Minnesota added 14,500 jobs in July, biggest gain since March

Minnesota saw a similar hiring surge as the rest of the U.S. last month, with the state adding 14,500 jobs in July, its largest monthly gain since March.

The state's unemployment rate fell one-tenth of a percent to 3.9%, according to data released Thursday by the Minnesota Department of Employment and Economic Development (DEED). The U.S. unemployment rate declined by a half a percent to 5.4% in July.

The largest job gains were in leisure and hospitality, which added 7,700 jobs last month. That is also the industry hardest hit by the pandemic in terms of job loss.

DEED Commissioner Steve Grove noted that Minnesota usually sees a jump in hiring among restaurants and hotels in the summer.

"But usually around this time of year you'd see maybe a 1,000 bump," he said. "So seeing 7,700 is a significant jump."

At the same time, he acknowledged that some of those businesses are still struggling to find workers.

"You've all seen the signs of businesses that have had to close on off days and things like that just because of the labor shortage," he said. "So this is by no means over, but certainly a good surge there in jobs pickup for that industry in particular."

Employment at Minnesota restaurants and hotels is now about 70% of pre-pandemic level.

Wages have also been rising across the board, particularly fast in leisure and hospitality as employers look to be more competitive to attract workers. The average hourly wage for production workers at restaurants and bars in Minnesota has remained above $15 an hour since February. In July, it hit $16.37, a 16% increase from July 2019.

"This is really the first time we're seeing such high wages there," said Oriane Casale, director of DEED's labor market information office.

Other sectors that added jobs last month were government, manufacturing and construction. Sectors that fell were trade, transportation and utilities; education and health services; and professional and business services.

The state has now recovered about 64% of the 416,300 jobs it lost in the spring last year.

Financial activities and information are the only two sectors in the state that continue to see over-the-year job losses.

While Minnesota initially logged a loss of 600 jobs in June, those figures were revised upward and now show a growth of 4,900 jobs that month. The revisions were primarily due to data that came in after the initial deadline. Casale noted that a little over half of those additional jobs were in leisure and hospitality.

While Minnesota's unemployment rate is inching closer to pre-pandemic levels, there are still about 87,000 Minnesotans who have not returned to the labor force since February 2020. The state's labor force participation rate continued to decline slightly last month, likely because of older workers retiring, Grove said.

Extended federal unemployment benefits will be coming to an end the week of Sept. 4, which will affect 200,000 Minnesotans receiving them.

DEED has been reaching out to those workers to make sure they're aware of that deadline and has also been holding webinars on finding work.

Some economists expect hiring to also pick up in September because kids go back to school, alleviating some challenges with child care. But at the same time, they're watching to see if the recent surge in COVID-19 cases could affect the job recovery.

"Fall is going to be fascinating," said Grove, adding that it's hard to predict what will happen. "You've got several factors in play in the next month or two."