Unemployment Falls to Lowest Level in 20+ Years As More People Return to Work

Minnesota’s unemployment rate ticked down two tenths of percentage point to 2.7% in February, according to numbers released today by the Minnesota Department of Employment and Economic Development (DEED). That’s the lowest unemployment rate in the state since 1999. The decline in Minnesota’s unemployment rate was entirely due to people moving from unemployment to employment, as the state’s labor force participation rate rose from 67.6% to 67.9% in February.

The national unemployment rate decreased to 3.8% from 4% in January and the U.S. labor force participation rate inched up one-tenth of a percentage point to 62.3%.

“We’re glad to see another significant jump in labor force participation during this tight labor market,” said DEED Commissioner Steve Grove. “We believe that the efforts of DEED and our workforce partners across Minnesota are bringing more people off the sidelines and into good jobs now. We remain laser-focused on helping businesses connect with workers, particularly in communities that are often overlooked.”

Minnesota gained 5,200 jobs, up 0.2% in the last month on a seasonally adjusted basis following the addition of 4,800 jobs (revised down from 10,200) in January 2022. The private sector gained 5,100 jobs, up 0.2%. This is the fifth straight month of job gains in Minnesota. The U.S. gained 678,000 jobs, up 0.5% from January to February 2022, with the private sector adding 654,000 jobs, also up 0.5% on a seasonally adjusted basis.

Job growth has been uneven coming out of the pandemic recession. Translating seasonally adjusted job change into a 3-month moving average series, Minnesota added 5,700, up 0.2% in Oct21-Dec21, 5,600, up 0.2% in Nov21-Jan22, and 4,200, up 0.1% in Dec21-Feb22. Nationally, all three periods have shown a 0.4% increase.

Over the month in Minnesota, five supersectors gained jobs, four lost jobs and two saw no change on a seasonally adjusted basis.

• Gains were in Manufacturing (up 900 jobs); Trade, Transportation & Utilities (up 3,100, driven by Retail Trade); Information (up 100); Education & Health Services (up 3,800, driven by Healthcare & Social Assistance); and Government (up 100).

• Losses were in Construction (down 200 jobs); Financial Activities (down 1,500, driven by Finance & Insurance); Professional & Business Services (down 300); and Other Services (down 800).

• Two supersectors saw no change over the month: Mining & Logging, and Leisure & Hospitality.

Over the year, Minnesota gained 60,909 payroll jobs, up 2.2%. The private sector gained 58,049 jobs, up 2.5% over the year. For pre-pandemic comparison, these gains put total nonfarm employment 122,334 jobs short of February 2020 employment, and 97,469 jobs short in the private sector.

• There were gains in nine supersectors, especially Leisure & Hospitality up 35,851 jobs (18.5%); Other Services up 5,358 jobs (5.3%); and Construction up 4,906 (4.6%).

• Two supersectors showed annual losses: Financial Activities down 3,909 (2.0%) and Education & Health Services, down 3,500 jobs (0.6%).

While the drop in unemployment rate shows how tight the labor market in Minnesota is, it doesn’t tell the full story. Unemployment rates by race continue to show disparities between white people and people of color. Based on 12-month moving average unemployment rates by race, Black Minnesotans’ unemployment rate increased 0.3% over the last month and is more than double that of white Minnesotans in February 2022. Hispanic Minnesotans’ unemployment rate improved at a slightly faster pace than the state as a whole, but is still significantly higher than that of white Minnesotans.

Unemployment rate by race or ethnicity – February 2022

Month/Year Total White Black Hispanic

February-2022 3.5% 3.2% 6.5% 4.7%

January-2022 3.7% 3.4% 6.2% 5.2%

February-2021 6.2% 5.9% 9.2% 7.5%

Over the month change -0.2 -0.2 0.3 -0.5

Annual change -2.7 -2.7 -2.7 -2.8

U.S. employment grew 4.8% over the year with the private sector up 5.2% in February. Nationally, all supersectors showed gains over the year. Five supersectors in Minnesota show strength over the year compared to the U.S.: Leisure & Hospitality, Construction, Other Services, Manufacturing, and Mining & Logging.

Minnesota lost 417,600 jobs from February through April 2020 and has since gained 296,600 jobs as of February 2022, or 71% of the jobs lost on a seasonally adjusted basis. The private sector has regained 75% of the jobs lost.

Many Minnesotans continue to be out of work, but the employment impact of the pandemic on workers has been difficult to measure. The pandemic caused some people to drop out of the workforce, lowering labor force participation, which resulted in an unemployment rate below what would be expected given job losses. The table below accounts for this by showing an adjusted unemployment rate, based on 12-month moving averages, that includes both Minnesotans who are looking for work now and who would have been expected to be working or looking for work if it wasn’t for the impact of the pandemic.

Adjusted Unemployment Rate, based on 12-month moving averages – February 2022

Month/Year Total White Black Hispanic

Feb-22 5.3% 4.7% 8.1% 1.5%

Jan-22 5.7% 5.0% 9.9% 2.3%

Feb-21 7.3% 6.5% 16.2% 6.8%

Minnesota and U.S. Employment and Unemployment – February 2022

Seasonally Adjusted Not Seasonally Adjusted

Unemployment Rate Feb. 2022 Jan. 2022 Feb. 2022 Feb. 2021

Minnesota 2.7% 2.9% 2.6% 4.6%

U.S. 3.8% 4.0% 4.1% 6.6%

Non-Farm Jobs Feb. 2022 Jan. 2022 Feb. '21- Feb. '22 Level Change Feb. '21- Feb.'22 % Change

Minnesota 2,874,500 2,869,300 60,909 2.2%

U.S. 150,399,000 149,721,000 6,834,000 4.8%

Minnesota and U.S. Over-the-Year (OTY) Employment Change, Not Seasonally Adjusted: February 2021 – February 2022

Industry Supersector OTY Job Change OTY Growth Rate (%) U.S. OTY Growth Rate (%)

Total 60,909 2.2 4.8

Private 58,049 2.5 5.2

Mining & Logging 420 7.1 0.3

Construction 4,906 4.6 4.1

Manufacturing 10,370 3.4 3.0

Trade, Transport. & Utilities 1,812 0.4 5.0

Information 1,141 2.7 8.9

Financial Activities -3,909 -2.0 1.4

Prof. & Business Services 5,600 1.5 6.6

Ed. & Health Services -3,500 -0.6 3.2

Leisure & Hospitality 35,851 18.5 12.7

Other Services 5,358 5.3 2.0

Government 2,860 0.7 2.8

Metropolitan Statistical Area (MSA) Over-the-Year (OTY) Employment Change, Not Seasonally Adjusted: February 2021 – February 2022

Metropolitan Statistical Area OTY Employment Change OTY Employment Change (%)

Minneapolis-St. Paul MN-WI MSA 45,755 2.4

Duluth-Superior MN-WI MSA 4,437 3.5

Rochester MSA 4,031 3.4

St. Cloud MSA 2,814 2.7

Mankato MSA 855 1.5

Visit the DEED website to see DEED’s alternative measures of unemployment. You can also find monthly jobs numbers and unemployment data on DEED’s website. Access resources to help Minnesotans prepare for and find employment now at CareerForceMN.com/GoodJobsNow.

DEED is the state’s principal economic development agency, promoting business recruitment, expansion and retention, workforce development, international trade and community development. For more details about the agency and its services, visit the DEED website, the JoinUsMn.com website, or follow us on Twitter.