Minnesota unemployment rate falls to 7.3 percent

The fact that Minnesota's unemployment rate fell 0.7 percent to a seasonally adjusted 7.3 percent in September doesn’t mean state employers went on a hiring spree last month.

According to figures released today by the Minnesota Department of Employment and Economic Development, employers actually shed 7,900 jobs in September. Minnesota's over-the-year job loss is 4.5 percent, compared with the nation's loss of 4.2 percent. The U.S. unemployment rate climbed 0.1 percent to 9.8 percent in September.

So how did unemployment take such a big tumble? DEED Commissioner Dan McElroy said ithis morning about 15,000 more Minnesotans were working last month, but there also were nearly 19,000 fewer who were unemployed. That means 4,000 people left the work force. He said there is strong evidence that people are seeking additional education, citing such things as a 13,000 increase in enrollment in the schools of the Minnesota State Colleges and Universities system. Full-time students are not considered working or unemployed.

"These mixed results are to be expected as Minnesota and the country begin to recover from the effects of the worldwide recession," McElroy said, adding that it is encouraging that five of the state's 11 industry sectors gained employment during the month, including manufacturing, which added 1,800 jobs.

This is the first time since the spring of 1992 the gap between the state and national unemployment rate has been as large as 2.5 percent.

The sharp decline in state’s unemployment rate could have severe consequences for up to 7,000 of the 170,000 Minnesotans now receiving unemployment benefits. The 7.3-percent unemployment rate will drop the state’s rolling three-month average below 8 percent. That will likely trigger a reduction in federal extended unemployment benefits. Workers who qualified for up to 79 weeks of unemployment benefits as long as the state rate remained above 8 percent, could find that cut to 72 weeks by Nov.