Minnesota's jobless rate hits record low 2.2%, and people doing the hiring feel the pinch

Patti Soskin wasn't surprised to hear Thursday that the unemployment rate in Minnesota had fallen to the lowest ever recorded.

The owner of Yum Kitchen and Bakery has about 10 open positions at her three locations around the Twin Cities and says she's having a harder time filling them than she can remember in her 17 years of business.

"It feels tighter than it's ever been," she said, adding that she's already raised wages and is looking at other benefits such as helping to pay for tuition. "We all need more people right now."

Minnesota's unemployment rate dropped to 2.2% in April, the lowest since state officials began tracking it in 1976. That is more than a full percentage point below the U.S. unemployment rate, which came in at 3.6% last month.

That means there's not a lot of people looking for work who can't find it, though there is still unevenness in who is getting hired. Black unemployment in Minnesota is more than double that of white Minnesotans.

Minnesota has been seeing strong and steady job growth this year, adding another 11,900 positions last month on top of an upwardly revised 13,200 jobs in March, the Minnesota Department of Employment and Economic Development (DEED) said Thursday.

"It's good news," said Jeanne Boeh, an economics professor at Augsburg University. "On the other hand, we still haven't recovered a lot of the jobs we lost. So we're still climbing."

Through April, the state has gained back 329,500 of the 417,600 jobs it lost two years ago in the first months of the pandemic. That's a 79% recovery rate, while the nation as a whole has recovered about 95% of the 22 million jobs it lost at the start of the pandemic.

Minnesota's labor participation rate rose a bit in April to 68.3%, but is still down more than 2 percentage points from where it was in February 2020. Meanwhile, the U.S. rate, at 62.2%, is just a little more than 1 percentage point off compared to before the pandemic.

"You had a lot of workers in Minnesota who retired early," said DEED Commissioner Steve Grove.

DEED officials also noted that the state's population growth has leveled off in the last couple of years, particularly as immigration has slowed due to pandemic restrictions and federal policies. The state saw more workers than usual move from the state last year.

"There is a very real concern in Minnesota around our tight labor market," Grove said. "It is worse here than in other places."

In Minnesota, there are 2.7 jobs openings for every available worker, compared with 1.7 jobs nationally, he said.

Aaron Sojourner, a labor economist at the University of Minnesota, noted that Minnesota still has seen steady job growth in the last few months despite the low unemployment rate. That means people who are looking for jobs seem to be finding them quickly.

"But to get faster job growth, we need more people to come off the sidelines and to start searching for jobs," Sojourner said. "I think that requires faster wage growth and faster job quality improvements."

But the opposite happened in April. While wages had been rising at a fairly rapid pace in the last year, that growth slowed last month. Wages for Minnesota private sector workers rose 2.2% over the year in April, down from a 5.8% growth rate the month before.

And those wage increases still aren't keeping up with inflation, which came in at 8.3% nationally last month.

In April, Minnesota's job gains were led by the financial activities sector, followed by professional and business services and then leisure and hospitality employers. Jobs in the trade, transportation and utilities sector and in construction fell.

Maple Grove-based Schuler Shoes has raised wages about 20% in the last year or so.

"It's helped us maintain a lot of our employees," said president Mike Schuler. "If we had left it where it was, they might have looked for something else."

The wage boost helped the company's workers through the prolonged winter, when sales typically slow and commissions don't got as far, he said. Still, more than half of his nine stores are looking to fill positions, a much higher percentage than typical, at a time when sales are picking up.

"We have a number of employees who found jobs in the fields they graduated in," Schuler said. "I think there was a delay in them finding those jobs. Now they're opening up so that's been a group of people who left and we've got to fill behind."

Alissa Henriksen, owner of Minnetonka-based executive search firm Grey Search and Strategy, said hiring at the mid- to upper-executive level has been more challenging, too.

"The process takes a little bit longer and it's extremely competitive," she said.

In the past, candidates might have one other offer. These days it's more like three or four. "It's an all-time high for the number of offers being thrown at candidates," she said.

Candidates are also being more upfront that if they're going to make a job change, they want to make sure it's a workplace that supports flexibility as well as health and wellness.

"It's not just the money," Henriksen said.