Minnesota jobless rate hits lowest level since 2001

Minnesota posted its fourth straight month of solid job gains in November, pushing the state's unemployment rate to its lowest level in 13 years.

At 3.7 percent, the Minnesota jobless rate is more than two points below the national average and as low as it has been since May 2001, according to the state Department of Employment and Economic Development.

After a tepid first half of the year, job growth in Minnesota over the past 12 months still lags the U.S. average of 2 percent. But the state has added more than 35,000 positions during the past four months, an encouraging trend heading into the end of the year.

"It just appears that we're going from modest growth to a little bit more robust growth," said Toby Madden, an economist at the Federal Reserve Bank of Minneapolis. "It looks like it's full-bore ahead."

The labor force has grown each of the past three months, and yet there are now fewer unemployed people than job openings in Minnesota, said Steve Hine, the state labor market economist. The low jobless rate has not translated into rising wages for many Minnesotans or workers across the country, but Hine expects wages to start moving upward.

"There's still a lot of that hidden slack that we're yet to absorb, some of that long-term unemployment," he said. "We're absorbing that slack fairly rapidly, and I would expect that to start to spill over into wages in the very near future."

Across the state, Mankato's job growth was 3.6 percent for the past 12 months, the best of any metro area in Minnesota. Minneapolis-St. Paul's growth was 2.1 percent.

"While we were seeing significant improvement in the unemployment rate for blacks, the last couple months have been quite a different story," Hine said.

The state's monthly job report is an estimate that at times can deviate widely from more refined results the federal government releases several months later. That was clear in September when data released from the Quarterly Census of Employment and Wages, widely considered the gold standard for job numbers, showed that from March 2013 to March 2014, the state added less than half as many jobs as the monthly reports showed.

Despite their limitations, the monthly numbers provide the only fast approximation of the state job market. Among the results was a surprising surge in the number of restaurant and hotel jobs (5,000), the largest monthly increase on record for that sector. The result was notable, Hine said, because it came less than four months after the increase in the state minimum wage.

Legislators increased the minimum wage for most workers — those employed at companies with more than $500,000 in annual revenue — from $7.25 per hour to $8 per hour in August. The wage steps up $1 per hour next year and another 50 cents in August 2016 to $9.50 per hour.

Some feared that the minimum wage increase would discourage businesses from hiring workers. Low gas prices and rising consumer confidence are helping hotels and restaurants, Hine said. So far, the minimum wage hike isn't getting in the way.