"Historic." "Unbelievable." "Bafflingly low."
That's how state officials reacted Thursday as they digested news of yet another record low unemployment rate in Minnesota.
New data showed the state's jobless rate sank to 1.8% in June, setting a state record for the third month in a row since the metric started being tracked in 1976.
Hiring also slowed dramatically last month, with Minnesota's job growth coming in basically flat.
When Minnesota's unemployment rate hit 2% in May, it was the second-lowest in the nation, with only Nebraska's lower and about a dozen other states also reporting record lows. The state will soon learn how it now ranks given the most recent figures.
"It's very possible we'll have the lowest" for June, said Steve Grove, commissioner of the Minnesota Department of Employment and Economic Development (DEED).
But not all Minnesotans are seeing their prospects improve. The Black unemployment rate rose last month to 7.4%, up from 6.9%, while the rates for white and Latino workers declined to 2.4% and 3.1%, respectively. Those figures are based on 12-month rolling averages.
Before this recent run of record-low unemployment rates, the lowest recorded one in Minnesota was 2.5% in early 1999. Before the pandemic, the state's jobless rate was generally in the range of 3 to 4%, before surging to a record high of 10.8% in May 2020.
By comparison, the U.S. unemployment rate has held steady for the last four months at 3.6%.
While it's good news that more unemployed Minnesotans are finding jobs, the ultra-low unemployment rate is also a sign of the challenges employers have finding workers, with job openings outnumbering unemployed people by more than 2 to 1. The state has the fifth-tightest labor market in the U.S.
The pandemic spurred many people to stop working as they retired or struggled with child-care issues. While the labor force has partially rebounded, Minnesota still has about 72,500 fewer workers compared with February 2020.
The difficulty in finding workers is the main reason why state officials think hiring flatlined in June, with the state adding just 100 jobs after seeing steady job growth in the spring that often surpassed 10,000 jobs a month. In May, the state added 7,500 jobs, a figure that was upwardly revised by 900 jobs.
"I am not hearing from a lot of employers that suddenly they're pulling back on hiring or instituting hiring freezes," Grove said. "I continually hear from the businesses we talk to that they're trying to hire people and can't find individuals."
Seasonal adjustments may also be impacting the monthly jobs numbers, he added.
Minnesota's sluggish job growth in June stands in contrast to the nation as a whole, which saw a fairly strong gain of 372,000 jobs last month.
The state has slightly outpaced the nation with job growth over the last six months, but it has been trailing over the last year. And while the U.S. has now recovered all private sector jobs lost in the pandemic, Minnesota is lagging behind, having only regained about 85% of such jobs.
Wage growth in Minnesota had also been falling behind the U.S. in recent months, but that changed in June. Average hourly wages for private sector workers in Minnesota rose 5.2% last month, up from 3.4% in May. Wages in the U.S. as a whole rose 5.1% in June.
But those wage increases are still not keeping up with inflation, which came in at 9.1% last month.
Some of the lower-paying sectors that were hit hardest by job losses in the beginning of the pandemic, such as restaurants and bars, saw some of the biggest wage increases last year. But this year the biggest wage gains seems to be shifting to higher-wage industries such as nondurable goods manufacturing and construction, said Oriane Casale, interim director of DEED's labor market information office.
"That industry is clearly looking to find workers," she said of construction.
Another 5,400 people joined Minnesota's labor force last month, leading its labor force participation rate to tick up a tenth of a percentage point to 68.5%. While that metric has been improving in recent months and is a sign of recovery, the last time the state's labor force participation rate was this low was 1979.
With the state's aging workforce and other demographic trends, Casale said the state's jobless rate will likely remain fairly low for the foreseeable future, though not necessarily this low.
"1.8% is a bit extreme," she said. "I don't think anyone expects the unemployment rate to remain that low very long."