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May jobs soar by 10,300; tight labor market foreseen in Minnesota

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Minnesota’s job market came roaring back in May in a “long awaited spring arrival of jobs,” said state job analyst, Steve Hine today. Also, the unemployment rate dropped to 4.6 percent adding to the good news for the state.
Lowest level in seven years
“Minnesota’s unemployment rate is at the lowest level in seven years, which is yet another indicator of our improving economy,” said Minnesota Department of Employment and Economic Development Commissioner Katie Clark Sieben. Minnesota’s seasonally adjusted unemployment rate is well below the national level of 6.3 percent.
Tight labor expected
Hine contemplates a tight labor market in Minnesota’s future where the market for labor may begin to tighten up in coming years. Indicators for this are continued decline in unemployment rate, robust leading indicators and the baby boomer population reaching retirement age.
Fewer workers by next year
Hine says we have long known that by next year, labor market growth falls to about one-tenth of our normal rate. He says we will eventually see a stagnant labor market as older baby-boomers retire out of the labor market. Minnesota’s labor participation rate is 70.6 percent, not far below the highest we have seen in recent memory of 75.6 percent in early 2001. The U.S. rate is only 62.8 percent. “We are fast approaching a time when Minnesota employers will have a smaller number of surplus workers to draw from,” says Hine.
How low a job rate can we go?
Minnesota employers felt the pinch of tight labor conditions in 1999 with a job rate of 2.5 percent, according to Hine. That was the lowest rate in recent memory, he says. The next lowest job rate was 3.9 percent in 2006 and that “was not considered a tight labor market.”
Jobs grow in May
Employers added 10,300 workers in May and 45,617 jobs in the past year throughout the state, according to the Minnesota Department of Employment and Economic Development (DEED). This extends a healthy gain of 154,300 jobs since January 2011. Year over year growth lagged slightly at 1.6 percent in Minnesota, compared to 1.8 percent throughout the U.S. However, online job postings of 16,600 in May was the second highest in the nation only behind Michigan.
Biggest growth was construction and manufacturing
Minnesota’s construction jobs are up by 9.2 percent compared to May 2011 far outstripping a decent 3.3 percent growth rate in the U.S. Manufacturing jobs are up by 3.1 year over year. Both sectors added more than 9,000 jobs in the last 12 months. “I don’t believe that has ever been the case before,” that construction and manufacturing have led in growth, added Hine.

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