Minnesota's unemployment rate jumps to highest in over two decades

Job applications
A prospective job applicant look for jobs in the job research area of The Job Center in Dayton, Ohio.
Photo by Chris Hondros/Getty Images

A lot more Minnesotans were unable to find work last month. About 17,000 more than in June. And that was the big driver behind a spike in the state's unemployment rate in July.

Minnesota's unemployment rate jumped a half-percent in July to 5.8 percent. That's the highest level in 22 years. About 170,000 Minnesotans who want a job can't get one.

Steve Hine is research director at the Minnesota Department of Employment and Economic Development. He's not surprised at the growing ranks of the unemployed given Minnesota's sagging economy.


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"We're experiencing a fairly significant economic slowdown, both nationally and here within the state," Hine said.

He said the state's getting hit with a double whammy. People are losing their jobs and employers aren't creating enough new ones to put a serious dent in the ranks of the unemployed.

"Part of the reason we're seeing higher unemployment rates is that we're not seeing as rapid a job creation rate," Hine said. "In July, we did lose 8,600 jobs."

The employment picture right now is especially dismal in government, construction, manufacturing and the leisure and hospitality industry. In Minnesota, those sectors lost about 8,000 jobs between them in July.

There are a few bright spots. The education and health care sectors added jobs.

Minnesota and U.S. Unemployment Rates
Minnesota's unemployment rate has slipped ahead of the national average.
MPR Graphic/Martin Moylan

But as Hine said, the state's net job loss was big. The state's unemployment rate is now a hair higher --one tenth of a percent-- than the national unemployment rate of 5.7 percent.

That's not something Minnesota is accustomed to. In most past economic slumps, Minnesota did better than the nation in making its way through a downturn.

But state economist Tom Stinson said that doesn't look like it will be the case this time.

"This time it looks like we are going to be affected just about the same as the U.S. average, maybe even a little worse," Stinson said.

Stinson said Minnesota's construction industry is getting hit harder than the nation's for one thing. And, he notes the state lumber and wood products industry is really hurting because it serves builders nationwide.

With those burdens, a depressed housing market and the prospects of rising energy prices, it may be a while before the state's economy turns around.