WASHINGTON (Bloomberg) - Employment dropped in 39 US 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 on Friday by the Labour 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 US held at 10 percent in December, the Labour Department said on January 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 US 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.

The number of states with at least 10 percent unemployment climbed to 16 last month, two more than in November, Friday'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 Labour Department reported on Thursday.

The state's jobless level climbed to nine 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.

"I try to make the connections, I meet people and give them follow-up e-mails, nothing right now seems to work," said Kyra DeBlaker-Gebhard, who lives in the nation's capital. "I'm concerned the longer I'm not working the less desirable I look."

Ms DeBlaker-Gebhard, 32, lost her job with the AARP in Washington, the advocacy group for the elderly, in March. She worked as a contractor for the government from July through October and has since resumed collecting unemployment benefits while sending out resumes. She has had two interviews in the last year.

"I don't feel confident," Ms DeBlaker-Gebhard said. "Even part-time jobs are hard to come by."

Employment in all 50 states dropped in 2009, with Wyoming, Nevada, Michigan and Arizona showing the biggest percentage decreases. The District of Columbia gained jobs, adding 6,200 in the 12 months to December.

Nevada and West Virginia had the biggest increase in joblessness among states last year, each climbing 4.6 percentage points. Alabama was next with a 4.5-point gain, followed by Michigan's 4.4-point increase.