Why is Minnesota’s record on employment growth worse than in other states?
Last week, in a report on low unemployment rates in Upper Midwestern cities, the Star Tribune noted that:
The entire state of Minnesota came in at a 2.1% unemployment rate for October, tying with Utah for the No. 1 spot among states. Minnesota has been on top since June, when it recorded the lowest state unemployment rate in U.S. history of 1.8%.
The low rates are shaped by strong hiring since the coronavirus pandemic was brought under control and a shrinking of the overall labor pool. The state’s 3 million-plus workforce is still about 90,000 workers smaller than it was before the pandemic.
This is a welcome acknowledgment of a fact we at the Center have noted for a while now, namely that Minnesota’s falling unemployment rate hasn’t been driven by increased numbers of people in work but by increased numbers of people leaving the labor force completely.
The Star Tribune explains:
Labor experts have pointed to accelerated retirements among the state’s aging population and continuing challenges with child or elder care as some of the reasons some workers haven’t returned to the labor force.
But we have to note that this phenomenon isn’t uniform across the country. As I noted last month:
…our state is also one of 23 out of 50 states and the District of Columbia which had fewer people employed in August 2022 than it did in February 2020, a fall of 0.6%. Where have all those unemployed people gone? Out of the labor force. The number of Minnesotans not in the labor force was 9.7% higher in August 2022 than it was in February 2020, the eighth largest increase in the United States.
The phenomenon of falling employment which we have to explain is, then, a local one. If it is explained by “accelerated retirements among the state’s aging population and continuing challenges with child or elder care” as these unnamed labor experts claim, we have to ask Why are retirements accelerated in Minnesota? and Why are challenges with child or elder care worse in Minnesota?
Very often the question to be asked is not Why is Minnesota doing poorly? but Why is it doing worse than somewhere else? That is where we find the effects of state policy.