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Yesterday, WCCO carried a story titled ‘Layoffs Forcing Thousands Of Minnesotans Back Into Job Market‘. However, we often hear that the economy is doing quite well. What is the truth of the situation?
Minnesota ranked 17th nationally for population growth
Employment statistics start by measuring the ‘Civilian Noninstitutional Population’. This is defined as “persons 16 years of age and older…who are not inmates of institutions (e.g., penal and mental facilities, homes for the aged), and who are not on active duty in the Armed Forces”.
According to data from the Bureau of Labor Statistics, the Civilian Noninstitutional Population of Minnesota grew by 0.9% (39,531) from June 2018 to June 2019. This was slightly ahead of the national average of 0.9%, and ranked us 17th nationally.
Minnesota ranked 22nd nationally for labor force growth
The next step is to see what share of this population is in the labor force, ie, employed or not employed but looking for work. This gives the Labor Force Participation Rate (LFP).
Minnesotans are hard workers so this number is traditionally very high here. In June 2018, the LFP was 69.8%, ranking us 2nd highest nationally after the District of Columbia. In June 2019, Minnesota’s LFP had edged up to 70.0%, but was now ranked 4th nationally, with North Dakota, Nebraska, and Iowa now above us. Our labor force grew by 1.1% between June 2018 and June 2019, the 22nd fastest nationally, and ahead of the national average of 0.9%.
Minnesota ranked 34th nationally for employment growth
In terms of the production of goods and services (GDP), what matters is the share of the state’s population which is actually working. Someone who is unemployed but looking and is counted in the labor force isn’t producing any more output than someone who is unemployed and not looking and isn’t counted in the labor force.
Again, we see what a hard working bunch Minnesotans are. In June 2018, our state had the highest employment ratio in the country, at 67.8%. But by June 2019, this had slipped to 67.6%, and our ranking was now 4th, behind Iowa, Nebraska, and North Dakota.
This was the result of relatively slow employment growth in Minnesota. From June 2018 to June 2019, employment in the state grew by 0.6%, compared to 1.0% nationally. This rate ranked us 34th nationally.
Minnesota ranked 1st nationally for unemployment growth
Remember that the labor force divides into those people employed, discussed above, and those people who are unemployed but looking. This share of the labor force gives you the unemployment rate, perhaps the most commonly cited of these statistics.
In June 2018, Minnesota’s unemployment rate – 2.8% – was the 44th highest in the country and below the national rate of 4.0%. But, in the year since, the number of unemployed Minnesotans rose by 18.7% (from 87,260 in June 2018 to 103,541 in June 2019). This was the highest increase in the United States. By contrast, the number of unemployed Americans fell by 2.8% over that same period. As a result, Minnesota was one of 13 states where the unemployment rate rose. By June 2019, the unemployment rate in our state was up to 3.3%, ranking us the 34th highest nationwide. Furthermore, the 0.5 percentage point rise in our employment rate was the highest in the country.
How healthy is our labor market?
To recap, in the year from June 2018 to June 2019, Minnesota ranked 17th nationally for population growth, 34th nationally for employment growth, and 1st nationally both for the increase in the number of unemployed and the percentage point rise in our unemployment rate.
There was some relief when it was reported by the Census Bureau that in 2017 and 2018 Minnesota had reversed a 15 year trend of net domestic out migration. But looking at our labor market data, we seem to be having some trouble generating jobs for the new Minnesotans. Our labor market is wobbling. WCCO might be on to something.
John Phelan is an economist at the Center of the American Experiment.