The State Race

The states with the highest churn rates share a common trait: exposure to the physical economy. Alaska (19.2%), Wyoming (16.8%), Montana (15.7%), and Idaho (16.0%) are all western, resource-dependent, and characterized by small labor markets where a single mine opening or closing can move the needle. Alaska’s economy is dominated by oil extraction on the North Slope, commercial fishing in the Gulf, and federal government spending — three sectors that are all highly seasonal and cyclical. When the salmon run is on, fish processing plants in Kodiak and Dutch Harbor hire thousands of temporary workers. When it ends, they lay them off. This cycle repeats every year, and it shows up in the BDS data as a permanently elevated churn rate.

Montana and Wyoming tell a version of the same story with different resources. Wyoming’s Powder River Basin produces more coal than any other region in America, and its natural gas fields in the Green River Basin employ thousands of seasonal workers. Montana’s economy mixes ranching, timber, tourism, and a growing tech sector in Bozeman and Missoula, but the traditional resource base still drives the state’s overall dynamism. These are economies where the weather determines hiring decisions, where a warm winter means fewer ski resort jobs but more construction starts, and where a commodity price swing in Houston or London can ripple through the entire state within weeks.

At the other end, the least dynamic states are the big, diversified ones. Pennsylvania (9.7% churn), Illinois (10.0%), and Ohio (10.3%) are the economy’s ballast: large enough that no single industry dominates, old enough that their industrial structure has long since settled, and stable enough that the quarterly creation and destruction of jobs proceeds at a stately pace. Pennsylvania’s economy spans Philadelphia’s healthcare and financial sectors, Pittsburgh’s tech renaissance, the state’s Marcellus Shale gas fields, and its legacy manufacturing corridor. No single component moves fast enough to drive the state’s overall churn rate above 10%.

The Sun Belt states that dominate political rhetoric about economic growth — Texas (10.6%), Florida (11.3%), Arizona (14.7%) — are dynamic but not exceptionally so. Arizona is the outlier, with a churn rate nearly 50% above Texas’s, reflecting the state’s smaller labor market and its heavy dependence on construction and real estate. Arizona’s economy has always been a boom-bust story: the state lost jobs at a 3.0% rate during the 2009 housing crash, the worst of any major state, then surged to a +2.4% net rate in 2006 during the bubble’s peak. Texas, by contrast, is big enough and diversified enough that its churn rate has converged toward the national average over the past two decades.

Churn measures speed. Net creation measures direction. In Q1 2024, the fifty states split into a clear majority of growers and a handful of losers. Forty-seven states posted positive or zero net job creation rates. Only four — Colorado (−1.0%), Washington (−0.5%), Idaho (−0.2%), and Nevada (−0.1%) — were net negative. That is an unusually tight distribution. In a recession, dozens of states go negative simultaneously. The fact that nearly every state is in positive territory, even if barely, reflects an economy that is growing slowly but broadly.

Alaska leads at +2.2%, but this is misleading in absolute terms. Alaska’s entire labor market comprises roughly 253,000 jobs, so a 2.2% net rate translates to about 5,600 net new positions. Arizona, ranked second at +1.7%, added about 46,000 net jobs in a single quarter — nearly eight times Alaska’s absolute contribution. The big states contributed the most in absolute volume: New York added 84,000 net jobs (+1.0%), Texas added 45,000 (+0.4%), and California added 52,000 (+0.3%). Florida, often celebrated as a migration magnet, posted a modest +0.3% net rate, adding about 27,000 jobs.

Colorado’s position at the bottom of the rankings is a story of post-pandemic overheating. Between 2021 and 2022, Colorado posted some of the highest net creation rates in the country: +3.2% in 2021, +1.3% in 2022. The state’s economy, centered on Denver’s tech corridor along Interstate 25, had attracted a wave of remote workers fleeing the costs of the Bay Area and the density of the Northeast. Real estate prices soared, construction boomed, and businesses opened at a frantic pace. By 2024, the hangover had arrived. The tech sector was laying off workers nationwide, Denver’s apartment vacancy rates were climbing, and the state’s loss rate of 7.4% — the highest in the country — was driven by the unwinding of those pandemic-era gains. The state that had been one of America’s biggest winners in 2021 was, by 2024, its biggest loser.

Washington tells a similar story with a Seattle twist. The state’s tech sector — Amazon, Microsoft, Boeing — had expanded aggressively during the pandemic, then contracted sharply as the sector retrenched. Washington posted a −0.5% net rate in Q1 2024, after registering +2.1% in 2021 and +1.9% in 2022. The pattern is strikingly similar to Colorado’s: explosive growth followed by correction, with the BDS data capturing the timing of the reversal with quarterly precision. Idaho and Nevada, which had also been pandemic boomtowns as remote workers relocated to Boise and Las Vegas, were posting their own smaller corrections.

