Minnesota’s labor force participation rate continues sluggish recovery

According to data from the Minnesota Department of Employment and Economic Development (DEED), Minnesota’s unemployment rate is down to 3.8 percent. This is the country’s 12th-lowest unemployment rate, and 1.4 percentage points lower than the national average. However, recovery in the state’s labor force participation has stalled.

According to DEED,

Minnesota’s labor force participation rate held steady at 67.8% in August. Nationally, the unemployment rate fell two-tenths of a percentage point to 5.2% and the labor force participation rate held steady at 61.7%.

Currently, Minnesota’s labor force participation rate is down by 2.4 percentage points — or 86,000 workers. While Minnesota has a higher labor force participation rate, the state saw a larger decline than the Nation’s 1.8 percentage point.

What this means

A slowdown in the recovery of the labor force participation rate may signal that workers will not be returning to the economy for a long time, possibly permanently. The recently enacted vaccine mandate makes that even more likely.

What would a lower labor force participation rate mean for Minnesota going forward? Minnesota is a low-productive but hard-working state. The state’s high GDP per capita numbers are due to the state’s relatively high labor force participation rate.

As the American Experiment noted in the 2020 Economy report, in 2019, Minnesota had 67.8 percent of its population working, compared to the national average of 60.8 percent.

Currently, Minnesota’s growth rates lag those of other states, and a declining labor force participation rate will likely worsen that trend going forward.