Last week, I wrote about revisions to official data which show that Minnesota’s economic performance in recent years has been even worse than previously thought and about how Minnesota’s disappointing economic growth is the result of below average growth in per worker output and employment.
Employment
It is often said that Minnesota’s slow job growth is a function of its slow population growth. If this is the case, then one way to boost employment growth is to boost population growth, such as with more immigration.
So, to what extent is it true that Minnesota’s below average growth in employment is a function of below average growth in population?
To find out we can break down the growth of the population into the growth of the number of people employed and the number of people not employed. The total pool of people available to work in a state is the “Civilian non-institutional population,” which the Census Bureau defines as:
All U.S. civilians not residing in institutional group quarters facilities such as correctional institutions, juvenile facilities, skilled nursing facilities, and other long-term care living arrangements.
If, using Bureau of Labor Statistics (BLS) data, we subtract the number of people employed from the civilian non-institutional population, we have the numbers we need for our calculation.
Figure 1 shows the growth of the civilian non-institutional population between 2014 and 2025 across the 50 states. We see that Minnesota’s grew by 8.9%, below 20 states but above another 29. The growth of the potential labor force in Minnesota compares favorably with that in other states.
Figure 1: Growth of Civilian non-institutional population, 2014 to 2025
Given this, it cannot be said that our state’s relatively slow employment growth is the result of relatively slow population growth. This means, in turn, that the solution to our relatively slow employment growth is not to try and boost population growth. Minnesota’s labor market has problems besides the growth rate of potential workers and it is when we look at how this population growth breaks down that a concerning picture emerges.
As Figure 2 shows, between 2014 and 2025, employment growth in Minnesota — 6.5% — ranked below that in 31 out of 50 states while, as Figure 3 shows, the growth of the number of people not employed — 13.9% — ranked above that in 33 out of 50 states. The result, as Figure 4 shows, is that the share of the civilian non-institutional population in Minnesota which is employed fell by 1.5 percentage points between 2014 and 2025, a performance worse than in 42 out of 50 states.
Figure 2: Growth of employment, 2014 to 2025
Figure 3: Growth of “not employed,” 2014 to 2025
Figure 4: Change in share of Civilian non-institutional population employed, 2014 to 2025, percentage point
So, Minnesota’s disappointing Gross Domestic Product growth is the result of below average growth in per worker output and employment, the latter of which is more down to a failure to generate jobs for the potential workers than of a lack of potential workers. These are the problems, poor productivity and sluggish job growth, at the root of Minnesota’s weak economic performance.