The December state employment and unemployment data, released today by the Bureau of Labor Statistics, show that most states closed 2014 on a positive course. Employment growth over the final three months of the year was reasonably strong, and unemployment fell in nearly every state.  This all points to an improving labor market, yet there is still considerable ground to make up before we can say that most states are back to prerecession labor market health.

From September to December 2014, 44 states and the District of Columbia added jobs, with the largest percentage gains occurring in Alaska (+1.7 percent), Oregon (+1.4 percent), and Wisconsin (+1.2 percent).  At the same time, six states lost jobs, with West Virginia (-0.5 percent), Maine (-0.4 percent), and Mississippi (-0.4 percent) experiencing the largest losses. When compared with the same period one year prior, employment growth in the final quarter of 2014 for the country overall was relatively strong: 0.6 percent in 2014 versus 0.4 percent in 2013 (a difference of about 350,000 jobs). In other words, the country added 100,000 more jobs per month this past quarter compared with the same time last year.

From September to December, the unemployment rate fell in 44 states and the District of Columbia.  The declines were largest in North Carolina (-1.2 percentage points), Delaware (-1.1 percentage points), Georgia (-1.0 percentage point), and Kentucky (-1.0 percentage point). However, at least some of the declines in these states may be attributable to job seekers giving up—not finding jobs—as the labor force shrank in all four of these states. In fact, the labor force decreased by 1.5 percent and 3.1 percent in North Carolina and Kentucky, respectively, over the last six months—compared with growth of 0.3 percent for the country as a whole.  The unemployment rate rose in Louisiana (+0.7 percentage points), Washington (+0.6 percentage points), and Indiana (+0.1 percentage points) as labor force growth outpaced job growth in these states, particularly Louisiana. Connecticut, North Dakota, and Utah had no change in unemployment.

While a shrinking labor force raises questions about the cause of recent unemployment declines in a handful of places, most states seem to have finished 2014 on the right track. Nevertheless, job growth for the country will still have to pick up from last year if the labor market is going to reach its prerecession health before the summer of 2017.