Minnesota job growth outpaces U.S.

Minnesota's labor market is staying strong heading into 2024, with job gains outpacing the nation as a whole.

The state added 9,500 jobs from October to November, marking the fifth-consecutive month of growth, the Department of Employment and Economic Development (DEED) reported Thursday. That number, which represents workers in jobs, climbed 0.3% on a seasonally adjusted basis compared with 0.1% nationally.

"This continued growth is great for Minnesota workers and the economy as a whole," DEED Commissioner Matt Varilek said at a virtual news conference.

The state gained 47,829 payroll jobs year-over-year, with seven of the 11 "supersectors" that DEED measures experiencing growth. Leading the uptick were construction; trade, transportation and utilities; education and health services; and government. Manufacturing, information, financial activities and professional and business services experienced losses.

Worker pay also rose: The average hourly wage in Minnesota reached $36.29 in November, up 3.4% year-over-year and 13.2% in three years, according to DEED. The national average hourly wage experienced greater growth — 14.2% in three years — but remained lower than the Minnesota average at $33.99.

Though recent wage gains in Minnesota and nationally are outpacing current inflation of 3.1%, they haven't caught up to the 18% increase in the consumer price index (CPI) in the past three years. The CPI measures the change in prices consumers paid for goods and services.

"Because inflation was consistently higher than wage growth between mid-2021 to early 2023, the cumulative effect over three years is that inflation is still surpassing wage growth," said Angelina Nguyễn, labor market information office director at DEED.

The Federal Reserve's effort to tame inflation by raising interest rates — a trajectory the central bank expects to reverse next year — has cooled the labor market and slowed wage growth.

Still, qualified workers remain in short supply. Minnesota's unemployment rate in November was 3.1%, compared with 3.7% nationally.

Varilek said job vacancies are "a pretty widespread challenge" across the state. Employers are seeing high demand for goods and services but not enough workers to meet the call, he said. State officials are trying to draw workers to sectors including technology, the trades, health care, manufacturing and education.

Southern Minnesota has the most need for workers, Nguyễn said. Across the board, she said, health care and manufacturing have experienced the greatest continued labor shortage. Meanwhile, industries, including retail and accommodation and food services, are recovering from pandemic-era losses and again seeing rising vacancies, she said.

U.S. census data this week showed slight population gains in Minnesota in 2023 after two years of slow growth or decline. International migration has been key to population growth, outpacing "natural growth" — births minus deaths — and domestic migration, which remained in the red.

DEED is working to attract more residents to the state, including through its Office of New Americans, Varilek said. Officials are also hopeful that new policies unique in the region, including free college and school lunch programs and paid family leave, will help Minnesota stand out, he said.

"We think those things are going to give us an advantage as people learn more about the Minnesota story and learn more about the Minnesota quality of life," Varilek said.

"We think it makes this an even more attractive place to go with the strengths that we have enjoyed over decades."