Minnesota’s unemployment rate reached 1.8 percent in June — the lowest jobless level the state has seen since record-keeping began in 1976, state officials announced Thursday.
The next-lowest monthly recorded unemployment rate was 2.5 percent, back in 1999. Nationally, the U.S. unemployment rate was 3.6 percent.
Even though Minnesota’s seasonally adjusted job numbers were essentially flat in June, the unemployment figures reflect an economy still growing as part of the post-pandemic recovery; the number of workers entering the job market grew — so the record-breaking figures are not the result of people retiring, or othersie leaving the workforce, according to state and federal data. The size of the workforce still hasn’t returned to pre-COVID levels.
In a sign the economy is in uncharted waters, the super-low jobless rate comes amid super-high inflation, which reached 9.1 percent last month, the highest national inflation rate since 1981.
Here are four takeaways to help understand what it all means:
13 JOBS FOR EVERY WORKER
For those with the right skills, there’s a buffet of job openings — 13 openings for every unemployed person, according to the Minnesota Department of Employment and Economic Development. That means there’s cushion; even if the economy slows — as some economists believe it will — there’s an excess in worker demand that might not be eclipsed for a while.
“It gives workers a little power,” said Oriane Casale, interim director of DEED’s labor market information office.
WAGES NOT KEEPING UP WITH INFLATION
The power that workers have to negotiate an extra buck an hour — or leave entirely for a new gig — isn’t keeping up with inflation.
Wages in Minnesota have risen 5.2 percent since June 2021 — compared to the 9.1 percent inflation rise. Some sectors, such as construction, hospitality and nursing homes, have seen double-digit wage increases that might keep up, but those spikes are isolated, according to a June analysis by DEED.
HARD TIMES FOR EMPLOYERS
The extra-tight job market combined with inflation will continue to put employers in a pickle.
“They’re having to make hard decisions as to whether to raise prices to pay their workers more so they won’t see that kind of churn that they’re seeing,” Casale said.
DOESN’T HELP INFLATION
Employers continually offering higher wages to chase fewer workers … yeah, that’s a phenomenon that can increase inflation in the short term. (If you took macroeconomics, you might recall the Phillips curve exploring this relationship.)
So for those hoping to see inflation fall, the new job figures won’t help.
It’s important to note that there’s a lot more going on with inflation though, including global spikes in energy and food prices, local and worldwide supply-chain issues, and lingering effects of the pandemic. DEED’s June analysis found that Minnesota’s inflationary trend started before the unemployment rate began to plummet.
In the meantime, there could be some signs that the job market is cooling. On Friday, the federal government released weekly figures showing that the number of Americans applying for unemployment benefits rose last week to the highest levels in eight months. Minnesota saw an increase as well, although Casale cautioned that it was too early to know if that was the beginning of an actual trend.