MinnEcon: September 1, 2010 Archive

Why is Minnesota's labor force sliding?

Posted at 9:30 AM on September 1, 2010 by Paul Tosto (1 Comments)
Filed under: Jobs & unemployment

When Minnesota saw a big drop in the state labor force in June, we asked in a half-funny way, "Hey labor force, where you going?"

We wondered why the improving economy wasn't bringing discouraged workers back into the labor force the way experts expected. But we were willing to believe June was an aberration.

Now we're not so sure.

The July data shows another big drop in the labor force. The chart below tracks the monthly Minnesota labor force numbers since the Great Recession began (click on chart for larger image).

June and July mark two straight months where 13,000 Minnesotans left the labor force.

Online, state seasonally adjusted labor force data go back more than 30 years, to 1976. There's never been a two-month drop even close to what we've seen in June and July. (Click on the chart below for a larger view.)

Minnesota's labor force participation rate -- the percentage of working age people who have a job or are unemployed and seeking a job -- was 71.9 percent in July. That's the lowest participation rate since 1989.

More than 30,000 Minnesotans are gone from the labor force since April. That just doesn't happen. Why is it happening now?

State experts have been worried for awhile now about the future health of Minnesota's economy given what's already projected to be a slow growth, aging workforce.

It's all moot, of course, if the August data shows a rebound. But a third month with a double-digit drop in the labor force will need some answers.

Anyone with perspective to share? Post below or drop us a line.

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