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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 This report uses the BLS unpublished 12-month moving averages.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 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 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 2.6%, which is down from 4.0% one year ago. In February 2020, just prior to the pandemic recession, the U-3 rate was 3.1%. October’s rate is an all-time low for this series, which goes back to 2001.

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 2.8%, and 4.2% one year ago.
  • In October, there were 4,900 discouraged workers, up from 5,000 in September and up from 4,500 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 3.4% compared to 4.9% 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 4.9% in October and 6.8% one year ago. October is down from 5.6% in February 2020 prior to the pandemic. October’s rate, tied with last month, is an all-time low for this series, which goes back to 2001.
  • In October, there were 26,100 involuntary part-time workers, down from 28,100 in September. There were 36,200 a year ago and 35,100 in February 2020. October’s number is an all-time low for the series, which goes back to 2001.

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

Measure* Oct-2022 Sept-2022 Oct-2021 Monthly
Change
Annual
Change
U-3 2.6% 2.7% 4.0% -0.1% -1.4%
U-4 2.8% 2.9% 4.2% -0.1% -1.4%
U-5 3.4% 3.5% 4.9% -0.1% -1.5%
U-6 4.9% 4.9% 6.8% 0.0% -1.9%
Number of Discouraged Workers 4,900 5,000 4,500 -100 +400
Number of Involuntary Part-Time Workers 26,100 28,100 36,200 -2,000 -11,100

*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 including lower future earnings (see Table 2 for updated Minnesota estimates).

  • In October, the number of long-term unemployed fell to 11,500 and was down from 41,400 a year ago. It is a little higher than in February 2020 when it was at 10,300.
  • The share of long-term unemployed fell to 14.2% over the month and was down from 33.8% a year ago.
  • The median duration of unemployment rose to 8.6 weeks and was down from 17.6 weeks one year ago.

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

Measure* Oct-2022 Sept-2022 Oct-2021 Monthly
Change
Annual
Change
Number Long-Term 11,500 12,100 41,400 -600 -29,900
Share Long-Term 14.2% 14.4% 33.8% -0.2% -19.6%
Median Duration of Unemployment (weeks) 8.6 8.3 17.6 0.3 -9.0

*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 Black Minnesotans rose to 69.1% in October, which is 2.2 percentage points higher than one year ago and higher than the labor force participation rate for white Minnesotans. The employment to population ratio rose to 65.6%, up from 63.6% a year ago. The unemployment rate dropped to 5.0% in October but is up slightly compared to one year ago.

The labor force participation rate for Hispanic Minnesotans dropped slightly to 77.2% in October, up 0.4 percentage points over the year. The employment to population ratio dropped to 74.3% in October but was up 1.2% from one year ago. The unemployment rate ticked up to 3.8% in October but was down 1.1% over the year.

The labor force participation rate for white Minnesotans fell slightly to 68.1% in October, unchanged over the year. The employment to population ratio ticked down to 66.7% but was up 1.3 points over the year. Unemployment ticked down to 2.1% in October and was down 1.8 points over the year.

The labor force participation rate for Native American Minnesotans was 57.9% from 2016 to 2020 compared to 69.3% for the total population age 16 and older. The employment to population ratio for Native American Minnesotans was 50.6% compared to 66.5% for the total population and the unemployment rate was 12.7% compared to 3.8% for the total population. These are annual data from the American Community Survey and are not comparable to the numbers elsewhere in this report.

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 White Black Hispanic
Oct-2022 68.4% 68.1% 69.1% 77.2%
Sept-2022 68.4% 68.4% 67.7% 79.1%
Oct-2021 67.7% 68.1% 66.9% 76.8%
Over the month change 0.0 -0.3 1.4 -1.9
Annual change 0.7 0.0 2.2 0.4

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

Month/Year Total White Black Hispanic
Oct-2022 66.6% 66.7% 65.6% 74.3%
Sept-2022 66.6% 66.9% 63.6% 76.2%
Oct-2021 65.0% 65.4% 63.6% 73.1%
Over the month change 0.0 -0.2 2.0 -1.9
Annual change 1.6 1.3 2.0 1.2

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

Month/Year Total White Black Hispanic
Oct-2022 2.6% 2.1% 5.0% 3.8%
Sept-2022 2.7% 2.2% 5.9% 3.7%
Oct-2021 4.0% 3.9% 4.9% 4.9%
Over the month change -0.1 -0.1 -0.9 0.1
Annual change -1.4 -1.8 0.1 -1.1

The labor force participation rate for women in Minnesota ticked up to 63.9% in October which is the same as one year ago. The employment to population ratio ticked up to 62.4% and was up 1.2 points from one year ago. The unemployment rate dropped to 2.3% in October and was down 1.9 points over the year.

The labor force participation rate for men in Minnesota ticked down to 73.0% but was up 1.4 points from one year ago. The employment to population ticked down to 70.9% and was up 2.1 points from one year ago. The unemployment rate remained level at 2.9% in October  and was down 1 point 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
Oct-2022 63.9% 73.0% 62.4% 70.9% 2.3% 2.9%
Sept-2022 63.8% 73.2% 62.2% 71.0% 2.5% 2.9%
Oct-2021 63.9% 71.6% 61.2% 68.8% 4.2% 3.9%
Monthly change 0.1 -0.2 0.2 -0.1 -0.2 0.0
Annual change 0.0 1.4 1.2 2.1 -1.9 -1.0

The teen (age 16-19) unemployment rate is 6.8% in October, up 1.2 points over the year. The labor force participation rate ticked down to 52.4% while the employment to population ration dropped slightly to 48.8%.

Table 7. Teen Unemployment Rate, Minnesota, 12-month Moving Average

Month/Year Labor
Force
Participation
Rate
Employment
to
Population
Ratio
Teen (Age 16-19)
Unemployment
Rate 
Oct-2022 52.4% 48.8% 6.8%
Sept-2022 53.0% 49.8% 6.2%
Oct-2021 51.2% 48.3% 5.6%
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