There is a simple explanation for why Minnesota’s unemployment rate can fall at the same time that the number of jobs falls. As I’ve explained previously:
The unemployment rate is calculated by dividing the number of people who are unemployed but looking for work by the total number of people in the labor force. Crucially, people who are unemployed and not looking for work are not counted in the labor force. Because of this, it is possible for the unemployment rate to fall without the number of people employed rising if people simply give up looking for work.
But what about those private sector jobs? As Figure 1 shows, now that Minnesota has slipped back below its pre-pandemic peak for private sector jobs, it is one of just 12 states and the District of Columbia to have failed to claw these jobs back. Among our neighbors (highlighted in yellow) by contrast, South Dakota regained that peak in 17 months.
Figure 1: Months after February 2020 that private sector jobs regained that peak
Figure 2 shows the change in the number of private sector jobs since February 2020. We see that Minnesota has 0.2% fewer private sector jobs than it did in February 2020 while South Dakota, for example, has 4.5% more.
Figure 2: Change in private sector jobs, February 2020 to March 2023