December’s unemployment rate fell 0.2 percent from the previous month to a seasonally adjusted 5.7 percent. “The unemployment rate has fallen 1.5 percent since August and is falling faster than it has since the mid 70s,” Commissioner Phillips said speaking to economic development professionals last week. “Unfortunately, we are seeing a fall off of the participation rate. It will probably start climbing as the economy comes back.” The accompanying chart shows how participation in Minnesota’s labor force has fallen dramatically since July.
Slow growth in Minnesota
The state’s jobs grew 1 percent in 2011, compared to 1.3 percent for the U.S., according to DEED. Education and health care added 11,000 while professional and business services added 10,000 new jobs leading all other categories by far. government lost 6,100 for the year. Notably, the construction industry is not showing much change while manufacturing has grown by 3,600 jobs in 2011.
How can the unemployment rate drop when there are fewer jobs?
Doug Hall, Economic Policy Institute, explains that the December unemployment rate dropped one percentage point or more in seven states – Alabama, Michigan, Minnesota, Ohio, South Carolina, Tennessee and Utah. The labor force decrease was largely responsible for unemployment rate drops in each of those states. “In two of those states – Minnesota and Ohio – the labor force has shrunk so much (-17,000 in Minnesota and -53,000 in Ohio) that the unemployment rate has gone down by over one percentage point despite decreased employment since September 2011,” he says.
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