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Should we worry about a ‘labor shortage’ or rising unemployment in Minnesota?

Minn Post has an article today titled ‘In a tight labor market, Greater Minnesota businesses think creatively about how to hang on to workers‘. Indeed, I’ve written about the ‘labor shortage’ in our state before. But, recently, I’ve written about how Minnesota is above average for population growth, below average for employment growth, and top for unemployment growth.

What’s the story? Do we have a ‘tight’ labor market with a shortage of workers, or do we have rising numbers of unemployed? Data from Minnesota’s Department for Employment and Economic Development allows us to answer that question.

The Labor Force includes those Minnesotans over 16 who are either employed or unemployed and looking for work. The Labor Force Participation Rate is this number as a share of the population over 16. Using DEED’s numbers for these, we can derive the population aged over 16.

In July, Minnesota’s population of over 16s stood at 4,438,616. That breaks down as 3,002,476 working, 104,555 unemployed, and 1,331,585 out of the labor force entirely, neither employed nor looking for work. Table 1 shows these numbers over the last year.

Table 1: Minnesota’s working age population by employment status

Source: Department of Employment and Economic Development 

How does this compare to the United States generally? DEED’s data shows that, in July, the US population of over 16s stood at 259,287,302. That breaks down as 157,288,000 working, 6,063,000 unemployed, and 95,936,302 out of the labor force entirely, neither employed nor looking for work. Table 2 shows these numbers over the last year.

Table 2: United States’ working age population by employment status

Source: Department of Employment and Economic Development 

These tables allow us to compare Minnesota’s performance to that of the US generally over the last year. Our population has grown faster – 0.9% compared to 0.5%. But the number of those employed has risen more slowly – 0.6% compared to 1.1%. The number of unemployed has risen in Minnesota by a staggering 22.1% while it has fallen by 2.7% nationally. And the number of Minnesotans not in the labor force at all has increased by 0.3% while, for the US as a whole, it has fallen by 0.3%.

In short, over the last year Minnesota has added more people but fewer jobs that the nation as a whole. The number of Minnesotans not working – either unemployed or out of the labor force entirely – has risen, while it has fallen nationally. Perhaps it is time to refocus our attention away from the ‘labor shortage’ and towards our growing unemployment problem.

John Phelan is an economist at the Center of the American Experiment. 

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