Minnesota’s seasonally adjusted unemployment rate rose to 9.9 percent in May, according to numbers released by the Minnesota Department of Employment and Economic Development.
The state's rate was 3.3 percent in May 2019.
Koochiching County's unadjusted unemployment rate for May was 9.1 percent - the lowest among the seven counties in the northeast region. It was 6.4 at the same time last year.
Other county rates for May are:
- Lake of the Woods, 7.5 percent; 3.9 percent in 2019
- St, Louis, 11.6 percent; 3.7 percent in 2019
- Itasca, 11.3 percent; 5.1 percent in 2019
- Minneapolis, 12 percent; 2.7 percent in 2019
- Pipestone, 3.4 percent; 2.5 percent in 2019
- Houston 4.4 percent; 2.4 percent in 2019
Minnesota added 9,800 payroll jobs in May on a seasonally adjusted basis, up 0.4 percent, with the private sector adding 27,500 jobs, up 1.3 percent, during the month, reports DEED. Government lost 17,700 jobs from April to May.
Meanwhile, Koochiching County had 1,260 people - 30.9 percent of the 2019 annual labor force - apply for unemployment insurance from March 16-June 21, DEED reported.
In Minnesota, the number of people unemployed increased 35,770 to 302,741 in May while the number employed fell by 34,235 to 2,765,258. The Minnesota labor force dropped by 1,535 people in May, with the labor force participation rate remaining stable at 68.9 percent, said DEED
Impact of CARES
On March 27, the federal government passed the Coronavirus Aid, Relief, and Economic Security, CARES, Act, providing additional unemployment insurance, or UI, benefits to eligible workers. A key piece of the emergency legislation is the Federal Pandemic Unemployment Compensation, FPUC, better known as the $600 per week additional UI benefit. Any worker receiving regular or extended UI will also receive the $600 add-on.
In the seven-county northeast Minnesota region, the median wage is $18.57 an hour, or $743 a week for full-time workers. Assuming a UI benefit equal to half the worker's income ($371), the added $600 benefit would provide a weekly income of more than $970. In that case, a worker making the regional median wage would earn $227 more per week on unemployment than at work.
The northeast region includes Koochiching, St. Louis, Itasca, Lake, Cook, Aitkin and Carlton counties.
DEED said the unemployment addition is even more significant for lower wage workers. By comparison, the median food preparation and serving ($11.61 per hour) or sales ($12.55 per hour) worker would need hourly increases of approximately $9 and $8.75 respectively, to match the incomes of their unemployed colleagues.
For many of the lowest-paid workers, the FPUC is a critical source of much-needed income during a time when going to work increases the risk of contracting the coronavirus. The extra $600 helped more workers to stay at home, lowering their risk of infection and spread, which was desired during the early weeks of pandemic response, when many states, including Minnesota, instituted Stay at Home orders, said DEED.
"However, now some question whether the FPUC is creating a disincentive for people to return to work as businesses reopen," said a DEED report this week. "Recent studies and articles show that a significant portion of unemployed workers make more from regular unemployment benefits plus the $600 add on than they did in the jobs that they were laid off from."
Not all low-wage workers benefit from the FPUC, said DEED. Those workers deemed essential continued to work, often in conditions placing them at higher risk of contracting the virus
"Despite the increased risks, there is no similar program or policy to equitably compensate workers providing essential services; keeping our grocery stores and critical retail outlets running and safe or taking care of our loved ones," the report said. "Some businesses have implemented hazard pay increases, but these increases are applied unevenly and often fall well short of the additional income that could be provided by the FPUC."