Nevada was followed by Utah, Alaska, Idaho, Arizona, Wyoming, Florida, Hawaii, and Delaware in the 10th spot. Canadian province Alberta had the highest overall ranking and best performing labor market among all states and provinces.
The peer reviewed study, Measuring Labor Markets in the United States and Canada: 2008 Report, assesses the performance of labor markets and examines characteristics which impact performance. The study includes an overall measure of labor market performance based on five indicators: total employment growth, private sector employment growth, unemployment rates, duration of unemployment, and labor productivity over the years 2003-2007.
"The dominance of Western states in labor market performance is clearly seen in the record of employment growth over the past five years," said Niels Veldhuis, co-author of the study and Director of Fiscal Studies at the Fraser Institute.
Nevada had the highest rate of employment growth in North America, followed by Utah while Arizona was fourth overall. Nevada, Utah and Arizona also performed well in private sector employment growth, along with Alaska and Idaho.
Hawaii had the lowest unemployment rate in North America, followed by South Dakota and North Dakota (tied for second in unemployment) and Virginia. Idaho, Utah, and North Dakota were states with the best ratings for average duration of unemployment.
At the other end of the scale, Michigan has the worst performing labor market in all of North America, ranking 60th out of 60 jurisdictions. The Wolverine State was joined at the bottom of the rankings by Mississippi, West Virginia, Missouri, Ohio, Indiana, Massachusetts, Illinois and Wisconsin.
"Michigan is the only jurisdiction that showed negative employment growth over the past five years while Mississippi and West Virginia both had growth rates below one percent," Veldhuis said.
In fact, Michigan had some of the worst results across all five measures of labor market performance: average total employment growth (60th), average private-sector employment growth (57th), average unemployment rate (55th), average duration of unemployment (58th), and average labor productivity (38th).
The study also examines four aspects of labor markets that directly affect labor market performance: public sector employment, unionization, minimum wages, and labor relations laws.
High rates of unionization have been associated with poorer labor market performance including lower rates of employment growth, lower
productivity and higher unemployment rates. Unionization also reduces productivity growth and employment creation.
Not surprisingly, the Right-to-Work states - those that permit workers to choose whether or not to join and financially support a union - have the lowest rates of unionization.
"Right-to-Work states did well on the overall labor market performance index. Six of the top 10 positions and 10 of the top 20 jurisdictions were Right-to-Work states even though they represent just more than one-third of the total number of jurisdictions," Veldhuis said.
Another factor influencing labor market performance is the extent of government employment.
Nevada tops the list of all jurisdictions with the lowest percentage of its employment in the public sector at 10.4 percent. Rounding out the top 10 were four Northeastern states (Massachusetts, Pennsylvania, Rhode Island, and New Hampshire), four Midwest states (Wisconsin, Indiana, Illinois, and Minnesota), and Florida.
Alaska, New Mexico, and Maryland had the highest levels of public sector employment among all states.
"The split between private and public sector employment is an important aspect of labor market performance since the incentives, productivity, and performance of labor activity in the private sector is different from that in the public sector," Veldhuis said.
"High levels of public sector employment lead to lower productivity, which is particularly problematic given that workers in the public sector tend to receive a wage premium compared to their private sector counterparts."