The most informative way to read the state data is not as a single snapshot but as a 25-year film. The big states — California, Texas, Florida, New York — together account for about a third of all American employment, and their trajectories reveal the deep currents shaping the national economy. California’s net creation rate has been on a long, uneven decline: from +0.8% in 2000 to +0.3% in 2024, with a devastating −3.1% during the 2009 financial crisis and a post-pandemic spike to +1.9% in 2021. The state’s gain rate of 6.0% in Q1 2024 is well below its 2000 level of 9.4%. California creates jobs at a slower rate than it used to, and the margin between creation and destruction has narrowed.

Texas tells the story of convergence. In 2000, the Lone Star State was clearly more dynamic than the national average, with a gain rate of 7.7% against the national 8.3%. By 2024, Texas had settled to 5.5%, almost exactly equal to the national 5.6%. The state that politicians love to celebrate as America’s job-creation engine has, over 25 years, converged toward the mean. Texas is still a net job creator (+0.4%), but the exceptional dynamism that characterized its oil-boom years in 2006 (+1.3%) and 2012 (+1.0%) has faded. The state is big enough, diversified enough, and mature enough that it increasingly resembles the nation as a whole.

New York, surprisingly, has been the most consistent net job creator among the big four states. Its net rate has been positive in 19 of the 25 years covered by the data, and its Q1 2024 rate of +1.0% is the highest among California, Texas, Florida, and New York. The state’s gain rate of 6.0% is exactly equal to California’s, but its loss rate of 5.0% is significantly lower. New York loses fewer jobs, proportionally, than any other big state — a reflection of the stability of its massive healthcare, education, and financial services sectors. The narrative of New York as a state that people and businesses are fleeing is not supported by the BDS data, at least through Q1 2024.

Florida, the great migration magnet, posted a modest net rate of +0.3% in Q1 2024. This may seem surprising for a state that has been gaining population faster than almost anywhere else in the country, but the BDS measures establishment-level employment dynamics, not population or migration. Florida’s gain rate of 5.8% is moderate, and its loss rate of 5.5% is not much lower. The state’s economy is heavily weighted toward leisure, hospitality, construction, and real estate — all high-churn, high-turnover sectors. Florida creates and destroys jobs at a fast clip, but the net is smaller than the headline migration numbers would suggest.

Some states don’t just ride the business cycle — they amplify it. Colorado, Idaho, Nevada, and Arizona are the economy’s amplifiers: states where the booms are bigger, the busts deeper, and the reversals sharper than the national average. Nevada’s net creation rate swung from +1.6% in 2006 to −3.8% in 2009 — a total arc of 5.4 percentage points in just three years. That is the widest boom-to-bust swing of any state during the Great Financial Crisis, worse even than Arizona’s 5.4-point drop (from +2.4% to −3.0%).

What these states share is exposure to the housing cycle. Nevada’s economy is built on Las Vegas, which is built on construction, tourism, and real estate. Arizona’s growth model is essentially the same, centered on Phoenix and Tucson. When national interest rates fall and mortgage credit loosens, these states attract a flood of homebuyers, construction workers, and service workers to build and staff the new developments. When rates rise and credit tightens, the flow reverses. The workers who came for the boom leave, the construction firms close, and the service establishments that opened to serve the growing population shutter. The BDS captures this cycle with remarkable clarity: Nevada’s gain rate in 2006 was 7.5%; by 2009, it had fallen to 5.2%. Its loss rate went the other direction, from 5.9% to 9.0%.

Idaho and Colorado are the pandemic-era versions of this pattern. Both states attracted a surge of remote workers between 2020 and 2022. Boise’s population grew 10% in three years. Denver’s tech sector expanded rapidly. By 2024, both states were in correction: Idaho’s net rate had gone from +2.5% in 2021 to −0.2%, and Colorado’s had swung from +3.2% to −1.0%. These are states where the denominator of the labor market is small enough that a few thousand hirings or layoffs can move the percentage by a full point. They are the seismographs of the national economy, registering tremors that barely register in California or Texas.

The lesson is that a state’s dynamism is not, in itself, a good or bad thing. Alaska is the most dynamic and the highest net creator. Nevada is among the most dynamic and a net job loser. The relationship between churn and net creation is weak. What matters is the spread between gains and losses, and that spread is determined by factors — industry mix, housing market conditions, commodity prices, population trends — that are largely outside the control of state policymakers, whatever they may claim on the campaign trail.