Minnesota jobless rate rises to 6.2 percent

The Minnesota labor market skidded further in August, with the loss of 3,100 jobs and the state unemployment rate rising to 6.2 percent, a peak not seen since 1985.

Once again, the unemployment rate in Minnesota hovered above the national jobless rate, which stood at 6.1 percent past month.

The state has lost 8,200 jobs in the past 12 months. In July, Minnesota's seasonally adjusted jobless rate stood at 5.8 percent.

"We're on a pace to lose about a year's worth of normal employment growth this year," said state economist Tom Stinson. "That's just not something we're used to seeing. That's a sign of how difficult times are for the Minnesota economy."

Economist Scott Anderson expects no short-term turnaround.

"We'll probably see more weakness as we move into the fourth quarter," said Anderson, senior economist at Wells Fargo & Co. "I think it's going to get worse before it gets better."

The industries that added workers in August include trade, transportation and utilities (4,100), government (1,100), education and health services (500) and financial activities (300). Natural resources and mining remained flat.

"Employers are becoming more cautious about hiring as the national economy has slowed down," said Dan McElroy, commissioner of the state Department of Employment and Economic Development (DEED).

The number of job openings across Minnesota in April, May and June fell 17.3 percent compared with the same period last year, according to a separate DEED report.

181,600 job seekers

In the second quarter, the agency tallied 51,700 job vacancies. In August, 181,600 Minnesotans were looking for work.

"We're seeing a more difficult market for unemployed workers than we did even during the 2001 recession," said Oriane Casale, DEED assistant director of labor market information.

"It's pretty disappointing, though not unexpected," said Toby Madden, regional economist at the Federal Reserve Bank of Minneapolis.

In his view, one of the few bright spots for the September jobs report -- due next month -- may be a small uptick in jobs linked to the Republican National Convention, held in St. Paul earlier this month.

"They had to eat someplace," he said. "They had to party someplace."

Matt Entenza, chairman and founder of the Minnesota 2020 think tank, said the most disturbing development is that Minnesota's job market no longer outpaces the nation's -- a phenomenon that characterized much of the last quarter century.

"An advantage of the past -- a state economy that goes into recession later and coming out earlier -- has disappeared," he said.

Minnesota ranked 49th in the nation in terms of income growth, rising 1 percent. That's little more than half the national growth rate of 1.8 percent, according to a U.S. Department of Commerce report released Thursday.