Minnesota’s employment recovery is below average

Gov. Walz gave his state of the state address Sunday night and in it, noted that,

Nationally, we have the fifth lowest unemployment rate among states, the third highest job growth, and one of the highest labor participation rates.

As Figure 1 shows, it is true that, in March, Minnesota had the joint fifth lowest unemployment rate among states, level with Kansas, New Hampshire, and South Dakota and below Indiana, Nebraska, and Utah.

Figure 1: Unemployment rate, March 2022, %

But does our state really have “the third-highest job growth”?

For the United States as a whole, Total Nonfarm employment reached its pre-pandemic peak in February 2020 and hit a trough in April 2020. For Minnesota, the pre-pandemic peak in Total Nonfarm employment came in January 2020, but the trough here was also hit in April 2020.

But Minnesota’s employment has recovered from that trough at a comparatively slow rate. Figure 2 shows the change in total employment from April 2020 to March 2022. From that trough in April 2020, total employment in Minnesota has grown by 8.5 percent, a rate that trails 40 other states.

Figure 2: Change in total employment, April 2020 to March 2022

You may notice that some of those states with the best rates of employment growth from April 2020 to March 2022 — Hawaii, Michigan, and Nevada — are those which had the steepest falls in employment in the period from February 2020 to April 2020. You would expect states like those, which lost most jobs in the downturn, to gain more jobs during the recovery. Conversely, you would expect a state like Minnesota, which saw unemployment decline by less than the average in the downturn, to gain fewer jobs in the recovery. Figure 3 bears this out, showing that 81 percent of the variation in employment changes from April 2020 to March 2022 can be attributed to variations in employment changes from February 2020 to April 2020.

Figure 3: Relationship between the change in employment from February 2020 to April 2020 and the change in employment between April 2020 and March 2022

So it is interesting to note that Minnesota is among the 27 jurisdictions that has, so far, failed to regain the level of employment seen in February 2020. As Figure 4 shows, in March, employment in our state was still 1.5 percent below the number recorded in February 2020.

Figure 4: Change in employment from February 2020 to March 2022

Looking at this, we do not have “the third-highest job growth” in Minnesota. Someone should ask what Gov. Walz was he was referring to exactly.