Minnesota jobless rate still nearly triple what is was before pandemic

Minnesota's unemployment rate fell to 8.6% in June, down from a record-high 9.9% in May, as more businesses reopened following the easing of restrictions.

Still, the state's jobless rate is nearly triple what it was before the coronavirus pandemic took hold. It was 3.1% in February.

And with more than 300,000 Minnesotans still receiving unemployment benefits, state officials are trying to prepare them for a big financial cliff next week when the additional $600 in weekly unemployment payments from the federal CARES Act is set to expire unless new legislation is passed.

"This is a pretty big inflection point in our country's response to the coronavirus," said Steve Grove, commissioner of the Minnesota Department of Employment and Economic Development (DEED). "When people go off it, their lives are going to change quite a bit."

Other unemployment benefits will continue.

But the extra $600 a week has helped keep many out-of-work Minnesotans above water during the pandemic and has amounted to more than half of all unemployment benefits paid out by the state since March.

More than 70% of Minnesotans who are collecting unemployment benefits have earned more because of CARES than they did when they were working, Grove said.

"It's been a really incredibly effective income replacement tool that helped to keep people at home at a time when staying at home has been important to get control of the virus and to respond to the pandemic," he said, adding that he hopes Congress extends it.

As the end of the program nears, DEED is trying to get the word out about its job services, most of which have shifted online, and to use its website to help workers learn about job openings.

Minnesota added 84,700 jobs last month, a 3.2% increase, according to numbers released Thursday by DEED. The rebound came after the state had shed more than 385,000 jobs in March and April.

"Overall, we're seeing the biggest positive gains in the industries that were hardest hit, such as leisure and hospitality," said Oriane Casale, interim director of DEED's labor market information office. "Retail trade is doing quite well and is really bouncing back maybe faster than we expected."

Retail stores in Minnesota were able to reopen in mid-May. Jobs in that sector were down 1% over the year, compared to 8.6% nationally.

The areas that saw the biggest job gains were leisure and hospitality, including accommodations and food services, which brought back 35,300 jobs. Retail jobs increased by 17,300 positions, education and health services by 16,900, and other services such as hair salons by 11,300.

Still, jobs in all industries were lower compared with a year ago, with leisure and hospitality, which saw the biggest decline during the pandemic, still being down 34.4% even with the job gains.

This latest jobs report reflects the situation of the week ending June 12 — the same week that hair salons, gyms, and bars and restaurants were allowed to reopen for indoor services at limited capacities. But Casale noted that businesses had to take some extra safety steps, leading some to take longer to reopen.

So a more full picture of the bounce-back in jobs in those sectors will come in next month's job report.

The data also showed that the pandemic continues to bring new challenges even after many state restrictions have been eased. Three industries showed modest job losses in June: construction, information and financial activities.

In recent months, the jobs data has had trouble keeping up with the rapidly changing landscape of the pandemic, leading to frequent and sometimes large revisions.

On Thursday, the jobs numbers for May were revised upward to show an addition of 26,200 jobs in the state, instead of 9,800 jobs. The new number took into account the fact that the survey was taken before some businesses had reopened later in the month.

Kavita Kumar • 612-673-4113