The St. Cloud and Duluth metropolitan areas saw unemployment rates drop by about one percentage point from June to July — falling from 4.7% to 3.7% and 3.8% in the St. Cloud and Duluth areas, respectively.

This should be good news, given the rates are St. Cloud's lowest in nine months and Duluth's lowest in nearly two years, according to data from the Minnesota Department of Employment and Economic Development.

But for both greater Minnesota areas, the size of the labor force continues to stay stagnant, confounding employers and economists.

"If you're trying to get the pulse of the economy, rather than looking at an unemployment rate … you want to know what share of [the] population is actually looking for work. To see that number kind of stuck as it is in terms of the size of the labor force is a concern," said local economist King Banaian. "The question is, where are they going? There's any number of explanations, from lack of child care to continuing unemployment insurance benefits to fear of the pandemic. And we don't have any good answers."

The St. Cloud Metropolitan Statistical Area, which includes Stearns and Benton counties, added 177 people to the labor force from June to July. The Duluth metropolitan area — St. Louis, Carlton and Douglas (Wis.) counties — added 19. But the labor force has shrunk by more than 4,200 people (3.7%) in St. Cloud and more than 4,800 people (3.3%) in Duluth since July 2019.

"I think in general we may just be underestimating people's willingness to stay out of the labor force while they wait to learn more about the path of the pandemic," said Banaian, who is dean of the School of Public Affairs at St. Cloud State University.

The pandemic has also spurred some of the highest resignation rates the country has seen in decades. In April, nearly 4 million people, or 2.8% of the workforce, resigned. The exodus hasn't slowed: In June, the quit rate was 2.7%, according to the U.S. Bureau of Labor Statistics.

"Right at this moment, employees have some market power to the extent that they feel they probably haven't had in a long time," Banaian said.

Both St. Cloud and Duluth have gained jobs since July 2020, with St. Cloud seeing the biggest gains in manufacturing jobs, which is up 8.4% over last July. Statewide, manufacturing jobs are up 3.5% since last July.

Duluth saw a 20% increase year-over-year in leisure and hospitality jobs, which lags behind the 24% increase year-over-year seen statewide. Duluth also saw double-digit percentage gains in the number of local government jobs and mining, logging and construction jobs.

But both regions have a ways to go to recover from the pandemic. While the St. Cloud area has gained about 4,400 jobs since July of last year, the total number of jobs in the region remains down nearly 4,700 from prepandemic levels of July 2019. Similarly, the Duluth area has gained about 9,400 jobs since July last year, but the total number of jobs in the region remains down nearly 4,400 from prepandemic levels.

Jenny Berg • 612-673-7299

Twitter: @bergjenny