By Derek Teed
October 2023
Minnesota's official unemployment rate is a useful indicator of the health of the state's economy, but it does not tell the whole story. We can get a more complete picture of Minnesota's labor market by looking at alternative measures of unemployment, and by providing the rates by age, gender, and race. The numbers below come from the Current Population Survey.
Use these estimates with caution. The Current Population Survey, which produces these data, has a sample size of only 900 households in Minnesota, making it too small to publish monthly estimates for subpopulations. This report uses the BLS unpublished 12-month moving averages. Rolling together 12 months of data is the most reliable method of publishing estimates for subpopulations in Minnesota but means that turning points in the data lag by six months. Moreover, even rolling 12 months of data together results in high standard errors on the estimates, reliability issues, and limitations on which demographic groups can have labor force estimates published. Essentially, the data provided in this report should be viewed as indicators rather than as reliable estimates.;
The Bureau of Labor Statistics has developed alternative definitions of unemployment and underemployment (see Table 1). The official unemployment measure, called U-3, is the share of those aged 16 and over who, at the time of the monthly survey, were not employed in the past week and who looked for work sometime in the past four weeks. U-3 excludes anyone who was not seeking work in the past month unless they were temporarily unemployed and have a date by which they will return to the same employer. This group, those not seeking work, is considered not in the labor force. Note that the U-3 number reported in this analysis will differ from the official state unemployment estimate because it is based on a 12-month moving average.
The U-4 adds people who want a job but aren't actively searching because they think no jobs are available that fit their qualifications, also known as discouraged workers, to the count. Discouraged workers are those who have looked for work in the past year but stopped looking in the past month because they think they cannot find a job.
U-5 adds all the other "marginally attached" workers, people who looked for work sometime in the past 12 months but, for reasons other than discouragement, did not look in the past four weeks, to the count of unemployed.
The broadest measure of unemployment, U-6, includes all the above and adds people who are employed part-time but want full-time work.
Table 1. Alternative unemployment rates in Minnesota as of September 2023 (12-month moving averages)
| Measure* | September-23 | August-23 | September-22 | Monthly Change | Annual Change |
|---|---|---|---|---|---|
| U-3 | 3.0% | 3.0% | 2.7% | 0 | 0.3 |
| U-4 | 3.1% | 3.1% | 2.9% | 0 | 0.2 |
| U-5 | 3.9% | 3.9% | 3.5% | 0 | 0.4 |
| U-6 | 5.4% | 5.3% | 4.9% | 0.1 | 0.5 |
| Number of Discouraged Workers | 2,700 | 3,500 | 5,000 | -800 | -2,300 |
| Number of Involuntary Part-Time Workers | 47,300 | 44,100 | 44,400 | 3,200 | 2,900 |
*Definitions of Measures:
U-3 Official unemployment rate
U-4 Discouraged plus officially unemployed
U-5 All marginally attached (including discouraged) plus officially unemployed
U-6 Involuntary Part Time plus marginally attached, discouraged, and officially unemployed
Involuntary Part time—a component of U-6, including only persons working less than 35 hours per week who want, but cannot find, a full-time job. Some usually work full-time but are currently working part time. Some usually work part time but would prefer to work full time.
Long-term unemployment—lasting more than 27 weeks —imposes costs on people that go well beyond lost wages, including lower future earnings (see Table 2).
Table 2. Long-term unemployment
| Measure* | Sept 2023 | August 2023 | Sept 2022 | Monthly Change | Annual Change |
|---|---|---|---|---|---|
| Number Long-Term | 9,400 | 9,000 | 12,100 | 400 | -2,700 |
| Share Long-Term | 10% | 9.7% | 14.4% | 0.3 | -4.4 |
| Median Duration of Unemployment (weeks) | 7.2 | 7.6 | 8.3 | -0.4 | -1.1 |
*Long term is defined as more than 27 weeks. The share of long term is expressed as a percentage of all unemployed (U-3).
The labor force participation rate for Black Minnesotans fell slightly to 74.8% in September, which is 7.1 points higher than one year ago and well above labor force participation rate for white Minnesotans. The employment to population ratio fell slightly to 73.1%, up from 63.6% a year ago. The unemployment rate dropped to 2.3% in September and is down 3.6 points from a year ago.
The labor force participation rate for Hispanic Minnesotans fell slightly to 73.0% in September, down 6.1 points over the year. The employment to population ratio rose slightly to 68.7% in September and was down 7.5 points from one year ago. The unemployment rate dropped to 5.8% in September and was up 2.1 points over the year.
The labor force participation rate for White Minnesotans rose slightly to 67.4% in September, down 0.3 points over the year. The employment to population ratio remained at 65.3% which is 1.6 points lower than last year. Unemployment ticked up to 3.1% in September, up 0.3 points over the year.
The labor force participation rate for Native American Minnesotans was 57.4% in 2017 to 2021 compared to 69.2% for the total population age 16 and older. The employment to population ratio for Native American Minnesotans was 49.9% compared to 66.3% for the total population and the unemployment rate was 12.9% compared to 4.0% for the total population. These are annual 5-year data from the American Community Survey and are not comparable to the numbers elsewhere in this article.
Tables 3, 4 and 5 display labor force participation rates, employment to population ratios and unemployment rates for the total population, Black, Hispanic and White Minnesotans for the current months and comparisons to previous months using 12-month moving averages.
Note: Due to the small sample size for Black and Hispanic workers in the Current Population Survey, the unemployment estimate and unemployment rate are subject to high volatility for these groups. The unemployment rate is valuable and meaningful when examined as a long term trend, not month-by-month.
The labor force participation rate for women rose to 64.7% in September, which was up 0.9 points from one year ago. The employment to population ratio rose to 63.1% and was up 0.9 points from one year ago. The unemployment rate rose to 2.6% in September and was up 0.1 points over the year.
The labor force participation rate for men remained at 71.5% which is 1.7 points lower than one year ago. The employment to population remained at 69% and was down 2.0 points from one year ago. The unemployment rate remained at 3.5% in September and was up 0.6 points over the year.
Table 6. Labor force indicators by gender
| Month/Year | Labor force participation rate | Employment to population ratio | Unemployment rate | |||
|---|---|---|---|---|---|---|
| Female | Male | Female | Male | Female | Male | |
| September-2023 | 64.7% | 71.5% | 63.1% | 69% | 2.6% | 3.5% |
| August-2023 | 64.5% | 71.5% | 62.9% | 69% | 2.5% | 3.5% |
| September-2022 | 63.8% | 73.2% | 62.2% | 71% | 2.5% | 2.9% |
| Monthly change | 0.2 | 0 | 0.2 | 0 | 0.1 | 0 |
| Annual change | 0.9 | -1.7 | 0.9 | -2 | 0.1 | 0.6 |
The teen (age 16-19) unemployment rate was 7.5% in September, up 1.3 points over the year. The labor force participation rate rose to 58.2%, and the employment to population ratio rose to 53.8%.
Note: Due to the small sample size for teen workers in the Current Population Survey, the unemployment estimate and unemployment rate are subject to high volatility. The unemployment rate is valuable and meaningful when examined as a long term trend, not month-by-month.
