Nov 30, 2021 - News

The Twin Cities' "true" unemployment rate

Change in metro area true unemployment rates
Data: Ludwig Institute; Map: Danielle Alberti/Axios. Note: The map shows the change in the measure of the “True Rate of Unemployment Out of Population," which includes 16 and 17 year olds and part-time workers looking for full-time work.

While the Twin Cities metro's unemployment rate is technically a low 2.6%, the "true" number of people who are unemployed — by one analysis — is much higher than that.

How it works: The Ludwig Institute for Shared Economic Prosperity uses U.S. Bureau of Labor Statistics to factor in not just those out of work who are looking for a job, but also those employed in a position earning less than a living wage.

  • The institute pegs the livable threshold at $20,000 annually — a conservative national estimate.

Why it matters: When we look at unemployment, we don't often think about the people who are underemployed or who don't make a livable wage.

Zoom in: The Ludwig Institute says 22.5% of Twin Cities residents fall into that category.

  • The number jumps to 43.6% when you add in 16 and 17 year olds and people working part time but trying to get full-time work, which the institute refers to the “True Rate of Unemployment Out of Population."

Yes, but: The Twin Cities has one of the lowest true unemployment rates in the country, according to the institute and, remarkably, improved the number of living wage jobs during the first year of the pandemic.

  • It's one of 16 metros among the 98 largest to see livable wage job growth in 2020, according to Ludwig. The metro's true unemployment rate improved from 28.4% in 2019 to 22.5% in 2020.

Between the lines: The Twin Cities lost a lot of low paying jobs in the pandemic, but the metro has seen wage growth that is outpacing inflation.

What they're saying: Minnesota Department of Employment and Economic Development commissioner Steve Grove credited the state's diverse economy for being resilient to challenges like the pandemic.

  • The state has a higher-than-average minimum wage, and Minneapolis and St. Paul's are increasing toward $15 an hour. Grove said those wages mean more livable jobs than other areas of the country.
  • But Grove noted that "any message that would claim that somehow the Twin Cities is doing great would not be telling the full picture if you didn't also look at the (racial) disparity we see (in employment)."

Of note: The Ludwig Institute's data is from 2020 and 2021 numbers won't be available until next fall, so the study doesn't yet tell the story about which metros are rebounding the best in year two of the pandemic.

Read the full Ludwig report.

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