DULUTH – For the first time since December, the Duluth area saw a decline in hospitality industry jobs last month, even as the unemployment rate held steady.

Between July and August, the Duluth metro area — St. Louis, Carlton and Douglas (Wis.) counties — lost 380 hospitality jobs, according to figures released this week by the Minnesota Department of Employment and Economic Development (DEED). The sector remains 1,844 jobs below Aug. 2019 levels. The St. Cloud metropolitan area also saw job losses in the hospitality industry last month.

It's the industry that took the biggest hit during the COVID-19 pandemic, but had made sizable gains earlier in the year.

Fear of rising coronavirus cases fueled by the delta variant and staff downsizing by employers may play a part, said Carson Gorecki, regional labor analyst with DEED.

"If you don't have X number of employees to open up two shifts, you may have to go down to one shift," he said, for example.

And while the Duluth area has recovered 70% of the jobs lost during the pandemic — slightly more than the state — its labor force decreased last month by nearly 1,200 people. It's the second consecutive month of decline after several months of increases.

"It's puzzling the labor force would drop at all, and as much as it did," Gorecki said, as federal unemployment benefits wound down in August and kids prepared to head back to school.

Those two factors may show more of an influence on the workforce in September or October, he said, unless the delta variant acts as a "wrench in the machine."

Although its unemployment rate remained unchanged at 3.7%, St. Cloud, too, saw a labor-force reduction last month, of about 1,500 people. St. Cloud employment has grown 2.1% since last August, but remains down 4.9% from Aug. 2019.

In Duluth, employment has risen 5% since last August, the largest increase of all Minnesota metro areas. The area is down 3.6%, however, since Aug. 2019.

"But there is reason for optimism," said Elena Foshay, workforce development director for the city of Duluth. Wages have increased at historically lower-paying jobs, regional businesses are looking to expand and Duluth saw a strong tourism season.

The next few months will be watched closely, she said, to see if more people return to a workforce experiencing a shortage that began before the pandemic.

Staff writer Jenny Berg contributed to this report.

Jana Hollingsworth • 218-508-2450