New Normal in the Labor Market
Thursday, May 04, 2017
While it didn’t get a lot of attention, Minnesota’s annual unemployment rate finished below 4 percent in both 2015 and 2016, according to a story by Dave Senf in the March issue of Trends magazine.
Why is that worth noting? Because Minnesota has seen only four periods in the last 70 years when annual unemployment finished below 4 percent in successive years, with the longest unbroken string occurring from 1995 to 2001.
One thing makes this period different from the others, though. While economic booms drove the three previous sub-4 percent labor markets, slowing labor force growth is the key factor this time.
Baby boomer retirements combined with sluggish growth in the working-age population virtually guarantees weak labor force growth over the next few decades. That, in turn, will mean fewer new jobs in the state because employers won’t be able to find enough workers to expand.
The big takeaway: Get ready for continued tight labor markets in Minnesota. They are likely to be the new normal for years to come.