While unemployment was down nationally in May, Minnesota was one of three states where it rose

On June 5th, the Bureau of Labor Statistics (BLS) announced that “Total nonfarm payroll employment rose by 2.5 million in May, and the unemployment rate declined to 13.3 percent”. This came as something of a shock. The consensus forecast had been for a fall in employment of 7.5 million and Paul Krugman speculated that the numbers were faked.

What was Minnesota’s role in this? Today we found out. The BLS announced that:

Unemployment rates were lower in May in 38 states and the District of Columbia, higher in 3 states, and stable in 9 states…

The over-the-month jobless rate increases occurred in Minnesota (+1.2 percentage points), Connecticut (+1.1 points), and Florida (+0.7 point).

Figure 1 shows how Minnesota’s unemployment rate has changed relative to other states.* As you can see, not only are we one of the few states whose unemployment rate rose, we also saw the biggest percentage point increase.

Figure 1: Change in unemployment rate April to May 2020, percentage point

Source: Bureau of Labor Statistics

Minnesota’s May unemployment rate, 9.9%, is a new record (the series goes back to January 1976). This is obviously terrible, but the same is or has been true recently for most states. If we are judging Minnesota’s performance, we must ask ‘relative to what?’

And this is where Minnesota’s May numbers are concerning. That they are high is to be expected given Covid-19. That they are moving up while the rest of the country’s are moving down is a cause for concern. Let us hope that June’s numbers are better.

*You’ll see that Delaware and Massachusetts also saw their unemployment rates rise so that five states saw increases, not the three the BLS mentions. This is because these increases are not deemed ‘statistically significant’ by the BLS owing, in Delaware’s case, to the small sample size relative to Florida.

John Phelan is an economist at the Center of the American Experiment.