June employment report: Good news from Minnesota’s labor market

Last week saw the release of Minnesota’s jobs figures for June. Our state’s unemployment rate stayed at 3.7%. Overall, the state added 4,400 jobs. Taken together, this means people joined the workforce. This contrasts with last month’s data, providing an object lesson in the need to observe trends over time.

Productivity in Minnesota

In the Center’s 2016 report “Minnesota’s Economy: Mediocre Performance Threatens State’s Future“, we looked at which sectors of our economy generated the most GDP per head. The leader was Mining & Logging with $366,429 of GDP generated per job. In last place, with $43,933 of GDP generated per job, was Leisure & Hospitality.

June’s jobs numbers and productivity

The leader in job growth in June was Leisure & Hospitality (4,500 new jobs) which generated just $43,933 of GDP per job in 2015. This is, probably, largely seasonal employment and remember what we said about the need to observe trends over time.

The news elsewhere was mildly encouraging. There were healthy gains in Professional & Business Services (2,300 new jobs) and Manufacturing (2,100 new jobs). The latter is about mid-range for GDP per job in 2015.

Sadly, the three best sectors for GDP per job in 2015 were among those which lost jobs in June – Mining and Logging (100 lost jobs, but still ahead of where it was in April), Financial Activities (1,300 lost jobs), and Information (600 lost jobs). The big losers, however, were the sectors Other Services (1,500 lost jobs) and Educational & Health Services (2,700 lost jobs). These account for three of the bottom five categories in terms of GDP per job in 2015.

Minnesota needs more productive jobs

What seems to have happened is that workers moved out of these sectors and into ones producing more GDP per job. This is a positive move and we should hope it continues.

As I’ve written before, this is in no way to denigrate jobs in these sectors. Health and education are vital. But to have high quality hospitals and schools and to be able to afford that week in the cabin Up North, we need high productivity, high wage jobs. This is key for the state’s economic future. Keep keeping an eye on the data.

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