Minnesota's official unemployment rate tells a lot about the share of the labor force who have untapped potential to offer. But it doesn’t tell us the whole story. We can learn more by looking at race, age, and gender, and by looking beyond the traditional unemployment rate.
When we break out unemployment rates by race, we find that some communities face greater challenges than others. Although unemployment rates for all groups have declined significantly in the years following the recession of 2007 to 2009, current 12-month moving average rates of 11.4 percent for Black or African American workers and 8.1 percent for Hispanic or Latino workers remain well above the statewide 4.8 percent rate as of March 2014.
We also find differences when we break out rates by age or gender. The unemployment rate of 14.1 percent for teens, though essentially recovered to its pre-recession level, still remains well above the statewide average. Unemployment rates for women, at 4.2 percent, and men, at 5.3 percent, both have declined considerably as well.
And the gap between genders has narrowed, though men historically see consistently higher unemployment rates than women. This gender gap might be explained in part by differing labor force participation rates or occupational trends.
Labor force is the sum of employed and unemployed persons. Since men historically have had higher participation rates, this means they can have both higher employment and higher unemployment at the same time as was the case in Minnesota as of March 2014. Men also are more heavily represented in occupations vulnerable to cyclical or seasonal ups and downs, like manufacturing or construction.
Beyond these demographic differences, we can also learn more about Minnesota’s labor market by looking at alternative measures of unemployment.
The official unemployment measure, called U3, is the share of the labor force aged 16 and over who, at the time of the monthly survey, have been unemployed for the past week and have looked for work sometime in the past four weeks.
But what about people who last looked for work a month ago or 12 months ago and decided there are no jobs available that fit their qualifications? These marginally attached “discouraged workers” reveal additional untapped potential and are included in a broader measure called U4.
And what if we add all the other marginally attached workers, people who looked for work sometime in the past 12 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 U5 measure.
And finally there is the measure called U6, which includes all of the above and adds people who are employed part-time but want full-time work.
Recent declines in unemployment mean that Minnesota’s economy is running closer to its full potential than before. But by looking at race, age, gender, and additional measures of unemployment, we can see where there is still more work to be done.
Note: Data here 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.