Despite low jobless rate, recovery in Duluth creeps along

DULUTH — The Duluth area's jobless rate has reached a historic low, but its stagnant labor force still means hiring woes for employers.

The unemployment rate for the Duluth metro area, which includes St. Louis, Carlton and Douglas (Wis.) counties, ticked down a notch to 2.6% in November, from October's rate of 2.7%, according to state figures released Tuesday. In Duluth alone, it is 2.2%.

Despite a strong start to 2021, a smaller group of job seekers has been a problem in the area for several months, as people leave the workforce for a variety of pandemic-related reasons. But the fact that the labor force needle didn't move much in the last month is a good sign, said Carson Gorecki, a regional labor analyst for the Minnesota Department of Employment and Economic Development.

The labor force typically shrinks this time of year when seasonal work is finished, he said, but because the drop was minimal, "that indicates to me recovery is still on. Not at as fast of a pace, but still heading in the right direction."

The Duluth metro has regained about 84% of the jobs lost during the spring of 2020, when the pandemic wreaked havoc on the economy. But November employment levels are 4.5% below what they were in November 2019. However, those seeking jobs not only have more choices but higher wages to earn in many cases. Average private sector hourly earnings are up 0.6% over the year and 11.3% over two years, outpacing the state.

But wage growth isn't evenly distributed, Gorecki said, and it's seen in northeastern Minnesota largely in the leisure and hospitality, natural resources and mining, and financial activities sectors.

Some of that is the region catching up to the Twin Cities metro, and some of it is an attempt to attract workers amid pandemic struggles, said Elena Foshay, director of workforce development for the city of Duluth.

And that creates "some pretty intense labor shortages" for small businesses that can't compete because they have no padding to do it, she said, noting that a lack of available child care remains one of the biggest problems preventing some from returning to work.

Industries that added jobs in the Duluth metro include the transportation, warehousing and utilities sector with 200 new jobs, and retail trade adding 435. Those industries that saw losses include the mining, logging and construction sector with 686, probably due to the end of the warm-weather construction season. Leisure and hospitality, with a loss of 268 jobs, is down for the fourth consecutive month. That sector remains down by 415 jobs since November 2019.

Foshay said some of that decline is seasonal, but she attributes part of it to a "moment of reckoning" within the restaurant business for those who want different working conditions.