Minnesota workforce participation inches past 68%

Minnesota Department of Employment and Economic Development Provides Jobs Update

On July 20, Matt Varilek, the new commissioner for the Minnesota Department of Employment and Economic Development (DEED), participated in the DEED’s regular jobs update. The update focused on the June workforce numbers, the tight labor market, wage growth, and workforce participation numbers.

Background

Matt Varilek, previously the president of the Little Falls Initiative Foundation, was appointed as the commissioner for DEED. DEED is the state’s principal economic development agency, responsible for working with businesses on various levels, providing workforce training and development, facilitating international trade, and supporting community development.

Varilek acknowledged that he had a lot to learn about the agency’s operations due to its wide range of responsibilities. However, he expressed gratitude for the efficient efforts of the department’s strong team in bringing him up to speed. Varilek’s previous experience includes over six years at the Initiative Foundation and four years with the U.S. Small Business Administration.

Workforce Numbers

Varilek highlighted the increase in Minnesota’s labor force, with an additional 9,017 people joining in June. This growth resulted in a 0.2% increase in the labor force participation rate, reaching 68.4%. The national labor force participation rate stands at 62.6%. The unemployment rate remained steady at 2.9% in June, indicating that most of the new entrants to the labor market found employment.

Nationally, the unemployment rate slightly decreased to 3.6%.

Labor Participation Rates

One of the key considerations in a tight labor market is the number of individuals capable of working but not actively seeking employment. Angelina Nguyen, DEED research director, reported that Minnesota’s labor force experienced positive growth for the fourth consecutive month, with an increase of over 9,000 people. The number of employees increased by 7,544, while the number of unemployed individuals increased by 1,473. This growth led to a 2% increase in the labor force participation rate, which currently stands at 68.4%. Minnesota’s labor force participation rate remains almost 6% higher than the national average and slightly lower than pre-pandemic rates.

Over the past year, Minnesota gained approximately 71,000 jobs, representing a 2.4% growth rate. The private sector accounted for 58,000 of these jobs, reflecting a 2.3% growth rate. The U.S. private sector experienced a 2.4% growth rate.

Varilek emphasized that Minnesota’s labor force participation rate exceeds the national average. He also noted a decline in voluntary quits and the fading impact of the “Great Resignation” trend. Varilek attributed this positive trend to the diverse opportunities available in Minnesota’s economy.

Nguyen highlighted the aging workforce in Minnesota, which has been a long-standing demographic trend. She explained that the pandemic accelerated retirements, particularly among women facing childcare and caregiving responsibilities. However, the recovery has been promising, with four consecutive months of increased labor force participation. The growth is primarily driven by women and Black workers reentering the labor force.

Nguyen stated that a healthy unemployment rate for an economy is around 4-5%, accounting for individuals transitioning between jobs or not actively seeking employment. With Minnesota’s unemployment rate at 2.9%, it indicates a tight labor market where job vacancies outnumber unemployed workers.