Minnesota’s labor force participation rate continues sluggish recovery

On Thursday, Sept. 16, the Minnesota Department of Employment and Economic Development (DEED) published the state’s employment data for August. Overall, Minnesota is still continuing its path of recovery as unemployment declined to 3.8 percent from 3.9 percent in July.

Minnesota currently has one of the lowest rates of unemployment in the nation –– the 12th lowest. And compared to the national average of 5.2 percent, Minnesota’s unemployment is 1.4 percentage points lower.

When it comes to labor force participation, however, recovery 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. This is higher than the Nation’s decline of 1.8 percentage points. Minnesota, has generally, also not seen a significant rise in the labor force participation any of the months of this year.

What this means

A slowing in the recovery of the labor force participation rate may be a signal that workers will not be coming back into the economy for a long time, even permanently. The recently enacted vaccine mandate may make 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 –– our high GDP per capita numbers are due to the fact that a large proportion of Minnesotans participate in the workforce compared to other states.

As 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 other states, and a declining labor force participation rate will likely worsen that trend going forward.