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Minnesota unemployment rate drops to pre-pandemic levels

October's job numbers paint a picture of continued recovery, though more than 84,000 Minnesotans dropped out of the workforce since the beginning of the pandemic and labor shortages continue to trouble businesses across the state.

Electrician apprentice Ndihoreye Soliba wires a circuit Monday, Feb. 8, 2021, at the Joint Apprenticeship Training Center in Fargo. Michael Vosburg / Forum Photo Editor
Forum Communications Co.

ST. PAUL — Minnesota's unemployment rate reached a low in October 2021 not seen since COVID-19 was declared a global pandemic in March 2020, the state's economic development agency reported Thursday, Nov. 18.

The state's unemployment rate hit 3.5% in October, down two-tenths of a percent from September, according to the Department of Employment and Economic Development's monthly workforce participation figures. The national unemployment rate stands at 4.6%.

While unemployment has reached pre-pandemic lows, Minnesota's workforce shrunk by 84,000 since the onset of the pandemic, state officials said. Overall participation in the workforce is 67.8%, down from 70.2% in March 2020. Officials attributed much of the drop in participation to the pandemic forcing people out of their jobs.

After adding 9,900 jobs in October, the state has now regained 71% of the 416,300 jobs it lost between February and April 2020.

The number of available jobs continues to grow as the economy recovers, leading to a tight labor market that has challenged employers across many sectors, particularly in rural areas, according to a DEED report published in September. Since 2005 the job vacancy rate for all of Minnesota has doubled, the report said. Southwest Minnesota has a vacancy rate of 5.2% — well above the 3% officials say makes for a balanced economy where employers have steady labor but workers can seek new jobs, too.


"People dropping out of the labor force due to the pandemic is part of the problem right now, but the more systemic reasons for workforce shortages are years of economic growth, an aging workforce heading toward retirement, and fewer young people to replace them," they wrote. "This is not a short-term problem, but rather a long-term problem that will need various strategies if we are to overcome it."

A Minnesota Chamber of Commerce report released Thursday said while the state is near the top nationally for workforce participation, the state is still short 300,000 workers.

The shortage has led to benefits for many workers as employers compete for labor. Wages continue to increase in Minnesota, reflecting a national trend. The average hourly earning for a Minnesota private sector worker rose to $33.43 last month, 8.7% up from September 2019, according to state estimates. The national inflation rate in the same period was 7.5%.

"Employers are paying higher wages, out-pacing inflation, which presents lots of great opportunities for job seekers," DEED Commissioner Steve Grove said in a statement from the department announcing October employment figures.

Follow Alex Derosier on Twitter @xanderosier or email .

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