New jobless claims in Minnesota spike amid renewed restrictions

Minnesota saw nearly 50,000 new unemployment applications or account reactivations in the last half of November as restaurants and other businesses faced new restrictions because of the surge in COVID-19 cases.

The state has not seen such a high volume of new jobless claims since early June when the economy began to emerge from the initial shutdown. It was a significant increase over weekly claims in recent months.

While still at elevated levels compared with before the coronavirus pandemic, new and reactivated unemployment accounts in Minnesota had generally been trending down throughout the summer, reaching a low of about 8,000 in one week in August.

They have been slowly rising this fall, climbing to about 11,000 the last week of October. The new claims then spiked to 23,000 in the third week of November and 25,000 last week, according to data from the Minnesota Department of Employment and Economic Development (DEED).

Some of the increase, particularly in early November, was not directly related to the pandemic but was part of the seasonal slowdown in construction because of Minnesota's cold weather, said Blake Chaffee, a deputy commissioner at DEED.

But the more recent jumps, he said, have been from food service workers, as one might expect given the state's four-week-long pause on indoor services at restaurants, bars, bowling alleys and gyms.

"Some of those folks were impacted in the very early days of the pandemic, so they kind of knew the drill," Chaffee said. Many got back into the state's unemployment system quickly to reactivate their accounts.

Like many in the restaurant industry, Breezy Harbour, a hostess at the Lowry in Uptown, has had a very "on and off" year.

She was furloughed in March, then returned to work in June. This fall, she had to quarantine for two weeks in September when a co-worker tested positive, and then again in October when she caught the virus herself.

Since the state's most recent restriction, she has managed to hang on to a couple shifts a week to help with to-go orders and collects unemployment for her reduced hours. But the benefits don't help make up for all of her lost wages.

"Now I have to manage every penny so closely," she said, adding that she's constantly checking her bank account.

At the same time, she said it also was stressful having to constantly ask customers to wear masks when they got up from their tables to go to the restroom or when they were leaving the restaurant. So she has mixed feelings about the new restrictions.

"It's good and bad because we're not constantly worrying about getting COVID at work, but now we're out of work," she said. "It's a Catch-22. There's no good way to be in the service industry right now."

Jeanne Boeh, an economics professor at Augsburg University, said the economic recovery should pick up steam once the vaccines are widely rolled out, but in the meantime, some aspects of it may get worse.

"You've already seen some pretty big restaurants close permanently, and you're going to see more of it," she said. "There will be some negative, long-term fallout."

People of color have been disproportionately affected by the pandemic in terms of employment. And, Boeh added, the percentage of the long-term unemployed is going up, and will likely continue to rise for some time.

Gov. Tim Walz has proposed an aid package to help bring some relief to unemployed workers whose extended benefits are set to expire right after Christmas. But it remains to be seen what sort of a deal he can reach with legislators. Meanwhile, federal lawmakers also are debating a second pandemic relief plan, the prospects of which remain uncertain.

On Thursday, the U.S. Department of Labor reported a drop in new jobless claims nationwide last week, though economists noted that the drop was likely due to the Thanksgiving holiday. Still, the number remains quite high and well above pre-pandemic levels.

About 280,000 Minnesotans continue to request jobless benefits each week.

Minnesota has recovered about 53% of the jobs it lost since the beginning of the pandemic, but job growth has been slowing.

The state's unemployment rate fell to 4.6% in October, a significant decline from 5.9% the month before. But that drop, as well as another sizable decrease the month before, has been largely due to people who have decided to stop working or looking for a job amid the strains of the pandemic.

According to DEED's latest forecast, the state's job growth is expected to continue to slow in the coming months. Recovery of all jobs lost during the pandemic isn't projected to happen until late 2022 or early 2023.