Only nine states have unemployment rates of 3% or lower—well below the national average of 4.1%, according to the U.S. Bureau of Labor Statistics (BLS). Leading the pack is South Dakota, with an impressive 1.9% unemployment rate, followed closely by Vermont (2.4%) and North Dakota (2.5%). Other states, including Nebraska and New Hampshire, also post strong employment figures.
So, what makes these states stand out? States with low unemployment rates tend to have a strong mix of industries, with steady employment in areas like healthcare, finance, and manufacturing. Business-friendly policies and high workforce participation also help keep their unemployment rates low.
Key Takeaways
- South Dakota, Vermont, and North Dakota have the lowest unemployment rates in the U.S., at 2.5% or lower.
- The national unemployment rate sits at 4.1%, meaning these states are significantly outperforming the nation as a whole.
- Factors such as strong local industries, high workforce participation, and favorable economic policies contribute to low unemployment rates among these states.
South Dakota: 1.9%
South Dakota boasts the lowest unemployment rate in the country thanks to a strong agriculture sector, a growing financial services industry, and a business-friendly regulatory environment that encourages job growth.
South Dakota also benefitted from a resurgent leisure and hospitality industry following the COVID-19 pandemic. Who wouldn’t want to visit The Badlands or Deadwood?
Vermont: 2.4%
Vermont benefits from a high labor force participation rate and a stable economy driven by tourism, healthcare, and advanced manufacturing.
This is not a big economy or a big state. Vermont ranks last among state economies. Tourism and leisure continue to be mainstays of Vermont’s economy, along with forestry, dairy farming, and specialized small-scale manufacturing.
North Dakota: 2.5%
The state’s energy sector, particularly oil and natural gas production, plays a key role in keeping unemployment low. North Dakota is the third leading oil-producing state in the nation.
Agriculture—the state’s largest industry—and higher education also contribute to a strong employment picture.
Note
North Dakota produces 10% of all U.S. oil. The state’s output is primarily driven by the Bakken Formation, one of the largest shale oil reserves in North America.
New Hampshire: 2.6%
A strong technology and healthcare sector, along with no state income tax, makes New Hampshire an attractive place to work and do business.
The state’s advanced manufacturing sector—making everything from medical devices to aerospace parts—employs more than 67,000 people.
Nebraska: 2.8%
Known for its stable job market, Nebraska has a strong agricultural base and a diverse economy that includes healthcare, social assistance, and retail, which alone account for about one-quarter of employment in the state.
Connecticut: 3.0%
A skilled workforce, especially in finance and insurance, helps keep unemployment low.
The state also benefits from major employers including Amazon, Booking Holdings, Charter Communications, Stanley Black and Decker, and XPO Logistics.
Hawaii: 3.0%
Despite challenges related to its high cost of living, Hawaii’s tourism-driven economy provides a steady stream of jobs in the hospitality and service industries. In fact, leisure and hospitality jobs make up about 20% of overall employment in the state.
Virginia: 3.0%
Strong government contracting, technology, and defense sectors contribute to Virginia’s healthy employment rate.
Within the state, Loudoun County boasts Data Center Alley—the world’s largest concentration of data centers, providing more than 12,000 jobs at data centers for Google, Amazon, and Microsoft, among others.
Wisconsin: 3.0%
Fast-growing leisure and hospitality, construction, and information sectors are fueling job growth in Wisconsin.
Manufacturing is also big: The state recently ranked first in the nation for paper production.
The Bottom Line
With the national unemployment rate sitting at 4.1%, these nine states—including Virginia, Wisconsin, Connecticut, and South Dakota—are significantly outperforming the rest of the country in terms of employment.
With strong industries, stable economies, and high workforce participation, they are attractive options for job seekers looking to find better employment prospects.