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9 States With the Lowest Unemployment Rates

The jobs market is nowhere near where it was prior to the recession in 2007, but considering we've moved from an unemployment rate of 10% down to a fresh five-year low of just 6.7%, it's safe to say things are moving in the right direction.

A rebounding U.S. economy, expanding manufacturing sector, and low interest rates that are spurring lending and business expansion have fueled hiring since the trough of the recession and given hope once again to job-seekers.

Source: Bureau of Labor Statistics

But, as we've witnessed previously, not all job creation is occurring equally around the U.S. Certain states have extremely high unemployment rates, while others are humming along well below the national average of 6.7%. Today, I want to take a closer look at the nine states with the lowest unemployment rates, as they could offer clues as to where the next job-growth hot spots may occur -- and they may also point to intriguing investment opportunities!

Nine states with the lowest unemployment rates
According to the November release by the Bureau of Labor Statistics, here are the nine states with the lowest unemployment rates: 


Unemployment Rate

North Dakota


South Dakota
















Source: Bureau of Labor Statistics. Unemployment rates are seasonally adjusted for Nov. 2013.

The first factor that likely jumps out is that these are generally more sparsely populated states that generally lack large business centers. In other words, these states don't represent any of your traditional business hubs such as New York, Chicago, Los Angeles, and so on. That may seem like a disadvantage, but it can actually be quite the opposite, as relatively focused businesses in these states allow prospective job-seekers to hone in on the skills they'll need to get hired. In larger cities, the types of jobs companies are seeking aren't always as obvious, which can lead to higher unemployment rates.

Many of these states also offer some degree of specialization that you'll struggle to find in other states throughout the country. North Dakota, South Dakota, and Wyoming, for example, have low unemployment rates because they're at the heart of a major oil and gas boom.

Source: Eric Kounce, Wikimedia Commons.

A substantial portion of the Bakken formation and Three Forks formation, for instance, sits in North Dakota. According to a U.S. Geological Survey report issued last Aprll, there are "an estimated 7.4 billion barrels of undiscovered and technically recoverable oil" in this region. What this tells me is that there's a multidecade opportunity left for drillers to explore and recover from these shale formations, which should give this previously desolate region of the U.S. renewed life. Two companies set to take advantage of this boom are Whiting Petroleum (NYSE: WLL  ) and Continental Resources (NYSE: CLR  ) , currently the two largest producers in the Bakken. Because this region is rich in liquid assets as opposed to natural gas -- and liquids have steadier demand, pricing, and margins -- look for Whiting and Continental to keep their hiring and expansion efforts up.

Another example would be Hawaii and its reliance on tourism to drive GDP growth. As my Foolish colleague Amanda Alix pointed out in November, Hawaii keeps its unemployment rate relatively low by focusing on tourism and offering a retirement haven for wealthy individuals. This would bode well for a company like Alexander & Baldwin (NYSE: ALEX  ) , which calls Hawaii home. A&B, as it's better known, is a real-estate development company, a sugar producer, and also the largest paving company in Hawaii.Given the temperate year-round climate and a more affluent residential population, Hawaii and Alexander & Baldwin should see continued growth.

A final example would be Nebraska, which specializes in agriculture. According to Greg Ibach, director of the Nebraska Department of Agriculture, the state is the fourth-largest agricultural economy in the U.S. and second in cattle production. Because Nebraska is known for its agricultural ties, it gives residents in that state a specific focus, which helps keeps the unemployment rate well below the national average. One company largely responsible for this is ConAgra Foods (NYSE: CAG  ) , which calls Nebraska home. Of ConAgra's workforce of nearly 36,000 people, roughly 8% are employed in Nebraska, and this figure should remain stable, considering that a growing population in the U.S. and abroad needs to be fed.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 29, 2014, at 4:32 PM, SkepikI wrote:

    Sean: Your focus exclusively on the unemployment rate is a mistake and misses a major point entirely. The people in the labor force has DECLINED substantially. Most of the decrease can be ascribed to people leaving the labor force. MANY MORE THAN CAN BE EXPLAINED BY "RETIREMENTS"

    This will come back to bite - particularly those of your age group. It would behoove you (and them) for you to write more about this than the unemployment rate.

    Its not even close to the rainbows and lollypops you seem to ascribe to the decline in rates.

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Sean Williams

A Fool since 2010, and a graduate from UC San Diego with a B.A. in Economics, Sean specializes in the healthcare sector and in investment planning topics. You'll usually find him writing about Obamacare, marijuana, developing drugs, diagnostics, and medical devices, Social Security, taxes, or any number of other macroeconomic issues.

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