Black unemployment rate falls to record low in Minnesota, but do numbers tell the whole story?

More Black workers in Minnesota appear to be entering the labor force and finding jobs, with the state's Black unemployment rate plunging to a record low.

The unemployment rate for Black Minnesotans is at 2.5%, lower than the white or Hispanic unemployment rates, according to the latest figures from the Department of Employment and Economic Development (DEED). Researchers cautioned the data is based on a small sample size but said long-term, there has been a substantial change in falling Black unemployment in Minnesota.

"When you have a tight labor market, and the hiring demand is still high across occupations, those who can work are working," said Leroy West, president of Summit Academy, a career and technical education institute based in north Minneapolis. "That's a favorable condition for who's been left on the sidelines."

The unemployment figures are a stark shift from last year, when economists and community leaders raised concerns as state jobs figures for Black Minnesotans lagged.

The Black unemployment rate was three times the white unemployment rate last July, despite the overall high demand for workers. State data suggested then Black Minnesotans were rejoining the labor force after a pandemic dip, but hiring wasn't keeping pace with worker availability.

While this year's data tells a different story, some said the latest low unemployment numbers don't ring true for all communities. And several people questioned whether the jobs Black workers are landing a living wage.

"As African Americans, sometimes what we are experiencing is that data does not represent us accurately," said Black Women's Wealth Alliance founder Kenya McKnight-Ahad, noting employment trends might differ between Black Minnesotans born in the U.S. and African immigrant communities.

"I am seeing people still looking for jobs and housing. I'm seeing a lot of pain and suffering," McKnight-Ahad said. "Northside is experiencing a lot more grief than it did before COVID and the uprising, and we haven't all been made whole."

Pandemic repercussions

The pandemic disproportionately affected Black workers, two-thirds of whom filed an initial unemployment claim in 2020 compared to roughly one-third of white workers, according to a DEED report.

Many Black workers held jobs in industries that experienced closures during the pandemic — like retail and hospitality — or were working in health care and chose to stay home out of concern for their health or to care for their children or elderly family members, said Marc Majors, DEED's deputy commissioner for workforce development. Many people are returning to those roles and a lot of entrepreneurs are starting their own businesses, he said.

Dianna Bady, of Minneapolis, is among those who lost work during the pandemic and returned to the workforce this year.

She previously did HIV education and testing at a nonprofit but lost her job in spring 2021. There were similar jobs available, but she struggled to do the type of work she had in the past and was helping to provide child care for her grandchildren.

"Giving people, at that time, a positive HIV result and then them melting down, that affected me. And it affected me more so post-pandemic and COVID," she said. "It was too many loved ones that I lost, dealing with too much death around."

But in May, she landed a temporary position as a job coach for the Step Up youth employment program in Minneapolis.

"It was like a light went off," she said, and she loved working with young adults. She hopes to continue in the field.

While workers like Bady continue to re-enter the workforce, economists are closely watching the cooling U.S. job market. A slowdown could have an outsized effect on workers of color.

The U.S. unemployment rate for Black workers was 5.8% in July, up slightly from a record low of 4.7% in April, according to the Bureau of Labor Statistics. That's still far below the median of around 11% through the past 50 years.

The recent increase could be because sample size for the national Black worker data — like Minnesota's racial workforce data — is relatively small and volatile, said Austin Clemens, interim policy director at the Washington Center for Equitable Growth. Or, he said, it might indicate a weakening job market, given the long-researched trend of "last hired, first fired."

"Whenever the job market starts to soften, you often see that for Black workers first," Clemens said. "And when the labor market gets tight, it's often Black workers who are the last to be drawn in."

Lagging income

That potential shift has not shown up in Minnesota's numbers. Here, unemployment for Black workers has been low while their labor force participation rate — which measures the percentage of a population 16 or older working or actively seeking work — has climbed.

It was nearly 75% in July, higher than the almost 74% participation rate for Hispanic workers and far above the roughly 67% rate for white workers. Since the racial breakdowns for both labor force participation and unemployment data draw on data from a small group of people, DEED uses a 12-month moving average to track them.

While monthly numbers can fluctuate, long-term labor force participation trends are clear, said Oriane Casale with DEED's Labor Market Information Office. White residents are aging, and their participation rates are falling. Meanwhile, the state's Black and Hispanic populations tend to include more new Minnesotans and new Americans. People tend to migrate when they are younger, bringing down the average age of those demographic groups, she said.

"It is really a numbers game in terms of the average ages of these groups," Casale said. "They are younger and also being very heavily recruited and tapped for the available work with the unemployment rate so low across the state, and with the number of job vacancies so high."

Basil Ajuo, president of Minnesota Africans United, which helps African immigrants enter the workforce, said more companies have connected with his organization and members of the African diaspora as they try to build a more diverse workforce and prioritize equity. He has also seen more foundations and corporations investing in job training programs the past couple years.

Meanwhile, the state has increased spending to train people in well-paying, fast-growing fields, added support for employers trying to create diverse and inclusive workplaces, boosted cash for a youth workforce program and created an office that helps immigrants and refugees receive skills training or become entrepreneurs, Majors said.

While more Black Minnesotans are entering the workforce, he said the state needs to examine whether racial disparities in income have persisted. Median income for Black households has been roughly $33,000 lower than white household income.

"The question that needs to be asked and probably answered sooner than later is: What is the income that folks are going back into or they are entering into?" he said. "I'm not sure if the picture is fully painted as to what the impact is."