Minnesota's jobs comeback gains momentum, with 10,200 added in January

Minnesota's economy got off to a strong start in 2022 with the addition of 10,200 jobs in January despite the surge in omicron cases that month.

That was the largest monthly gain the state has logged since last July, according to data released Thursday by the Minnesota Department of Employment and Economic Development (DEED).

The state's unemployment rate also ticked down to 2.9% in January, now well below the level seen before the pandemic abruptly threw hundreds of thousands of Minnesotans out of work.

The U.S. unemployment rate came in at 4% in January and 3.8% in February. The state will release its jobs numbers for last month in two weeks.

"We were uncertain of what exactly the jobs picture would look like in January when rates for COVID were quite high in the state, but the economy really performed," said DEED Commissioner Steve Grove.

He added that the solid job growth was an encouraging sign, especially since the economy is in a "fluid state" right now amid Russia's invasion of Ukraine.

"We face a whole host of uncertainties on the horizon ahead with the situation in Russia and Ukraine, of course, and the energy crisis that seems to be sparking," he said.

Also on Thursday, the U.S. Bureau of Labor Statistics reported that the consumer price index, a measure of inflation, rose 7.9% last month. That was an acceleration from 7.5% in January. Wages have been rising, too, but not enough to keep up with price inflation.

Average wages for private sector workers in Minnesota was $35.54 an hour in January, a 6.7% increase over the year. That was slightly higher than the increase nationwide of 6.4%.

As of January, Minnesota had recouped about 71% of the jobs it lost in the first few months of the pandemic. It is still about 121,000 jobs short of the pre-pandemic level, when about 3 million people were working in the state.

Some sectors that are close to a full jobs recovery are local and state government, information and financial activities. Those that still have a long way to go include arts and recreation, accommodations and food services, administrative and support services and educational services.

At the same time, there continues to be big racial disparities in who is finding jobs.

"Black Minnesotans are having a harder time with getting back into the workforce and finding employment compared to white Minnesotans," said Angelina Nguyen, research director of DEED's labor-market information office.

In January, the Black unemployment rate in Minnesota was 6.2%, compared with 3.4% for white residents and 5.6% for Latinos. Because of smaller sample sizes, these numbers are 12-month moving averages, which is why they're different from the overall state unemployment rate.

While women dropped out of the labor force at a higher rate than men at the beginning of the pandemic, Nguyen said that gap has closed throughout and the two groups now look more similar.

The state's labor force grew in January — and its participation rate rose to 67.6% — but it still has nearly 119,000 fewer workers than it did in February 2020.

Grove said the state's workforce shortage remains acute, with 205,000 job vacancies and about 40,000 in health care.

He's been hearing from trade groups in leisure and hospitality that some employers seem to be having better luck with hiring, especially as businesses have raised wages and offered better work schedules and hours.

"They are seeing some momentum, but it's still a crisis," Grove said.

Professional and business services saw the biggest gains in January with an addition of 3,600 jobs. That was followed by leisure and hospitality with 1,800 jobs.

Meanwhile, construction lost 1,400 jobs and trade, transportation and utilities declined by 500 jobs.

As happens at the beginning of every year, the state jobs data for the last several years were revised this month to take into account new information, such as the size of the state's population and additional seasonal factors.

That benchmarking is why the state jobs report for January comes out a bit later compared with other months.

The adjustments resulted in the state reporting a lower unemployment rate, particularly at the beginning of the year, and a lower labor force participation rate in 2021.

And while the state had originally logged job gains every month last year aside from December, the revised figures now show losses in June, August and September.

Meanwhile, a loss of 2,000 jobs initially reported for December was revised to a gain of 2,500.