Minnesota’s Economic News – W/E 7/30/21
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The Minnesota Department of Employment and Economic Development (DEED) announced yesterday that for the first time in months, Minnesota’s unemployment went down mainly due to people finding jobs. This heavily contrasts to the last few months whereby Minnesota faced a decline in unemployment due to people leaving the workforce.
As reported by DEED, Minnesota still faced a decline in the labor force participation rate, but not a significant one.
Minnesota’s seasonally adjusted unemployment rate dropped to 4.3% in February, down from 4.5% in January, according to numbers released today by the Minnesota Department of Employment and Economic Development (DEED). The decline in the unemployment rate was due to more people finding work and a decrease in the number of unemployed people, which resulted in another decline in the number of people engaged in Minnesota’s labor force.
Minnesota’s labor force participation rate fell by a tenth of a point to 67.8% in February. It was 70.2% in February 2020, immediately before the start of the pandemic. Nationally, the unemployment rate fell one-tenth to 6.2% in February, with labor force participation staying level at 61.4%.
Minnesota gained 13,900 jobs, up 0.5%, in February on a seasonally adjusted basis. This is 200 jobs short of the peak pandemic recovery employment in October 2020. The private sector gained 11,000 jobs in February, up 0.5% over the month, bringing private sector employment 300 jobs above peak pandemic employment reached in October.
Issues however still remain. Minnesota has up to date only recovered 49.3% of jobs lost during the period between February and April 2020. This highly signals long-term employment that is highly likely to turn permanent. The Hospitality industry furthermore remains underwater with 26.1% over the year job losses as of February 2021.
As we noted in our report, The State of Minnesota’s Economy: 2020, Minnesota’s high levels of income are for some reason dependent on our high labor force participation rate. Our productivity is much lower compared to other states as well as the US average. Therefore, a declining labor force participation rate would likely pose many significant challenges to the future of Minnesota relative to other states.
Albeit slow, Minnesota’s job gains are a good turning point. But more can be done to speed this process. With the majority of our elderly vaccinated, improving COVID-19 outcomes as well as lack of evidence showing the effectiveness of lockdowns, Minnesota’s small businesses ought to be fully reopened.