Minnesota jobless rate falls to two-year low

Minnesota’s unemployment dropped to its lowest level since December 2008 — a seasonally adjusted 6.7 percent in January — despite anemic job growth of 2,000.

The rate was 0.2 percent below December’s revised 6.9 percent unemployment rate, according to figures released today by the Minnesota Department of Employment and Economic Development (DEED).

The U.S. unemployment rate was 9 percent in January for the second month in a row.

DEED Commissioner Mark Phillips described January’s report as showing “a slow but steady improvement in the Minnesota labor market.”

He noted: “While the economy continues to face headwinds, we’re seeing a number of positive signs, including growth in temp-help hiring, rising consumer confidence and declining initial claims for unemployment benefits.”

The only sectors posting job losses occurred in trade, transportation and utilities (down 6,700) and government (down 300). Without the large decline tied to retailing, the January growth would have been much stronger, said Steve Hine, DEED director of labor market research.

He also pointed to two positive employment trends: several months of 20 percent-plus year-over-year growth in temporary hiring, which is typically a leading indicator for permanent hiring, and an increase in the number of hours worked.

Assessing the anemic gain of 2,000 jobs in January, Hine said, “I think the underlying forces at play are stronger than that number indicates.”

Hine said the report provides “mixed signals” on the state’s economy.

But he admitted that the labor participation rate typically moves up as unemployed workers return to the job market seeking unemployment. So far, that has not happened. The labor force participation rate actually decline from 71.9 percent in December to 71.7 percent in January.

Education and health services led all sectors, gaining 4,200 jobs in January. Other gains occurred in leisure and hospitality (up 1,800), other services (up 900), financial activities (up 700), logging and mining (up 500), professional and business services (up 400), construction (up 200), manufacturing (up 200) and information (up 100).

Over the past year, the state has gained 16,500 jobs, for a growth rate of 0.6 percent. The U.S. growth rate during that period was 0.7 percent.

This month’s employment data also include benchmarks results — an annual revision of employment data from the previous 21 months. The revisions indicate that the state lost 158,300 jobs during the recession, rather than the 162,200 jobs that were originally reported.

The recovery, however, has been slower than originally reported, with 19,300 jobs gained instead of 33,000 as of December 2010.

The revised data also indicate that the seasonally adjusted unemployment rate peaked at 8.5 percent in both May and June 2009, instead of the originally reported 8.4 percent during those months.

Comments (3)

  1. Submitted by Neal Rovick on 03/03/2011 - 07:54 am.

    Several comments:

    1.)Because of people “falling off” of benefits and discouragement and otherwise “making do”, the rate can continue to fall while hiring remains slow or non-existent. Eventually it is possible to return to more “normal” rate while true unemployment remains high.

    2)It is said that job growth of 150,000 per month is required on a national basis just to keep up with population growth, or approximately 1 job per 1000. Job growth below that level then actually means falling behind. Translating that ratio to Minnesota (employed population of 2.6 million), says that 2,600 new jobs a month are required to keep up with population growth. So the growth of 2,000 fails to keep up with population growth and more than explains the fall in the labor force participation.

    3)…Education and health services led all sectors, gaining 4,200 jobs in January…. While education and health care are important we cannot have an economy where these two sectors are the main engines of growth. Right now, on a national basis, education, health care, defense/homeland security, and finance are the most vigorous sectors of the economy. The first three depend on the government for most or all of their funding, and the fourth, finance, at this point, is not helping at all (recall the description of Goldman-Sachs as “a giant vampire squid on the face of America”).

    While job growth is good, the fact remains that we have to have an economy where any other sector than these four HAS to be the growth engine for jobs. It simply won’t work in the long run if most growth occurs in health, education defense or finance. It is the same way as a snake eating its tail–it does not solve it’s hunger problem. American civil society was supported by a vigorous private economy that has high employment, pays good wages and pays adequate taxes to support government functions. Right now, all factors are in jeopardy, and that is a major problem.

  2. Submitted by David Fey on 03/03/2011 - 08:54 am.

    I want to emphasize Neal R’s first point. The unemployment or “jobless” rate is a misnomer, because it does not include discouraged workers. That’s the main reason this “good news” doesn’t seem to add up.

    The Bureau of Labor Statistics defines discouraged workers as people “who want and are available for a job and who have looked for work sometime in the past 12 months (or since the end of their last job if they held one within the past 12 months), but who are not currently looking because they believe there are no jobs available or there are none for which they would qualify.”

    As the size of this discouraged group grows, the unemployment rate declines, when in fact total “joblessness” is increasing.

  3. Submitted by greg copeland on 03/04/2011 - 01:50 am.

    Comments from Neal and David are both on point! Their comments go a long way to telling “the rest of the story” about the National Jobs and Housing Depression, which contrary to DEED’s PR Spin,sadly, does include Lake Woebegone.

    It is really disgusting how each month, regardless of who is sitting in the Governor’s Office, that DEED becomes the Minnesota Ministry of Cheerleading, rather than a reporter of our economic reality: Minnesota has 200,000 officially jobless, and there are thousands more who are out of work that never get a job interview and are no government list because of the vast array of structural barriers to their re-employment.

    The claim of 2,000 new jobs last month…1% of the 200,000 citizens on the Northstar No-Jobs Bench, should be received as a shout out to Legislators to take action now to remove any & all barriers to getting Minnesotan’s back in the game.

    DEED repeating every month the PR Spin that MN has a lower jobless rate than the nation puts no bread on any one’s table;yes I know, except for DEED’s flacks.

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