Minnesota added 19,100 jobs in July while jobless rate remained at historic low

Minnesota's employers last month hired the most people they have all year, even with the state's jobless rate at at an all-time low.

The state logged a blockbuster month with the addition of 19,100 jobs, a sharp acceleration from the 1,000 who were hired in June, according to data released Thursday by the Minnesota Department of Employment and Economic Development (DEED).

"We have never stopped hearing that employers are trying to hire people," said DEED Commissioner Steve Grove. "They clearly had more success in July than in June."

Meanwhile, the state's unemployment rate held steady at a record low of 1.8%, which was not only the lowest in the nation in June but also the lowest ever recorded in the U.S. since the metric started being tracked in 1976.

Leisure and hospitality saw the biggest gains last month with the addition of 6,700 jobs. That was followed by government with 4,500 jobs, professional and business services with 3,900 jobs, manufacturing with 2,600 jobs and construction with 1,100 jobs.

Wage growth also accelerated in July with average hourly earnings in Minnesota rising 5.6% over the year — faster than the nation as a whole and up from 5.2% the month before.

With Minnesota having the second-tightest labor market in the U.S. after New Hampshire, Grove said it's challenging for businesses to find workers with the right skills.

"We're seeing employers really shift how they think about training folks on the job, changing their perception of what a good candidate coming in the door looks like and doing some really unique things to help sign people up," he said.

He noted that, earlier this week, he was in Thief River Falls where Arctic Cat, a maker of snowmobiles and all-terrain vehicles, said it's offering $4,000 signing bonuses as it looks to fill 150 jobs.

Companies are also turning to automation to fill in labor gaps, Grove said.

"Every business that I meet with is finding new ways to get things done, whether it's picking up the trash or building a snowmobile," he said. "They're finding ways to do that with robots."

The monthly jobs data has been uneven month to month coming out of the pandemic, DEED officials said. The rapid drop in jobs and slow comeback upset some of the seasonal patterns that are adjusted for in monthly reports.

"Some of the lumpiness is also just due to the challenges that employers have with hiring," said Oriane Casale, interim director of DEED's labor-market information office.

She added that looking at the jobs growth trend over a few months provides a better snapshot of the state's progress. By that perspective, Minnesota has been keeping pace with the rest of the U.S. in terms of growth.

Over a longer time span, however, Minnesota has been lagging the nation in terms of its overall job recovery. While the U.S. has now gained back all jobs lost in the first months of the pandemic, Minnesota is about 85% of the way back.

With an aging workforce, state officials think Minnesota was hit especially hard by a wave of early retirements spurred by the pandemic. There are currently about 77,000 fewer workers in Minnesota's labor force compared to before pandemic.

In recent months, more workers have been coming off the sidelines, leading to a bump in the state's labor force of about 63,000 workers since the beginning of the year. But that forward momentum took a pause in July when about 4,000 people stopped working or looking for work.

That demographic challenge is one of the factors Grove cited for why Minnesota has recently been leading the nation with its record low unemployment rate. He also pointed to other factors, such as the state's diverse economy, that help it weather downturns better than other states.

Minnesota's unemployment rate is about half that of the nation as a whole, which has a jobless rate of 3.5%.

However, Minnesota also continues to exhibit large racial disparities. The state's Black unemployment rate fell one-tenth of a percentage point to 7.3% in July, based on 12-month moving averages. But that is still more than triple the jobless rate for white Minnesotans.

Wage increases overall are not keeping up with inflation, which rose 8.5% in July. But some industries that are struggling to find workers are seeing faster growth.

For example, wages in nursing and residential care are up 13% over the year.