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Alternative Measures of Unemployment

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 This report uses the BLS unpublished 12-month moving averages.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 about 6 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 perfectly reliable estimates.

Broad Unemployment and Underemployment

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.

• In October, the U-3 stood at 4%, compared to 4.2% in September and 5.7% one year ago.

The U-4 adds people who want a job but aren’t actively searching because they think there are no jobs 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.

• In October, U-4 stood at 4.2%, compared to 4.4% in September and 5.8% one year ago.

• In October, there were 4,500 discouraged workers, down from 4,700 in September but up from 3,200 one year ago.

U-5 adds all the other “marginally attached” workers, people who looked for work sometime in the past twelve months but, for reasons other than discouragement, did not look in the past four weeks to the count of unemployed.

• In October the U-5 was 4.9% compared to 5.1% in September and 6.5% one year ago.

The broadest measure of unemployment, U-6, includes all the above and adds people who are employed part-time but want full-time work.

• In October, the U-6 was 6.8% and 7.2% in September and 10.1% one year ago. This is up from 5.9% in October 2019 prior to the pandemic.

• In October, there were 58,300 involuntary part-time workers, down from 63,000 in September and 112,500 a year ago. This is down from 66,000 in October 2019 prior to the pandemic and indicates that employers are offering more full-time schedules than in the past, possibly in an attempt to staff difficult-to-hire positions.

Table 1. Alternative Unemployment Rates, Minnesota, 12-month Moving Average

Measure*

Oct-21

Sep-21

Oct-20

Monthly Change

Annual Change

U-3

4.0%

4.2%

5.7%

-0.2%

-1.7%

U-4

4.2%

4.4%

5.8%

-0.2%

-1.6%

U-5

4.9%

5.1%

6.5%

-0.2%

-1.6%

U-6

6.8%

7.2%

10.1%

-0.4%

-3.3%

Number of Discouraged Workers

4,500

4,700

3,200

-200

+1,300

Number of Involuntary Part-Time Workers

58,300

63,000

112,500

-4,700

-54,200

*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

The long-term unemployed

Long-term unemployment—lasting more than 27 weeks —imposes costs on people that go well beyond lost wages. Future earnings are lower, and health, relationships, and self-esteem can suffer (see Table 2 for Minnesota Oct. 2021 estimates).

• In October, the number of long-term unemployed fell to 41,400, down from 44,100 in September, but was still way up from 18,200 a year ago.

• The share of long-term unemployed fell to 33.8%, down from 34.6% in September, but way up from 10.3% a year ago.

• The median duration of unemployment fell to 17.6 weeks compared to 18.7 weeks one month ago but was up from 11.2weeks one year ago.

Table 2. Long-term Unemployment, Minnesota, 12-month Moving Average

Measure*

Oct-21

Sep-21

Oct-20

Monthly Change

Annual Change

Number Long-Term

41,400

44,100

18,200

-2,700

+23,200

Share Long-Term

33.8%

34.6%

10.3%

-0.8%

+23.4%

Median Duration of Unemployment (weeks)

17.6

18.7

11.2

-1.1

+6.4

*Long term is defined as more than 27 weeks. The share of long term is expressed as a percentage of all unemployed (U-3).


Labor force status by race/ethnicity and gender

The labor force participation rate for all BIPOC workers in Minnesota fell slightly in October to 65.4% and was down over the year by 2.0 percentage points. Employment to population fell to 62.4% but was up slightly over the year, by 0.2 percentage points. The unemployment rate rose in October to 4.7% but was down 3 percentage points over the year.

The labor force participation rate for Black Minnesotans rose to 66.9% in October but was 0.9 percentage points higher than one year ago. The employment to population ratio remained the same in October at 63.6% and was up 3.6 percent from one year ago. The unemployment rate ticked up to 4.9% in October and was down 4.2 percentage points compared to one year ago.

