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MinnEcon Blog
Paul Tosto

The Minnesota jobless gap that isn’t closing

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Last week was good for jobless rates. Minnesota's January rate fell below 7 percent, the first time since 2008 the announced monthly rate was less than seven. Earlier today, the U.S. rate also fell to a nearly two year low.

Good stuff.

And yet we know the announced rate never tells the complete story of the job markets. The broader measures of employment still signal a troubled jobs market.

We're talking about U-6, a measure that not only counts people employed and unemployed but also takes into account people who are working part-time but want full time as well as "discouraged workers" -- people who've stopped looking but who would take a job if they could find one.

Tack those on to the traditional unemployed and you get an average 2010 jobless rate of 13.8 percent in Minnesota during 2010, according to data released recently by the Bureau of Labor Statistics.

That's obviously a lot higher than the 7.3 percent average for 2010 using the official calculation -- total unemployed as a percent of the civilian labor force.

The real problem, though is how the gap has widened between the traditional unemployment rate and the broader measure. The recession not only shoved many people out of work, it ballooned the number of "marginally attached" workers.

That's a gap, moreover, that hasn't shown signs of closing despite more than 18 months of recovery.

Here's a chart with the Minnesota data (click on the chart for a larger view)

In the chart, "Jobless rate +" is the U-6 measure: Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers.

Minnesota's data mirrors the U.S. data.

The data tell us that that there are a lot of Minnesotans besides the traditional unemployed having trouble in this job market.

State economists put it succinctly in their recent forecast: The basic unemployment rate should hang around 7 percent for most of 2011 and it will be mid-2013 before Minnesota regains job numbers hit prior to the recession, and nearly one in seven Minnesotans who want a full time job can't find one.