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Serving Northern St. Louis County, Minnesota

State unemployment drop is deceiving

Workers dropping out of labor market

David Colburn
Posted 10/22/20

REGIONAL- Unemployment in Minnesota dropped in September from 7.4 percent to 6 percent, but Department of Employment and Economic Development Commissioner Steve Groves told an online audience last …

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State unemployment drop is deceiving

Workers dropping out of labor market

Posted

REGIONAL- Unemployment in Minnesota dropped in September from 7.4 percent to 6 percent, but Department of Employment and Economic Development Commissioner Steve Groves told an online audience last week that the picture wasn’t as rosy as it appeared.

“The big news really is that almost all of that drop we attribute to a decrease in the labor force participation rate,” Groves said. “That represents about 56,000 people who have dropped out of the labor force.”

Groves said the labor force participation rate of 68.4 percent in September was the lowest the rate has been in more than 40 years.

“This is not an encouraging sign,” Groves said. “It means there are folks who are for whatever reason getting discouraged about their job search. We as a state have always had a high labor force participation rate, one of the highest in the country. It’s a concerning trend to see that number trend downward.”

Nationally, about 80 percent of the people who have dropped out of the labor market during the course of the coronavirus pandemic and aren’t actively seeking work have been women, but in Minnesota the number is about evenly split between men and women, Groves said.

The two age groups with the highest representation of job market dropouts in September were teens and adults ages 25-34.

The northeast region of the state and the Twin Cities continue to be the areas hardest hit by the economic downturn, Groves said, although the September unemployment rate in St. Louis County of 5.8 percent was slightly lower than the state as a whole. Groves said that the health care and hospitality sectors suffered the most losses in the northeast.

St. Louis County unemployment peaked in May at 11.4 percent, and remains above the 3.3 percent level in Sept. 2019. Labor force participation rates for the county were not available.

The news from Groves wasn’t all gloomy. While there are still 182,763 unemployed Minnesotans, that’s down significantly from the 303,000 people unemployed in May. New jobs also rose last month, with 14,800 payroll jobs added.

“There are jobs coming back, but not at the same rate they were earlier,” Groves said. “There is some good job growth and there are some good jobs available now.”

However, those seeking employment seem to be reluctant to pursue jobs outside of their past education and experience, although many of the available jobs provide on-the-job training and good wages, Groves said.

“There’s a lot of hesitancy in the market right now,” he said. “We’re hearing from employers that job seekers are taking a pause. They don’t quite know yet if there will be a vaccine soon, or if their job will come back or if there will be additional assistance from the federal government, so I think there is a little sluggishness in the job seeker category that we’re hoping frees up soon because we know there are jobs available.”

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