Minnesota lost nearly 50,000 jobs in December, as another business shutdown took effect

Minnesota lost nearly 50,000 jobs last month as the economic recovery sputtered in the midst of increased state restrictions on restaurants, bars and gyms.

December was the second straight month that the number of jobs in the state has contracted since April, according to data released Thursday by the Minnesota Department of Employment and Economic Development (DEED).

Not surprisingly, leisure and hospitality accounted for the largest share of the decline with a loss of 41,100 jobs.

"When you dial back the economy, this is what you expect," said Steve Grove, DEED's commissioner. "You're going to have layoffs."

While it's "never great" to see jobs disappear, he said that limitations put in place by Gov. Tim Walz in November had a "big effect" on slowing the then-surging spread of COVID-19 in Minnesota. The state's rate of hospitalizations from the virus peaked in late November and is now running about one-third of the level it was then.

"The sacrifices that businesses, workers and Minnesotans across the state made to create a safer place for all of us were worth it," Grove said.

Less than 10% of those who have been laid off said they expect their job losses to be permanent. In other words, most are hoping they will be able to return to their previous jobs.

So state officials hope to see many of these jobs bounce back in the coming months, especially as restrictions were eased earlier this month to allow, for example, to a return to indoor dining at 50% capacity.

Grove pointed to data from the OpenTable that indicates that 78% of restaurants in Minnesota are accepting reservations again, compared with 85% in November before the renewed restrictions were put into place.

"Those are encouraging signs that we're back up and running as an industry, but I think it will take a little time," he said, nodding to the fact that January is typically a slow month for restaurants in Minnesota because of winter weather.

About 350,000 Minnesotans continued to request unemployment benefits last week, about 20,000 fewer than the week before. But the overall number is still at very elevated levels and is higher than in October and November.

With December's job losses, Minnesota has now regained only about 36% of jobs it lost earlier in the year due to the pandemic. It had recovered about 53% of jobs in October before the more recent setbacks.

The state lost 49,800 jobs in December and a revised 15,500 jobs in November. Together, those losses erased all of the job gains from August through October.

In addition to the big declines in hospitality and leisure, government lost about 6,900 jobs in December, most of them in local government, in areas such as busing and recreation.

Other services, which include dry cleaners, hairdressers, personal care and auto repair, were down 3,400 jobs. And education took a hit of 2,600 jobs, which state officials attributed partly to private schools that may have paused in-person instruction.

There were a couple of bright spots. Manufacturing added 1,300 jobs in December, as did trade, transportation and utilities. Professional and business services added 1,200 jobs and construction was up 800 jobs.

The state's unemployment rate in December came in at 4.4%, slightly slower than the 4.5% for November, a figure that was slightly revised upward.

It remains lower than the U.S. unemployment rate, which held steady at 6.7% last month.

But as in previous months, the decline in Minnesota's jobless rate was entirely due to people leaving the labor force. In December, 15,488 Minnesotans stopped working or stopped looking for work as the pandemic has continued to put strains on families juggling child care and virtual schooling. Many people also remain wary of being exposed to the virus through work.

More people leaving the labor force was also one of the big factors in the improvement in the unemployment rate for Black Minnesotans, which fell to 5.5% in December, from 11.1% the month before. The unemployment rate for Latino Minnesotans also fell to 6%, from 7.7% in November. DEED uses six-month rolling averages to calculate the Black and Latino unemployment rates because they have smaller sample sizes of those groups.

A little over 100,000 Minnesotans have dropped out of the labor force since February, with the largest exodus happening in the fall.

"That's a real concern for our economy," said Oriane Casale, director of DEED's labor market information office. "At 4.4% unemployment, that doesn't leave a lot of room for hiring."

Grove added that a number of employers in Minnesota are eager to hire workers, and in some cases, are having trouble filling jobs. He said DEED will be stepping up its efforts in the coming months to help unemployed workers move into other industries, especially those where their skills might easily transfer.

Kavita Kumar • 612-673-4113 Twitter: @kavitakumar