Worrisome trends linger in Minn. labor data

Minnesota employment data continues to show some confusing stuff about our state's labor force -- trends that should keep us concerned about the strength of our economy despite the "recovery."

Steep drops in the labor force since April don't fit at all with the idea that we're in a recovery. Nearly 34,000 Minnesotans have left the state's labor force (sum of the employed plus the unemployed) since April.

After a slight uptick in September, the newest data show the labor force down again in October.

Meanwhile, the labor force participation rate -- the percentage of working age people who have a job or are unemployed and seeking a job -- slipped to 71.7 percent. The last time that rate was lower? June 1988.

Here's another one: Minnesota labor to population ratio -- the proportion of the state's working age population that is employed -- fell a tick to 66.6 percent in October. The last time that ratio was lower? January 1984.

The crucial question we've been asking for months: Why isn't the improving economy bringing discouraged workers back into the labor force the way experts expected?

That's the way it's supposed to work -- things get better and all those folks who gave up start trying again and the labor force rises. We've heard various explanations -- people who've gone back to school and are waiting for the job market to need their skills again is the most plausible. But right now it's still speculation.

Here's the chart on Minnesota's labor force we've been updating the past few months. (Click on the charts for a larger view.)

We're told that Minnesota is adding jobs and that's encouraging. Yet, the count of unemployed people in Minnesota has been rising since June.

So while we are supposed to be in a recovery in Minnesota, we see:

-- the percentage of employment-age population that's actually employed is at its lowest point in 20-plus years,

-- the ratio of people who are employed or seeking a job is at its lowest point in 20-plus years;

-- after a year of nearly steady improvement, the number of unemployed has been rising through the fall.

I'm not trying to be a downer. I'm trying to understand why the data runs counter to the idea that things are improving. Is it a lag time issue? Will we be laughing about this in a few months? Or is there some fundamental shift in employment trends we haven't yet recognized?

Post your thoughts below or contact us directly at MinnEcon.

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