Oct. 25, 2021, 10:20 a.m. EDT

This state has the biggest labor shortage — and one of the lowest unemployment rates

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By Elisabeth Buchwald

Labor shortages are most prevalent in Nebraska and least prevalent in Hawaii, according to a first-of-its-kind Labor Department report published Friday as employers across the U.S. struggle to fill job openings.

In August, when 8.4 million Americans were unemployed, there were 10.4 million job openings, according to data from the Bureau of Labor Statistics. That equates to just over one job opening for every unemployed person.

But the bureau’s new state-level Job Openings and Labor Turnover report showed that some 22,400 Nebraskans were unemployed in August, while there were 66,000 job openings. That translates to a ratio of three job openings for every unemployed Nebraskan — signifying the largest labor shortage among all states.

Related: ‘A job is not just a job’: Why some unemployed people aren’t jumping at job openings

This is primarily a product of the state’s record-low unemployment rates, said Bryan Slone, the president of the Nebraska Chamber of Commerce & Industry, a trade group.

“We went into the pandemic with low unemployment rates, and even through the pandemic had some of the lowest unemployment rates in the country,” he said. Unlike governors in many states, Nebraska Gov. Pete Ricketts, a Republican, did not issue stay-at-home orders.

That meant fewer workers “were displaced during the pandemic,” Slone told MarketWatch. “People were able to continue to work under health safeguards rather than simply being sent home.”

In contrast, Hawaii, California, Connecticut, New York and Illinois had the lowest ratios of job openings to unemployed people, all hovering around 0.13. That signifies there is a shortage of job openings in these states, as opposed to workers.

All five states’ governors issued stay-at-home orders during the pandemic. They also did not cut off jobless residents from collecting enhanced unemployment benefits before they expired in early September.

While “the relationship is important,” it likely isn’t “causal in the sense that keeping the unemployment benefits is the reason why those states have higher ratios,” said Nick Bunker, an economist at the online jobs platform Indeed, referring to the fact that these five states didn’t end enhanced federal unemployment benefits prematurely, as 26 other states did.

“That connection is due more to the industry composition of those states,” Bunker said. “Hawaii, for example, is very dependent upon tourism. Those industries have been hit hardest, so you can understand why policymakers in those states would be less willing to cut the program early.”

Kentucky has the highest quit rate among all states

The report published Friday also revealed that the “Great Resignation” trend is most prevalent in Kentucky, where the job-quit rate was 4.5% in August. The national job-quit rate that month hit a record high of 2.9% .

“The labor force challenge that we’re seeing nationwide is generally worse in Kentucky than it is anywhere else,” said Charles Aull, a senior policy analyst at the Kentucky Chamber of Commerce, a trade group.

In September, Kentucky had the third-lowest labor force participation rate, 56.5%. Nationally, the labor force participation rate is 61.6%, according to September’s jobs report.

“We have a very, very serious workforce problem here in Kentucky,” Aull told MarketWatch. At the same time, the state had the highest rate of job openings, 8.2%. The national job-opening rate is 6.6%.

Since there were 167,000 job openings in August and 85,000 people were unemployed, Aull said, that naturally “entices people to quit jobs to take other jobs and to move around a lot.”

On top of that, “the delta variant was particularly bad in Kentucky — inevitably, that probably did lead to some degree of quits,” Aull said.

On a national scale, “bipartisan immigration reform that allows legal immigration” is crucial, Slone said. “Until that’s done, it’s going to be really hard to solve the workforce shortage.”

Related: Senate parliamentarian says $3.5 trillion bill can’t include citizenship path for immigrants

Related: Opinion: A pathway to citizenship could create 400,000 new jobs, but only if Congress acts

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