Minnesota prepares for more jobless claims as new restrictions go into place

The state's jobs agency is preparing for thousands of unemployment applications in the coming days as Minnesota puts new restrictions in place for bars, restaurants and gyms starting this weekend.

Steve Grove, commissioner of the Minnesota Department of Employment and Economic Development (DEED), said Thursday he was hopeful that restaurants will hold on to many of their employees while indoor dining is closed for four weeks. They can continue to offer takeout and delivery.

"We'll have to see," he said. "But our team is ready and our system is ready to handle more applications. We'll be there to help Minnesotans as they need it."

He added that workers who received jobless benefits earlier in the pandemic shouldn't have any problems receiving them again. That's true even for workers who may have exhausted their 26 weeks of regular unemployment benefits because of various extensions to unemployment programs that have been made through the end of the year. The state's unemployment program generally provides workers with assistance equivalent to about half of their previous paychecks.

DEED is in active conversations with the U.S. Department of Labor on whether extended benefits will continue in 2021. Various factors such as the current unemployment rate are used in a calculation that can trigger extensions, Grove said. A 13-week federal add-on for unemployment benefits has provided another safety net for workers. But it is also set to expire at the end of this year.

The decision to close restaurants, bars and gyms for a month will create more suffering for businesses and workers, Grove said, noting that some businesses might not make it to the end of the year. But he said the move was not only important for public health, it also could help facilitate a faster jobs bounceback over the longer term.

"We know that dialing back the economy is going to cause some short-term challenges for many, many businesses across the state," he said. "But we're hopeful that it will lead to longer term economic recovery based on getting the virus under control."

Economic projections suggest that the state could recover all of the 387,000 jobs it lost at the beginning of the pandemic by the third quarter of 2022, but only if the state is able to mitigate the virus, he said. If, on the other hand, the situation spins out of control, it could tack on an extra year to the jobs recovery.

New data released by DEED on Thursday showed that the state has recovered about 53% of the jobs it shed earlier this year. That includes an addition of 13,200 jobs in October, a slight slowdown from the month before. Job gains last month were led by trade and transportation, leisure and hospitality, and manufacturing.

The state's unemployment rate fell to 4.6% in October, from a revised 5.9% the month before. But that was once again not because more Minnesotans had found jobs, but because more workers had either decided to stop working or looking for a job.

About 47,000 Minnesotans exited the labor force last month, following a dropout of about 56,000 in September.

Minnesota's labor force participation rate, at 67.4%, is now at the lowest level in decades. Before the effects of the pandemic, the participation rate was 70.2%.

The U.S. labor force participation rate, by comparison, showed a small increase last month after a significant decline in September. The U.S. jobless rate is also higher than Minnesota's at 6.9%.

Oriane Casale, director of DEED's labor market information office, said the state's declining labor force participation rate is mostly due to workers who do not want a job right now, are not searching for a job, and are not available for work. Workers who are discouraged because they cannot find a job account for a relatively small portion of the exodus.

"I think people are aware that there are jobs available out there and are making decisions for other reasons," she said.

Workers age 55 years and older made up the largest share of the people who left the labor force last month in Minnesota.

Casale said that DEED analysts don't know exactly what people's motivations are for leaving the workforce, but they have some educated guesses.

"The likelihood is that the labor force declines are at least in part due to temporary decisions people are making based on safety concerns and the need to care for children and sick family members rather than permanent or long-term decisions," she said.

Grove added that he hopes this is a temporary blip and that people will soon return to work.

"In the short term, it's challenging because there is actually a lot of folks hiring out there," he said. "We really hope Minnesotans do go out there and seek jobs right now because we need workers in our economy and there's a lot of shortages out there."

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