The Tightest Labor Market on Record Across the Country

The State Employment and Unemployment report released last week and the State Job Openings and Labor Turnover Survey report released this morning make one thing clear: labor shortages continue to intensify across the country, even as workers return to the labor force.

Every single state in the U.S. now has more job openings than unemployed people. State ratios between unemployed people and job openings are at record lows in 27 states, and state unemployment rates are at record lows in 12 states.

Here are states with particularly remarkable labor market dynamics:

1. Utah and Montana are the best job seekers’ markets in the nation

Nationwide, there are 1.7 job openings for every unemployed person, which would be remarkable on its own. (The pre-pandemic average was 0.4, by comparison.) But the imbalance between labor supply and labor demand is even starker in Utah, and Montana, with 3.7 and 3.3 job openings for every unemployed person, respectively.

While those two states have the starkest imbalances between supply and demand, labor shortages are a broader phenomenon. 8 states have unemployment rates of 2.5% or below: Nebraska, Utah, Indiana, Montana, Kansas, Minnesota, New Hampshire, and South Dakota. In all of these states, staffing shortages at businesses are particularly rampant and there is fierce competition among employers for scarce talent.

As a result, job seekers in those states are enjoying substantial bargaining power, which is translating into rapid wage growth. State wage growth rates are released with a lag— the latest available data are for the third quarter of 2021—but already then, year over year wage growth measured in 15.0% in New Hampshire and 7.1% in Utah.

States with tight labor markets where wage growth is lagging behind—such as Nebraska, at 5.5%— have likely experienced intense upward pressure on wages since.

States with such tight labor markets have become powerful job magnets, attracting workers from across the country. For example, both Montana and Utah are in the top 10 when it comes to net in-migration rates, with Montana adding 17 residents for every 1,000, and Utah adding 10 between 2020 and 2021, according to the most recent data from the U.S. Census Bureau.

2. Layoffs have become vanishingly rare in Michigan, once known for cascading mass layoffs and plant closures

In the Great Recession, Michigan workers became accustomed to mass layoffs of manufacturing workers and government workers, as plant closures and local government bankruptcies roiled the state. Now, in the wake of the Covid recession, however, the state’s workers couldn’t be faring more differently. The state has the lowest rate of layoffs and discharges nationwide, giving workers unparalleled job security.

Only 0.6% of Michigan workers are being terminated each month—a much lower share than the national average of 0.9%. In February, only 28k people lost their jobs involuntarily in the state. While past recessions have seen demand for goods fall more than demand for services, the pandemic recession has largely been concentrated in the service sector, while demand for goods— particularly durable goods— has skyrocketed, benefiting the manufacturing belt.