What are the forces moving the Minnesota economy? Adam Belz tries to identify the trends and show the connections between Minnesota and the larger U.S. and global economies. You can connect with him on Twitter: @adambelz

Minnesota lost 4,200 jobs in July, state says

Posted by: Adam Belz under Business trends, Economics Updated: August 14, 2014 - 3:22 PM

Minnesota lost 4,200 jobs in July and June’s job gains were revised downward by 3,600, disappointing news in a year so far of tepid job growth for the state.

The unemployment rate remained at 4.5 percent, according to figures released Thursday by the Minnesota Department of Employment and Economic Development. The U.S. unemployment rate in July was 6.2 percent.

State economists cautioned that the job figures may be misleading. Adjusting the numbers seasonally using normal patterns of weather and the timing of school years is complicated, and has been more difficult in recent years thanks to the long, severe winters, said Steve Hine, the state labor market economist.

“By digging into the numbers a bit more deeply than just these top-level seasonally-adjusted numbers, I have to conclude that our job growth and our employment strength is considerably greater than these particular numbers would reveal,” Hine said. “Not only July’s numbers, but the numbers we have seen over the past few months.”

Still, over the first seven months of the year, Minnesota’s job market has been stuck in neutral.

After adding 41,900 positions from August to December of 2013, the state has now added a net of only 2,900 jobs since January. Some 133,000 Minnesotans are officially unemployed, and thousands more are working part-time jobs when they would rather work full-time.

The biggest job losses in July were in private education, which shed 4,800 jobs.

“We really did have a significant cutback in July in private ed that has not been typical,” Hine said.
Information, which includes publishing and broadcasting, lost 1,000 jobs. Construction lost 700 jobs. 

The losses were partially offset by gains in manufacturing, retail, transportation and warehousing, hotels and restaurants, and administrative support and temporary jobs.

One bright spot has been heavy construction, which added 500 jobs in July and has added nearly 4,000 positions in the past 12 months.

Meanwhile, Minnesota’s workforce continues to shrink, a sign the unemployment rate will continue to fall.

Labor force participation -- the share of the working-age population that is either working or looking for work -- fell to 70.1 percent. The indicator threatens to fall below 70 percent for the first time since October 1980.
Most of the decline is due to baby boomers retiring, Hine said.

While a smaller pool of workers might help job-seekers in the near term, it is a worrying sign for the long-term health of the state economy, since a robust workforce is key to business expansion.

Laura Kalambokidis, the state economist, said she’d feel better if job growth had been stronger so far in 2014, but other indicators -- like job vacancies, the average worker’s workweek, and the number of people filing for unemployment -- have been positive. 

Initial claims for unemployment insurance fell by 14 percent in July compared to a year earlier, to about 10,700.

“It would be more concerning if we were seeing more people laid off,” Kalambokidis said. “Sluggish job growth is not as worrisome as people losing their jobs.”

The debate over the reliability of the monthly job numbers is an old one, and takes on more significance in
an election year.

“They’re volatile, they get revised,” Kalambokidis said.

The state-specific monthly job numbers from the U.S. Bureau of Labor Statistics released Thursday are based on surveys that economists like Hine and Kalambokidis have argued should be interpreted with caution.

Another source of jobs numbers, the Quarterly Census of Employment and Wages, is based on unemployment insurance records, which account for all workers. Those figures are more reliable, but they are released on a six-month lag to give analysts time to collect and carefully adjust the data.

The esoteric debate over job numbers had its time in the sun in 2011, when Wisconsin Gov. Scott Walker argued the quarterly census numbers were more accurate and was lambasted for releasing them early. The fact that he did so a few weeks before his recall election opened him to extra criticism.

This post was updated at 3:22 p.m. on Thursday.

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