Nebraska Jobless Rate Lowest in Midwest

HERE'S a riddle: What state in the continental United States has the lowest unemployment rate west of the Mississippi River? No, it's not California. Washington doesn't cut the mustard. Neither does Colorado. The answer, surprisingly, is Nebraska.

For many months this agricultural and manufacturing state has posted the lowest unemployment figures in the Midwest.

In August, Nebraska had the third lowest unemployment rate in the nation with 3.1 percent, trailing only Hawaii (1.8 percent) and Maine (3.0 percent).

``Nebraska has been one of the most healthy economies in our region'' for the last few years, says Tim Smith, a senior economist with the Federal Reserve Bank of Kansas City.

Farming has recovered. Nebraska's two largest cities, Omaha and Lincoln, have shown increases in manufacturing and service jobs. New economic-development incentives approved in 1987 have polished Nebraska's image as a pro-business state.

The problem is that Nebraska's low unemployment rate is actually a sweet-and-sour picture of what is happening throughout the Great Plains: New jobs are coming in, but people are moving out.

``Our labor force is not growing and, in fact, shows signs of decreasing,'' says John Austin, an economist with the University of Nebraska's business research bureau. So when new jobs open up here, they make the unemployment rate fall a lot faster than in states where large numbers of people are moving in.

As in the rest of the Midwest, Nebraska's rural population has shrunk while its urban centers continue to grow.

The Lincoln metropolitan area grew 9.7 percent between 1980 and 1988, according to the US Census Bureau, which exactly matched the average growth of metropolitan America and doubled the increase in rural America. The Omaha metropolitan region grew 6.2 percent during the same period.

Now, this metropolitan growth is beginning to spill over to medium-sized rural communities, says Stuart Miller, research director for the Nebraska Department of Economic Development.

Here in Wayne, Neb., for example, the First National Bank of Omaha is building a data processing center. The bank hopes to open it by Dec. 1 and employ 40 people by year's end; eventually 150 the center is expected to employ. That's a big boost for town of 5,000, which already boasts a small state college and a refrigerator truck-trailer factory.

``We have filled a lot of business fronts that were vacant,'' says Linda Smith, executive vice-president of the Wayne Area Chamber of Commerce. ``We are seeing a lot of growth in northeast Nebraska.''

It's not clear that Nebraska's spurt of the last two years represents a new era, Mr. Miller says. But the prospects for stability look a lot brighter than they did just a few short years ago.