North Dakota Unemployment Rate Remains Low Mostly Because Unemployed Workers Are Leaving

According to a press release from North Dakota Job Service today (see below), the state’s unemployment rate in October remained at a rock-bottom low of 2.8 percent. That’s unchanged from last month and, in fact, is unchanged from October.

But how can that be? After all, the plunge in oil prices and its impact on North Dakota’s economy has been well-documented. There’s still plenty of hiring going on in the state, and generally the economy here is still strong, but there’s no question that plenty of people have been laid off. So why aren’t they showing up in the unemployment rate?

The answer is because most of those workers are leaving the state once their jobs here are gone.

This chart compares North Dakota’s civilian labor force (the number of people who are available for jobs) versus a count of the number of people who are employed. The gap between these two numbers is the unemployment rate.

As you can see, the trend for both numbers is downward over the last year, but they also track one another. When the employed number goes down, so does the count of people in the state who are eligible to work. This means that the workers who are leaving the “employed” category are probably also leaving the state.

North Dakota lost just over 6,000 employed workers from October 2014 to October 2014, but the civilian labor force also shrank 6,496 workers, which is how the unemployment rate stayed essentially unchanged.

Job Service officials have noted a spike in unemployment benefits paid out-of-state. “Michael Ziesch with Job Service North Dakota says about 53 percent of payments have gone to out-of-staters over the past twelve month period,” the KXNews reported in September. “He says traditionally that number has been less than twenty percent.”

According to that report, workers who lost their jobs in North Dakota and move out of state get counted in their home state’s unemployment counts even though North Dakota is on the hook for paying their unemployment benefits.

What this means, ironically, is that North Dakota is getting some benefits from being something of an acquired taste when it comes to places to live. Were we, say, California or Florida a lot of these workers might be sticking around inflating the unemployment rate and signing up for public assistance programs.