By Courtney Schlisserman

Jan. 22 (Bloomberg) — Employment dropped in 39 U.S. states in December, seven more than in the prior month, indicating job losses were widespread.

Payrolls in California showed the biggest decline, falling by 38,800 last month, according to figures issued today by the Labor Department in Washington. Texas followed with a 23,900 decline and Ohio was next with a 16,700 drop.

With the national unemployment rate projected to average 10 percent this year, state budgets may continue to be strained by limited tax revenue and jobless insurance payments. While the pace of firings has eased over the last year, the time it is taking to find a job rose to a record 29.1 weeks in December.

Employment is “still very weak, which is why we think the unemployment rate is going to continue to rise,” Marisa Di Natale, a director at Moody’s Economy.com in West Chester, Pennsylvania, said before the report. “There are some states that are in pretty big trouble, fiscally speaking. 2010 is not going to be a good year.”

The jobless rate in the U.S. held at 10 percent in December, the Labor Department said on Jan. 8. A jump in the number of discouraged workers leaving the labor market kept the rate from rising.

Payrolls fell by 85,000 last month and followed a gain in 4,000 in November that was the first increase in almost two years. The U.S. has lost 7.2 million since the start of the recession in December 2007, the most of any slowdown in the post-World War II era.

Exceeding 10 Percent

The number of states with at least 10 percent unemployment climbed to 16 last month, two more than in November, today’s report showed. Mississippi, with a jobless rate of 10.6 percent, and New Jersey, at 10.1 percent, joined the list. New Jersey’s rate was the highest in 32 years.

New York City’s unemployment rate rose to 10.6 percent last month, the highest since March 1993, the state’s Labor Department reported yesterday. The state’s jobless level climbed to 9 percent from 8.6 percent.

Michigan remained the state with the highest level of unemployment at 14.6 percent. Nevada followed at 13 percent and Rhode Island was next at 12.9 percent.

Joblessness in South Carolina, Delaware, Florida, North Carolina and the District of Columbia in December reached the highest level in monthly records going back to 1976.

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