Minnesota’s jobless rate last month vaulted to its highest level since 1983 — 8.1% — but officials said the figure lowballed the damage to the state workforce.
A different indicator, the number of people filing unemployment claims, shows more than 20% of the state’s workers have been hurt. And in preparing the monthly employment snapshot released Thursday, economists at the Department of Employment and Economic Development (DEED) tried to understand why the unemployment rate was so far from that figure.
They settled on timing and methodology as the likely reasons for the disparity.
The unemployment rate is determined from a survey of about 900 Minnesota households conducted in the middle of the month by the U.S. Bureau of Labor Statistics. That’s a small sample, and it was taken when the number of people leaving work was still rising.
“It’s not very good at picking up quick changes and we’ve never had a change this quick before,” said Oriane Casale, labor market analyst at DEED.
In February and March, the state’s unemployment rate was 3.1%, ending an 18-month stretch in which the rate hovered near its all-time low.
A separate survey conducted by DEED last month of Minnesota employers produced data that more closely aligned with the number of unemployment claims. Those claims have nearly reached 700,000 since March 16, the day the state-ordered closure of public gathering places and businesses such as restaurants began.
The DEED survey of employers found 332,000 fewer Minnesotans working in April than in March, an 11% drop.
And the number of people working in the state, which was just below 3 million in every month of 2019, was 2.57 million in April.
“We think that the employer survey is just doing a better job at measuring what’s going on in the economy right now,” Casale said.
The new data emerged at a moment when state leaders are facing their greatest pushback from business lobbies over continuing restrictions on firms that deal with large public groups. On Wednesday, Gov. Tim Walz and Steve Grove, commissioner of the jobs agency, prescribed tight constraints on restaurants, hair salons and other businesses opening June 1, angering business owners and trade groups.
April’s job losses were greatest in the leisure and hospitality sector that was most directly affected by Wednesday’s decision. Employers in the sector reported a 55% drop in number of workers. Arts and entertainment firms, a subset of that sector, let go of 60% of their workers during the month.
Retail jobs were down 10%, education and health service jobs down 9.3%, manufacturing jobs down 6.7%, government jobs down 6.5%, professional service jobs down 5.3% and construction jobs down 3%.
The May jobs data for Minnesota, which will be reported in the third week of June, is likely to be worse than April’s. The state’s unemployment rate could be the highest since monthly data began in the 1970s. Census data during the Great Depression shows unemployment in Minnesota’s large cities climbed above 20% during some years in the 1930s.