Minnesota’s unemployment rate fell to 6% in September, but it’s not good news

According to the Minnesota Department of Employment and Economic Development (DEED),

Minnesota’s seasonally adjusted unemployment rate dropped substantially in September, down to 6.0% from 7.4% in August.

Unfortunately, this was mainly due to a large number of people leaving the labor force. The labor force participation rate for Minnesota declined by 1.3 percentage points from 69.7 percent in June to 68.4 percent in August. In February 2020, the labor force participation rate was 70.2 percent.

Compared to the national average, Minnesota is doing slightly better. As shown in the above chart, the U.S. unemployment rate declined from 8.4 percent in August to 7.9 percent in September. And in September, the national labor participation rate stood at 61.4 percent.

Job losses are still high among industries, and even though Minnesota’s private sector fared slightly better compared to the national average, some industries performed worse compared to the national average. These include: construction, information, financial activities, education, and health services as well as leisure and hospitality.

Minnesota is the state that works

Generally, Minnesota’s employment outlook has continued to improve. However, employment growth has slowed in the past few months. This is a trend that is being experienced nationally. The same is true with the drop in the labor force participation rate.

Regardless, for Minnesota, this drop in the labor force participation rate is particularly concerning. Minnesota is a low-productivity state compared to other states. A high rate of labor force participation rate makes up for that. Fewer people in the labor force could, therefore, mean reduced output.