Record low unemployment in Minnesota in context

Minnesota set record in June unemployment rate 1.8%smallest number recorded for any state Ever since data collection began in 1976. While this is good news, the overall unemployment rate needs to be placed in its proper context. In Minnesota and across the country, employment and labor force participation rates are still well below pre-pandemic levels. Policy makers should resist the temptation to view low unemployment as evidence of an overheated economy and instead should continue to pursue policies to bring workers into the labor market, raise wages, lower barriers to employment, and promote racial and gender equality.

The unemployment rate is an important indicator, but it doesn’t tell the whole story.

An unemployment rate of 1.8% means that only 1.8% of Minnesotans looking for a job They say they can’t find it. This is good news. And it’s not just Minnesota that’s doing well. Unemployment data for June 2022 also showed Nebraska with 1.9% unemployment, New Hampshire and Utah with 2.0% and Vermont with 2.2%. A total of eighteen states had unemployment rates below 3% in June.

Yet each of those states had fewer jobs in June than before the pandemic. FIR Economic indicators The page shows that the United States is still 524,000 fewer jobs than it was before the pandemic. Given the population growth over the past 2.5 years, the country 3 million fewer jobs than we might expect if pre-pandemic trends continued.

Why such a discrepancy between the unemployment rate and the number of jobs? The unemployment rate takes into account only two groups – people who have a job, and people who are actively looking for work, but cannot find it. These two groups are what the Bureau of Labor Statistics (BLS) officially considers the workforce. The labor force does not include able-bodied people who, for one reason or another, are not actively trying to find work. With each release of unemployment data, the BLS also publishes the labor force participation rate (LFPR) – the share civilian, non-institutionalized adult population who are part of the labor force (i.e. those who are currently employed or actively looking for work).

The Minnesota LFPR’s February 2020 amounted to 70.8%. It was much higher national average or 63.4%, reflecting high employment rates in Minnesota. However, by June 2022, Minnesota’s LFPR fell 2.3 percentage points to 68.5%. This is more than a 1.2 percentage point drop in the country, from 63.4% to 62.2%. This means that despite the historically low proportion of Minnesotans who say they are looking for work and can’t find one, Minnesota also has a significant proportion of adults who are out of work and out of work since the pandemic began. Looking for a job. In fact, the decline in labor force participation in Minnesota from February 2020 to June 2022th the largest in the country. Several other low unemployment states such as Vermont, New Hampshire and Wyoming have also experienced marked declines in labor force participation during the pandemic.

However, there are reasons to believe that the LFSR has room to grow. In June, 73.1% persons newly hired No accounted for as part of the labor force a month earlier. That is, according to the data, almost three-quarters of people who got a job in June were not looking for a job in May. This strongly suggests that many people are interested in returning to the labor market if good jobs are available to them, jobs that allow them to balance work and care responsibilities, and jobs that adequately protect their health and safety.

Moreover, low overall unemployment masks very real racial disparities in employment. Black unemployment continues to rise almost twice as high as do white workers, and the unemployment rate among Hispanic workers is 30% higher than that of white workers. These disparities persist—both in terms of employment and wages—even when education and qualifications.

The right policy decisions can increase labor force participation and fight inflation at the same time.

Inflation has reached its highest level in recent years, and policy makers have been tempted to blame the labor market shortage for rising prices, an impression that is reinforced when only low unemployment rates are considered. However, if you look at the big picture, it becomes clear that the lack of a labor market is the driving force behind inflation.

Josh Bivens of EPI explained in details how the current high inflation rate is the result of global supply chain problems caused by the pandemic and corporations using the situation to extract more profits than usual. If low unemployment were the main driver of inflation, we would see wages rise above the rate of inflation, but the opposite is happening. Wages do not contribute to rising prices, but lag behind behind prices go up and wages go up slows down significantly.

Given these dynamics, policymakers should prioritize policies that bring more workers into the workforce. Not only would this unequivocally make public labor markets stronger, but it would also help dampen any possible effect of tight labor markets on prices.

One of the main reasons why so many workers are still out of work is the lack of child care, as well as the need to care for elderly family members. Investing in the care economy create more opportunities entry of workers into the labor market.

Investment in affordable housing also reduce pressure on family income and potentially allow more workers to live in areas with better job opportunities. This would be especially helpful in reducing persistent racial disparities in the country, creating more opportunities for black and brown workers to become homeowners, and increasing generational wealth.

Criminal justice reform reduce barriers to employment for those affected by incarceration, and will especially help workers of color who are disproportionately likely to the presence of a criminal record used as a reason deny them employment.

A key way to increase labor force participation is to implement policies that increase wages and the labor force. Simply put, higher wages draw people into the workforce. For example, shortage of teachers, school bus drivers and other education workers are directly related to the low wages of these jobs. States must also establish higher salary targets for home healthcare workers as the demand for these jobs will increase dramatically in the coming years. In addition, by supporting the right of workers to form trade unions is a vital tool in building a strong economy for all Americans.

Last but not least, the minimum wage needs to be increased. In recent years, many states and cities have raised the minimum wage, but without noticeable impact from the prices of gas and oil, food, cars or semiconductors. The $15 federal minimum wage would raise wages by tens of millions of low-paid workers across the country. In terms of purchasing power, the federal minimum wage is at its lowest level since 1956. A higher minimum wage could make jobs more attractive to those on the margins of the labor force.

In short, the country still needs policies to bring more people into the labor market, pay higher wages, and reduce racial disparity. Minnesota’s record low unemployment rate is good news, but it’s not all there, and if policymakers ignore other contextual factors because they’re looking at one big number, we’ll lose the opportunity to make lasting change for workers and their families.