Minnesota unemployment rate at lowest level since 1999 after 6 months of gains

Minnesota's unemployment rate dropped last month to the lowest level since 1999 as the state reported one of the strongest periods of job gains across the country.

Minnesota added 11,500 jobs in March and dramatically revised its previously reported February numbers from 5,200 to 12,800 additional jobs. The updates made for six months of job gains following a punishing pandemic that pummeled the retail, leisure and hospitality sectors, the Minnesota Department of Employment and Economic Development (DEED) reported Thursday.

"Seeing this kind of job growth for six months in a row is great," said DEED Commissioner Steve Grove. "We have every reason to be optimistic."

Nationally, the number of people seeking unemployment benefits ticked up last week but remained at a historically low level, reflecting a robust U.S. labor market with near record-high job openings and few layoffs.

Jobless claims rose by 18,000 to 185,000, the Labor Department said Thursday, after nearly touching the lowest level since 1968 in the previous week. The four-week average of claims, which levels out week-to-week ups and downs, edged up from 170,000 to 172,000.

"Claims are still at very low levels, underscoring historically tight labor market conditions,'' said Nancy Vanden Houten, lead U.S. economist at Oxford Economics. "We expect initial claims to remain below (200,000) in the weeks ahead, as employers, who continue to struggle to attract and retain workers, will keep layoffs to a minimum.''

In Minnesota, 10 of 11 sectors reported job gains in March, with manufacturing, trade, transportation and utilities leading the pack. The only sector to lose jobs, with a decline of 200 positions, was the "other services" category.

The recovery, though, has been uneven.

Overall, the seasonally adjusted unemployment rate is 2.5% for March.

Based on rolling 12-month moving average rates, Black unemployment rose to a troubling 7.1% in March, more than twice the level of whites at 3%. Latino unemployment rose to 5.1%.

"So, you are not seeing this recovery in an even way. There is an unevenness to this," Grove said.

Blacks were hurt badly during the pandemic. Many were among the first to be laid off and the least likely to be recalled to jobs as the virus loosened its grip, Grove and Angelina Nguyen, DEED's labor market information office director, told reporters during a call Thursday morning.

It's only been during the last quarter or so, that "you see more black workers getting back into the labor force greatly," Grove said. As a result, the Black labor force participation rate is now up to 70.2%.

Grove said that Gov. Tim Walz and DEED are working hard to erase racial disparities in the numbers. They are creating new outreach efforts with Minnesota employers, issuing training and millions in grants to nonprofit and employment groups in communities of color. They are also issuing jobs information in four languages in an effort to reach more job seekers of color.

Minnesota's labor force participation rate rose to 68.1% in March, from 67.9% in February. The unemployment rate slid to 2.5% in March 2022 from 2.7% in February 2022, its lowest level since February 1999.

Year over year, Minnesota's payroll jobs rose by 2.5% to 68,540 positions in March, led by leisure/hospitality and manufacturing. The state lost 417,600 jobs during the early days of the pandemic, from February through April 2020, but has since regained about 76% of all positions on a seasonally adjusted basis, Grove said.

While wages are not keeping pace with inflation almost everywhere, Minnesota is faring worse than the nation as a whole on that issue. The average hourly wage increase for all private sector workers in the state was 4.9% over the year, just over half of the 8.5% yearly inflation rate seen in March 2022. Nationally, wages rose 5.8%.

In Minnesota, some low-wage jobs are seeing greater average wage increases, Nguyen said. Workers in nursing care facilities, food service and retail are now securing hourly wages in excess of $21, $16 and $18.

Two years after the pandemic sent the economy into a brief but devastating recession, workers across the country are enjoying extraordinary job security. Weekly applications for unemployment aid, a proxy for layoffs, have remained consistently below the pre-pandemic level of 225,000.

Last year, employers added a record 6.7 million jobs nationally, and they've added an average of 560,000 more each month so far in 2022. The U.S. unemployment rate, which soared to 14.7% in April 2020 in the depths of the COVID-19 recession, is now just 3.6%, barely above the lowest point in 50 years. And there is a record 1.7 job openings for every unemployed American.

This story includes reporting by the Associated Press.