About Minnesota’s 1.8 percent unemployment rate

Minnesota’s unemployment is still at an all time low according to the Minnesota Department of Employment and Economic Development (DEED).

The unemployment rate held steady at 1.8% in July 2022 – tying the record low since the metric has been tracked in 1976, according to numbers released today by the Minnesota Department of Employment and Economic Development (DEED). This was also the all-time lowest state rate on record in the United States as of June.


The size of Minnesota’s labor force declined for the first time this year, dropping by nearly 4,000 people as a result of small declines in both the number employed and the number unemployed. The result was a one-tenth of a point decrease in the labor force participation rate, to 68.4%.

A low unemployment is not all good news

The slugging recovery of Minnesota’s labor force is something American Experiment has been extensively drawing attention to since the beginning of the recovery period. Unfortunately, this trend has only gotten worse in the recent employment update.

In June Minnesota’s labor force was 2.3 percentage points lower compared to January 2020. In the recent update, that number went down even further to 2.4. And Compared to other states, Minnesota is in the same position that it was, meaning that among our neighbors, Minnesota is only surpassed by Iowa on this bad performance.

Our other neighbors — South and North Dakota, as well as Wisconsin — are either fully recovered or close to recovering their entire labor force numbers. In fact, South Dakota’s labor force is above its pre-pandemic levels.

And still, nationally, only 8 other states have performed worse than Minnesota on recovering their labor force.

Figure: Change in Labor force participation rate, July 2022 vs January 2020

Interestingly, nearly half of all states have seen workers leave the labor force between June and July of this year. So, Minnesota is part of a much more general trend on that.

But something to note; only 14 states — including Minnesota — have seen their employment go down between June and July. So, Minnesota is part of a smaller circle of states that seem are seeing some of the progress that they have made on recovering employment go away.

This is the first time that Minnesota’s employment declined since February 2021. And if this trend persists, our labor force is bound to be in even more trouble especially considering that we are still not yet fully recovered from the pandemic.

Figure: Minnesota employment since January 2021

Source: Bureau of Labor Statistics


Sure, unemployment is at a historic low, but this headline hides other concerning facts, namely that our labor force is still much smaller than it was before the pandemic, and employment is also starting to go down.