The missing economic boom
Last week, state officials announced the unemployment rate for June. The 1.8 percent level recorded was the lowest ever logged, not just for Minnesota, but for any state in the current data series which reaches back to 1976.
Nebraska is not far behind at 1.9 percent, with New Hampshire and Utah each recording 2.0 percent.
You would expect, with numbers this low, Minnesota and the rest of America would find itself in the middle of a Gold Rush-style economic boom. Instead, the stock market is in the middle of a bear market. Employers in Minnesota reported that only a net 100 jobs were created in June.
That’s 100 jobs in a state with a population of 5.7 million people. June’s modest gain was entirely attributable to government hiring. The private sector actually lost jobs for the month.
As my colleague Martha Njolomole pointed out when the numbers were first released last week, Minnesota’s labor force participation rate has not recovered to pre-pandemic levels. That translates into 72,000 workers missing from the labor force.
In fact, despite the lowest unemployment rate ever recorded, anywhere, Minnesota has fewer people employed than before the pandemic. State employment peaked at 3,046,000 in January 2020. Two-and-a-half years later, we are still 11,000 workers short of that level.
There is a real disconnect between the labor market and general economy. Everyone who wants a job has one. Employers are simply unable or unwilling to coax any additional workers off the sidelines and into the game.
The current labor force participation rate of 68.5 percent implies a total potential labor force of 4.5 million. That’s 1.5 million people eligible, but not working. Many are retired, in school, or disabled. But still, 1.5 million?
There is no shortage of potential workers, but a severe shortage of people willing to work. “Why?” is a question no one seems to be asking.