The labor force participation rate for Hispanic Minnesotans fell to 76.8% in October but was up 1.2 percentage points over the year. The employment to population ratio rose to 73.1% in October and was up 3.8 percentage points from one year ago. The unemployment rate fell to 4.9% in October and was down 3.4 percentage points over the year.

The labor force participation rate for white Minnesotans fell slightly to 68.1% in October and was down 1.4 percentage points over the year. The employment to population ratio was 65.4%, up slightly from last month but down 0.3 percent over the year. Unemployment dropped to 3.9% in October and was down 1.5 percentage points over the year.

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.

Table 3: Labor Force Participation Rates by Race or Ethnicity, Minnesota, 12-month Moving Average

 

Month/Year

Total

Total BIPOC

White

Black

Hispanic

October-2020

69.2%

67.4%

69.5%

66.0%

75.6%

September-2021

67.9%

65.9%

68.2%

66.8%

76.7%

October-2021

67.7%

65.4%

68.1%

66.9%

76.8%

Over the month change

-0.2%

-0.5%

-0.1%

+0.1%

+0.1%

Annual change

-1.5%

-2.0%

-1.4%

+0.9%

+1.2%

Table 4. Employment to Population Ratios by Race or Ethnicity, Minnesota, 12-month Moving Average

 

Month/Year

Total

Total BIPOC

White

Black

Hispanic

October-2020

65.2%

62.2%

65.7%

60%

69.3%

September-2021

65%

63.2%

65.3%

64.1%

72.5%

October-2021

65%

62.4%

65.4%

63.6%

73.1%

Over the month change

0.0%

-0.8%

+0.1%

-0.5%

+0.6%

Annual change

-0.2%

+0.2%

-0.3%

+3.6%

+3.8%


Table 5. Unemployment Rate by Race or Ethnicity, Minnesota, 12-month Moving Average

Month/Year

Total

Total BIPOC

White

Black

Hispanic

October-2020

5.7%

7.7%

5.4%

9.1%

8.3%

September-2021

4.2%

4.1%

4.2%

3.9%

5.5%

October-2021

4.0%

4.7%

3.9%

4.9%

4.9%

Over the month change

-0.2%

+0.6%

-0.3%

+1.0%

-0.6%

Annual change

-1.7%

-3.0%

-1.5%

-4.2%

-3.4%


The labor force participation rate for women dropped to 63.9% in October and was down 1.5 percent from one year ago. The employment to population ratio dropped to 61.2% and was down 0.7 percentage points from one year ago. The unemployment rate remained level at 4.2% in October and is down 1.3 percentage points over the year.

The labor force participation rate for men remained level in October at 71.6% and was down 1.3 percentage points from one year ago. The employment to population ratio rose slightly to 68.8% and was up 0.2 percentage points from one year ago. The unemployment rate fell to 3.9% in October and was down 2.0 percentage points over the year.

Table 6. Labor Force Indicators by Gender, Minnesota, 12-month Moving Average

Month/Year

Labor force participation rate

Employment to population ratio

Unemployment rate

 

Female

Male

Female

Male

Female

Male

October-2020

65.4%

72.9%

61.9%

68.6%

5.5%

5.9%

Sept.-2021

64.2%

71.6%

61.5%

68.7%

4.2%

4.2%

October-2021

63.9%

71.6%

61.2%

68.8%

4.2%

3.9%

Monthly change

-0.3%

0%

-0.3%

+0.1%

0.0%

-0.3%

Annual change

-1.5%

-1.3%

-0.7%

+0.2%

-1.3%

-2.0%

The teen (age 16-19) unemployment rate decreased to 5.6% in October and is down 7.2 percentage points over the year. This is one of the lowest teen unemployment rates on record: teen unemployment was only lower in October 2018 at 5.4% (estimates go back to 2002).

Table 8. Teen Unemployment Rate, Minnesota, 12-month Moving Average

Month/Year

Teen Unemployment rate (Age 16-19)

October-2020

12.8%

Sept.-2021

5.9%

October-2021

5.6%

Monthly change

-0.3%

Annual change

-7.2%

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