Commentators on recent jobs reports have identified stagnant hiring by state and local governments as a major cause of the nation's stubbornly high unemployment rate.
Maybe so, but most state capitals are doing better than their states (Table).
Out of the 33 capitals which are not also their state's commercial capital (most populous city), 20 had a lower median monthly unemployment rate than their state for the first half of 2012. Out of the other 17, 11 had lower median monthly unemployment rates than their states. That makes 31 out of 50. The median unemployment rate for all state capitals for the first half of 2012 was 7.1%.
A few caveats are in order, in addition to those noted in the table itself: (1) Some state governments have major operations outside the state capital itself. (2) Controlling for seasonal adjustment was not possible because some state capitals were too small. (3) For the same reason, BLS data was unavailable for how much nonfarm employment in each city is composed of "government" jobs (i.e. to what extent these are truly company towns).
We know from the recent cases of Providence and Harrisburg that state capital status is no guarantee against fiscal distress. But it's still generally advantageous.