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Alternative Measures of Unemployment

Minnesota's official unemployment rate tells us a lot about the share of people in the labor force who have untapped potential to offer. But it doesn't tell the whole story. We can learn more by looking at race, age, and gender, and by looking beyond the traditional unemployment rate. Please note that all data below are presented as 12-month moving averages.

Unemployment by race or ethnicity

When we break out unemployment rates by race, we find that some communities face greater challenges than others. Black unemployment ticked down from 8.8 percent in December and January to 8.5 percent in February. Though still among the lowest rates seen in records dating back to December 2001, the Black unemployment rate is more than double the White unemployment rate of 3.1 percent. Hispanic unemployment increased slightly to 5.5 percent. It should be noted that due to relatively small sample sizes, the calculated unemployment rates for black and Hispanic individuals are more susceptible to random measurement error.

Minnesota unemployment rates by race or ethnicity as of February 2017:

  • Black or African American, 8.5 percent, compared to 13.6 percent 12 months ago
  • Hispanic or Latino, 5.5 percent, compared to 4.5 percent 12 months ago
  • White, 3.1 percent, compared to 2.9 percent 12 months ago
  • All workers statewide, 3.9 percent, compared to 3.7 percent 12 months ago

 

alt-measures-ui-race


Also see the American Community Survey for a broader selection of unemployment data by race or origin, including White, Black or African American, Hispanic or Latino, American Indian and Alaskan Native, Asian, and more. Population profiles for all available races are available for download below. Note that the American Community Survey data are collected and calculated by a method which differs from the Current Population Survey numbers shown above.

American Community Survey 1-year Population Profiles for All Available Races in Minnesota:
2015 , 2014

Unemployment by age and gender

We also find differences when we break out rates by age or gender. Teen unemployment increased for the fifth straight month, from 7.8 percent in September to 11.7 percent in February, the highest rate since late 2014. However, it still remains below the rates seen during the years 2003 through 2013. The unemployment rate among men has held almost steady at 4.4 to 4.5 percent for the past ten months. Women’s unemployment may have hit the bottom of a long downward trend in summer of 2016, to a low of 2.7 percent, from a summer 2011 high of 6.3 percent. The unemployment rate among women held steady at 3.4 percent in February after a five-month rise, to its highest rate since September 2015.

Minnesota unemployment rates by age and gender as of February 2017:

  • Teens (age 16-19), 11.7 percent, compared to 7.7 percent 12 months ago
  • Men, 4.5 percent, compared to 4.2 percent 12 months ago
  • Women, 3.4 percent, compared to 3.1 percent 12 months ago
  • All workers statewide, 3.9 percent, compared to 3.7 percent 12 months ago

 

    graph- Minnesota Unemployment by Age and Gender


The long-term unemployed

Long-term unemployment—lasting more than 26 weeks (six months)—imposes costs on people that go well beyond lost wages. Future earnings are lower, and health, relationships, and self-esteem can suffer. Long-term unemployment has been following a downward trend since late 2011.

Minnesota long-term unemployment as of February 2017:

  • Statewide number of long-term unemployed, 14,900 persons, compared to 17,800 persons 12 months ago
  • Statewide long-term unemployed as a share of total unemployed (U-3), 12.7 percent, compared to 15.9 percent 12 months ago

It is important to note that the percentage of long-term unemployed persons represents a share of unemployed persons only, while other unemployment rates represent a share of the entire labor force which includes all persons age 16 or older who are working or looking for work.


graph-Minnesota Long-Term Unemployed  


Alternative measures of unemployment

We can learn still more about Minnesota's labor market by looking at alternative measures of unemployment defined by the U.S. Bureau of Labor Statistics. The official unemployment measure, called U-3, is the share of the labor force aged 16 and over who, at the time of the monthly survey, were not employed in the past week and who have looked for work sometime in the past four weeks.

But what about people who looked for work within the past twelve months but not in the past four weeks because they believed there were no jobs available that fit their qualifications? These “discouraged workers” reveal additional untapped potential and are included in a broader measure called U-4.

And what if we add all the other marginally attached workers, people who looked for work sometime in the past twelve months but, for other reasons, did not look in the past four weeks? These other marginally attached workers expand the count still further in the U-5 measure.

And finally, U-6 includes all of the above and adds people who are employed part-time but want full-time work. The U-6 rate has historically been about twice the official unemployment rate (U-3). In February, U-3 was 3.9 percent while U-6 was 7.7 percent.

The official unemployment rate fell slightly in February, from 4.0 percent to 3.9 percent, with an over-the-year increase from 3.7 percent 12 months ago to 3.9 percent in February. U-4 and U-5 both increased by 0.1 percentage point over-the-year, while both U-6 and the component of U-6 measuring underemployed part-time workers fell from their levels 12 months ago, by 0.3 and 0.5 percentage points, respectively. The chart below shows that all of the alternative measures tend to behave in very similar ways over time. It is notable that all of the alternative measures have been falling since their peak in late 2009, and have leveled off since mid-2015, with only small changes up and down since then.

Minnesota unemployment rates by alternative measures as of February 2017:

  • U-3 Officially unemployed, 3.9 percent, compared to 3.7 percent 12 months ago
  • U-4 Discouraged plus officially unemployed, 4.1 percent, compared to 4.0 percent 12 months ago
  • U-5 All marginally attached (including discouraged) plus officially unemployed, 4.8 percent, compared to 4.7 percent 12 months ago
  • U-6 Part-time underemployed plus marginally attached, discouraged, and officially unemployed, 7.7 percent, compared to 8.0 percent 12 months ago
  • Part-time underemployed—a component of U- 6, including only persons working less than 35 hours per week who want, but cannot find, a full-time job—is 2.9 percent, compared to 3.4 percent 12 months ago

 

graph-Minnesota Unemployment and Underemployment  


Looking ahead

Generally low and stable unemployment and underemployment mean that Minnesota’s economy is running closer to its full potential than before. In fact, it now appears that overall unemployment may have reached a minimum in mid-2016. By looking at race, age, gender, and additional measures of unemployment, we see that the slight increases in overall unemployment since the summer are largely concentrated among women and teens. There are also different trends seen when breaking the numbers out by racial groups, which shows that there is still room for improvement in the employment situation in the state.

Notes on using Current Population Survey state data:
Data above are presented as 12-month moving averages. Each monthly data point is an average of that month and the previous 11 months. Twelve-month moving averages are calculated differently than the official estimates of unemployment and should not be compared directly. Learn more about using CPS subnational data at
www.bls.gov/gps/notescps.htm .

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