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Minnesota experienced job losses second month in a row

Earlier today the Minnesota Department of Economic Development (DEED) announced unemployment numbers for December. According to the new numbers, Minnesota’s unemployment rate dropped from 4.5% in November to 4.4% in December. However, this is not good news. As explained by DEED,

The tenth of a percentage point tick down was due to people leaving the labor force, at least temporarily, and happened as Minnesota lost 49,800 jobs in December. The private sector lost 42,900 jobs in Minnesota in December, down 1.8% and Government lost 6,900 jobs, down 1.7%.

This is the second month in a row that Minnesota has lost jobs

Minnesota lost jobs for the second month in a row, losing 49,800 payroll jobs, down 1.8%, in December on a seasonally adjusted basis following a loss of 15,500 jobs (revised) in November. Job losses in November and December erase job gains made from August through October. Minnesota lost 387,800 jobs from February through April and has since gained 140,300 jobs, or 36.2% of the jobs lost on a seasonally adjusted basis. This is down from October, when Minnesota had regained 205,600, or 52.5% of jobs lost during the pandemic, on a seasonally adjusted basis.

Over the Year changes

According to the new Data,

Over the year in December, Minnesota shed 238,056 payroll jobs, down 8.0%, with private-sector jobs down 7.9% in December. U.S. over-the-year job loss stood at 6.0% with the private sector down 6.1% in December, unchanged from November.

All supersectors continued to show over-the-year job loss in Minnesota and nationally. In Minnesota, over-the-year job losses were still greatest in Leisure & Hospitality, down 43.7% or 116,429 jobs, and Information, down 15.9% or 7,301 jobs. Other supersectors with a high share of job losses were Other Services, down 13.5% or 15,499 jobs, Logging & Mining, down 11.4% or 694 jobs, and Government, down 8.4% or 36,152 jobs over the year.

Minnesota and U.S. Employment and Unemployment  December 2020

Seasonally Adjusted

Not Seasonally Adjusted

Unemployment Rate

December 2020 

November 2020

December 2020

December 2019

Minnesota

4.4%

(revised) 4.5%

4.6%

3.5%

U.S.

6.7%

6.7%

   6.5%

3.4%

Employment

December 2020

November 2020

December ’19- December ’20 Level Change

December ’19- December ’20 

% Change

Minnesota

2,730,100

2,779,900

-238,056

-8.0%

U.S.

142,624,000

142,629,000

-9,152,000

-6.0%

It is a reflection of the most recent shutdown

This is potentially mainly a reflection of the most recent  Covid-19 restrictions that were introduced in Mid-November and lasted all through December to be lifted effective January 11th of this year. In November, Governor Walz ordered a total shutdown of bars and restaurants with no outside dining. Additionally, other places and gyms were also shut down.

When we look at the data, there is a direct overlap between sectors that experienced job and those that were closed down.

December employment numbers reflect the impact of the late fall spike in COVID-19 cases. Sectors dependent on groups of people gathering together, including restaurants and bars, entertainment venues, and fitness centers, showed job losses. The Leisure & Hospitality sector led job losses in December with a decline of 41,100 jobs last month.

In the words of DEED commissioner Steve Grove,

Today’s employment data confirms what we’ve expected – the spike in cases in late fall had an impact on the economy. The predictable loss of jobs that accompanied the sacrifice that businesses and workers had to make may turn out to be temporary, as just 10% of those surveyed said their job loss was permanent.

Our declining labor force participation rate is a problematic trend especially after considering that Minnesotans did not necessarily benefit from business closures. Additionally, categorizing a mandated shutdown as a sacrifice that businesses made downplays the damage that arbitrary rulemaking has had on small business owners.

Our Covid-19 outcomes specifically following the restrictions over thanksgiving mirrored those of our neighboring. Yet these states chose not to burden their small businesses with restrictive rules. So why are Minnesota businesses still making these sacrifices despite the lack of evidence they work but only lead to loss of jobs?

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