Black unemployment in Minnesota hits 10.5%

Black Minnesotans are out of work at more than twice the rate of the state’s overall workforce, as Minnesota’s unemployment rate has stayed above the national rate every month this year, a pattern state economists say they can’t yet explain.

The unemployment rate for Black Minnesotans reached 10.5% in August, up from 7.7% a year earlier, according to the Minnesota Department of Employment and Economic Development (DEED). The rate for white Minnesotans was 4.2%.

“Whenever we see rising unemployment rate, it is always workers of color, especially the Black workers and Hispanic workers, who are first impacted and most impacted,” said Angelina Nguyen, DEED’s labor market information director.

Minnesota’s overall unemployment rate rose to 4.5% in September, compared with 4.2% nationally. The state lost 4,600 jobs in September. 

Minnesota’s gap between Black and white unemployment is wider than the nation’s. Nationally, the Black unemployment rate in August was 5.6%, and the white rate was 3.7%, about 2 percentage points apart, Nguyen said. In Minnesota, the Black rate is about two and a half times the white rate.

Minnesota’s racial disparities in employment have historically been worse than the rest of the country’s, Nguyen said, and those gaps widen when the economy slows.

“Right now the economy is not terrible, but it’s also not great,” she said. “Whenever we see the economy plateau or start to decline a little bit, it’s always people of color who are first and most impacted.”

Minnesota has long had lower unemployment than the nation. Before this year, the only month since the state began collecting the data that Minnesota’s rate topped the national rate was May 2007, Nguyen said. This year, Minnesota’s rate has been higher every month since January.

“This phenomenon of Minnesota’s unemployment rate staying higher than the nation since January of this year is very odd,” Nguyen said.

The trend is puzzling, she said, because job growth has been decent and fewer people are filing for unemployment benefits, which would normally signal a healthier job market. Because unemployment data is based on surveys, response rates or sample sizes can affect the estimates, Nguyen said, and DEED’s annual revisions each February could bring the numbers into closer alignment.

Asked what is driving the rise in Black unemployment specifically, Nguyen said DEED does not have insight into why that rate has climbed.

DEED Commissioner Matt Varilek has said he would expect some people affected by Operation Metro Surge, the federal immigration enforcement surge in the Twin Cities earlier this year, to have left the state and the labor market. He also said foreign-born workers, who usually help replace retiring workers in Minnesota’s aging population, aren’t doing so as much anymore. 

Workers are also losing ground on pay. Minnesota wages have stayed flat since last September while prices have risen 3.7%, meaning workers have lost purchasing power. 

DEED does not track unemployment by industry, but job numbers show which sectors are growing and shrinking. Education and health services have grown steadily for years as Minnesota’s population ages, Nguyen said, while financial activities and information, including banking, insurance and publishing, have lost jobs.

At Urban League Twin Cities, demand for workforce services remains strong, said Joi Jones, director of workforce solutions. Job seekers want more than help finding an opening, she said in an email. They want guidance on staying competitive, moving into new industries and finding stable work with room to advance.

Jones said Black job seekers face several connected barriers: hiring bias, limited professional networks and employers who overlook transferable skills or place too much weight on traditional credentials. As employers adopt new technology and artificial intelligence, workers without reliable computer access or the time and money to earn certifications can fall further behind, she said. Transportation, child care and housing instability can also make it hard to finish training or keep a job.

“Being qualified for a job does not always mean having equal access to the opportunity,” Jones said.

The slowdown is also squeezing Black-owned businesses, which employ many Black Minnesotans. The Metropolitan Economic Development Association (MEDA), which provides loans and business consulting to entrepreneurs of color, is seeing more businesses seek its help, said Adrian Ruddock, Vice President of Lending & Business Consulting at MEDA.

Ruddock said higher interest rates have led banks to tighten credit and toughen their lending standards, leaving many clients without the capital they once had. Tariffs have also made equipment and supplies more expensive, he said.

“Let’s say someone was planning to hire before the end of the year in a high interest rate environment. They’re going to put that off until the end of next quarter,” Ruddock said. “It does hamper business growth, hiring, equipment purchases and anything else that would increase the business’s expenses.”

To keep and add jobs, Ruddock said, Black-owned businesses need a clear understanding of their cash flow and reserves, and should know about community development financial institutions, or CDFIs, like MEDA, which can be more flexible than banks.

“We look at the entire story of the business,” he said. “Someone is not bankable. It doesn’t mean that the business isn’t good.”

For anyone recently laid off, Jones said the first step is perspective.

“A layoff is an employment event, not a reflection of your worth or your ability,” she said. She advised people to review their finances and unemployment eligibility, take stock of their transferable skills and connect with workforce organizations, and to avoid “making your next move out of fear or urgency alone.”

How to get help

DEED’s CareerForce program offers free help to job seekers at more than 50 locations across Minnesota, including resume help, job searches, applications and connections to training. Workers affected by mass layoffs can get help from DEED’s State Rapid Response team. Learn more at www.careerforce.mn.gov/.

Urban League Twin Cities offers career counseling, training and job placement help. Call 612-302-3155 or visit ultcmn.org.

Business owners seeking capital or consulting can contact MEDA at info@meda.net.

Jasmine McBride welcomes reader responses at jmcbride@spokesman-recorder.com.