucy Ren)

Ward McCarthy, chief financial economist at Jefferies LLC, predicted that unemployment rate would continue to fall. “The small- and medium- size companies should continue contributing to the job growth,” McCarthy said.

“The non-farm payrolls was up 252,000 in December,” McCarthy said. “When looking at that number and the declining unemployment rate together, you can tell that the labor market should continue to generate greater momentum in 2015.”

States with unemployment rates significantly different from that of the U.S. in December 2014. (Bureau of Labor Statistics, Medill/Lucy Ren)

Brown predicted that although unemployment rate continued to drop, the decline would begin to slow down. “The biggest issue here is the calculation of unemployment,” Brown said.

In order for a person to be counted as unemployed, he or she has to be actively looking for work in the prior four weeks.

“Many people stopped looking for jobs over time, especially after their unemployment insurance ran out,” Brown said. “So those people were not counted as unemployed. However, as the labor force becomes more flexible, those people will return to the job market, and so eventually the decline in unemployment rate won’t be as steep as it is now.”

The national unemployment rate declined to 5.6 percent in December, down 2 percentage points from the month before and 1.1 percentage points from a year ago.

Photo at top: Hiring sign at a Starbucks in the Loop Area of Chicago. (Medill/Lucy Ren)