Minnesota showed steady job growth in May

A steady flow of Minnesotans got back to work last month as more businesses resumed normal operations and pandemic concerns eased.

Minnesota added 12,300 jobs in May, which was slightly lower than April's revised job gains of 13,400, the Minnesota Department of Employment and Economic Development (DEED) said Thursday.

But it was the fifth straight month of job gains, and the state has now recovered about 60% of the jobs it lost at the start of the pandemic.

"It takes people time to find the right match for their skills and their lives as folks re-enter the labor market," said DEED Commissioner Steve Grove. "But the good news is that people are doing that. They're getting back into the market. They're searching jobs. They're finding jobs."

Minnesota's unemployment rate ticked down to 4% from 4.1% the month before. The decrease was due entirely from people finding jobs, a reversal from previous months when it fell mostly because workers had left the labor force.

DEED continues to call thousands of unemployed Minnesotans for job counseling, making sure they're looking for jobs as required for them to continue receiving benefits, and pointing them to other job opportunities in the state.

At the same time, Grove acknowledged that employers are still raising concerns about difficulties in finding workers — an issue, he added, that pre-dates the pandemic.

"A lot more folks are going into these jobs where wages are going up," he said. "It's a worker's market out there right now."

Hourly wages in Minnesota's private sector overall have increased 3.3% since right before the pandemic hit in February 2020.

"I think the really big news is that the lowest-wage sectors and hardest-hit sectors are up quite a bit more," said Oriane Casale, director of DEED's labor market information office.

In that same timeframe, hourly wages have risen 11.4% at retail and 7.2% at restaurants and bars, she said, adding that employers also seem to be giving more hours to workers.

State officials noted that the strongest job growth in May was in Duluth and the Twin Cities, the places that saw the most job losses early in the pandemic. The hardest-hit industries are also the ones now showing the most growth.

It was followed by professional and business services, which added 3,500 jobs; other services, which includes hairdressers and dry cleaners, with 2,200 jobs; construction, with 1,200 jobs; and manufacturing with 800 jobs.

That was offset by a loss of 2,500 jobs in government, which Grove said he hoped was a temporary issue likely due to some difficulties local governments were having in hiring for seasonal positions.

In another positive sign, the state's labor force participation rate inched up two-tenths of a percent to 67.9%, the first increase in three months. But while nearly 7,000 Minnesotans entered the labor force in May, there are still nearly 90,000 Minnesotans who stopped looking for work during the pandemic who have not yet returned.

Casale added that retirements seem to have accelerated in the pandemic.

"That could be where we're seeing some labor shortages really bubbling up is those older workers who are choosing to retire rather than come back to either a previous job or a new job," she said.