Unemployment Rate Rises in 48 States

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The unemployment rate rose in all but two states last month, and in eight states it reached the highest level in the 34 years on record.

Michigan, hit hard by auto plant closures, had the highest unemployment in the country, the Labor Department said Friday, rising to 14.1% in May from 12.9% in April. It was the highest Michigan's unemployment has been since the early 1980s, when high energy prices and a rising dollar slammed the U.S. manufacturing sector.

Oregon's unemployment rate of 12.4% was the next highest in the country, and the highest for the state on records going back to 1976. Next was Rhode Island and South Carolina, each at a record 12.1%, and California, at a record 11.5%. North Carolina, Florida, Georgia and Nevada also had record high unemployment rates.

In 16 states and the District of Columbia, the unemployment rate topped the nation's 9.4%; it was lower in 33 states. The two states with the lowest unemployment rates were North Dakota and Nebraska, whose farm economies have been shielded from job losses.

Payrolls were below year-earlier levels in 48 of the 50 states. The largest percentage decline was in Arizona, where the housing downturn has cut deeply into real-estate related work. It had 7.4% fewer jobs than a year earlier.

The national jobless rate has hit a quarter-century high of 9.4%. Federal Reserve Chairman Ben Bernanke and other economists predict the U.S. unemployment rate will keep rising even if the recession ends later this year, since companies won't want to ramp up hiring until they feel certain their own sales and profits are on the rebound and any economic recovery will have staying power.

Even as their residents deal with a worsening job market, states are increasingly dipping into taxpayers' pockets to replenish their cash-starved coffers.

Faced with gaping budget holes, 23 states have raised taxes this year, and 13 more are considering doing so as they set out to approve 2009-2010 budget agreements, according to a report by the Center on Budget and Policy Priorities, a liberal think tank. In most cases, the tax increases come on top of cuts in public services.

The raises include income, sales and business taxes and take aim at everything from slot machine licenses to motel room taxes. Another popular target is excise taxes on alcohol and tobacco. New York, which estimated its budget gap at 29% in its 2010 budget, will charge 11 cents more on beer and wine. Similarly, seven states will raise the price of a pack of cigarettes anywhere between 2 cents and $1.