Minnesota notches another new low in unemployment

People work near a crane
Steel workers maneuver a beam into place on a 10-story parking ramp being built in the Discovery Square district of downtown Rochester on April 26, 2022. Ken Klotzbach for MPR News
Ken Klotzbach

Minnesota’s unemployment rate dropped to 2 percent in May, down from 2.2 percent in April, the Department of Employment and Economic Development announced on Thursday. That’s the lowest unemployment rate since the state began keeping track in 1976.

In May, Minnesota added about 6,600 jobs. That was fewer than in prior months but still represented eight straight months of gains. The state has now added back about 80 percent of the private-sector jobs shed early in the pandemic.

The labor-force participation rate inched up, as did the employment-to-population ratio. All told, more than 3 million Minnesotans are counted as employed.

“The year over year and month over month job growth and dropping unemployment rate are really positive signs that we have a strong economy … an economy that has seen more growth and more traditional consistency than I think a lot of the volatility that we became used to during the pandemic,” said agency commissioner Steve Grove.

It marks two straight years of decline, but there were other statistics that took some shine off the headline figure.

Average wage growth in Minnesota has considerably lagged behind rising consumer prices. Average wage increases in the past year were about 3.4 percent, while annual inflation was above 8.5 percent. 

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Grove said Minnesota generally has higher wages than the national average — about $33.71 an hour in the private sector compared to $32.12 for the U.S. as a whole. But the bumps in pay have also been slower lately, he said.

“Minnesota businesses probably need to be raising wages faster than they are to attract workers especially given that we have the fifth tightest labor market in the country,” Grove said.

The record low unemployment rate in Minnesota isn’t playing out evenly for people of all ethnic backgrounds.

Labor Market Information Director Angela Nguyen said Black workers were more than twice as likely to be on the employment sidelines as their white peers.

“For Black workers, the unemployment rate has been fluctuating up and down whereas the unemployment rate for white workers and Hispanic workers are more steady,” she said.

Agency officials say people of color tend to work in industries that experience more job churn. They say employers who are having a hard time finding workers could find them hiding in plain sight.

The commissioner said he’s not seeing indications that Minnesota companies are backing off hiring due to concerns over a possible economic slowdown.

“I think everybody who's watching the economy is holding their breath a little bit at this moment,” Grove said.