Patti Soskin was not surprised to learn Thursday that the unemployment rate in Minnesota had fallen to its lowest ever recorded.
The owner of Yum Kitchen and Bakery has about 10 job openings at her three locations in the Twin Cities and says she has a harder time filling them than she can remember in her 17-year business.
“It feels tighter than ever,” she said, adding that she has already raised wages and is looking at other benefits, such as paying tuition. “We all need more people now.”
The unemployment rate in Minnesota fell to 2.2% in April, the lowest since government officials began tracking it in 1976. That’s more than a full percentage point below the US unemployment rate, which stood at 3.6% last month.
That means there aren’t many people looking for work who can’t find it, although there is still inequality in who is hired. Black unemployment in Minnesota is more than double that of white Minnesotans.
Minnesota has seen strong and steady job growth this year, with an additional 11,900 jobs added last month on top of an upwardly revised 13,200 jobs in March, the Minnesota Department of Employment and Economic Development (DEED) said Thursday.
“It’s good news,” said Jeanne Boeh, a professor of economics at the University of Augsburg. “On the other hand, we still haven’t regained many of the lost jobs, so we’re still climbing.”
As of April, the state has regained 329,500 of the 417,600 jobs it lost two years ago in the early months of the pandemic. That’s a 79% recovery rate, while the country as a whole has recovered about 95% of the 22 million jobs it lost at the start of the pandemic.
Minnesota’s employment rate rose slightly to 68.3% in April, but is still more than 2 percentage points lower than in February 2020. Meanwhile, at 62.2%, the US is just over 1 percentage point lower than in February 2020. compared to before the pandemic.
“You had a lot of workers in Minnesota taking early retirement,” DED commissioner Steve Grove said.
DEED officials also noted that the state’s population growth rate has leveled off in recent years, especially as immigration has slowed due to pandemic restrictions and federal policies. The state saw more workers than usual move out of the state last year.
“There is a very real concern in Minnesota about our tight job market,” Grove said. “It’s worse here than in other places.”
In Minnesota, there are 2.7 job openings for every available employee, compared to 1.7 jobs nationally, he said.
Aaron Sojourner, a labor economist at the University of Minnesota, noted that despite low unemployment, Minnesota has continued to see steady job growth in recent months. That means that people looking for a job seem to find it quickly.
“But to get faster job growth, we need more people to come off the sidelines and start looking for jobs,” Sojourner said. “I think that requires faster wage growth and faster job quality improvements.”
But in April, the opposite happened. While wages rose at a fairly rapid pace over the past year, that growth slowed last month. Private sector wages in Minnesota rose 2.2% year-on-year in April, up from 5.8% the previous month.
And those wage increases are still not keeping pace with inflation, which stood at 8.3% nationwide last month.
In April, job growth in Minnesota was led by the financial sector, followed by professional and business services, then employers in the leisure and hospitality sector. Jobs in trade, transport and utilities and construction declined.
Maple Grove-based Schuler Shoes has increased wages by about 20% in the past year.
“It has helped us retain many of our employees,” said President Mike Schuler. “If we’d left it where it was, they might have looked for something else.”
The pay increase helped the company’s employees through the protracted winter, when sales are typically slow and commissions don’t get that far, he said. Yet more than half of its nine stores are looking for job openings, a much higher percentage than usual, at a time when sales are picking up.
“We have a number of employees who have found jobs in the fields they graduated from,” Schuler said. “I think they’ve been delayed in finding those jobs. Now they’re opening, so that’s a group of people who have left and we need to fill the gap.”
Alissa Henriksen, owner of Minnetonka-based executive search firm Gray Search and Strategy, said hiring at the mid-to-higher executive level is also more challenging.
“The process takes a little longer and it’s extremely competitive,” she said.
In the past, candidates may have had another offer. Today it is more like three or four. “It’s a record high for the number of offers being thrown at candidates,” she said.
Candidates are also more candid that if they want to change jobs, they want to make sure it’s a workplace that supports flexibility as well as health and wellness.
“It’s not just the money,” Henriksen said.
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