DEED: Minnesota's four-week pause will cause 'suffering' for some businesses

Empty tables at a Minnesota restaurant amid the pandemic. (FOX 9)

Minnesota’s four-week dial back sparked reaction from lawmakers and business owners who say financial relief is going to be needed to make it through the next month.

The latest unemployment data paints a picture of conflict. The state unemployment rate dropped to 4.6 percent last month, but it’s because fewer people were looking for work. What’s called the labor force participation rate dropped to 67.4 percent. That’s the lowest level since 1978. The state’s chief jobs officer says that data point is troubling.

"But it meant that we are about a 100,000 job seekers lighter in the state over the last two months than we were two months ago," said Steve Grove, the commissioner of the Department of Employment and Economic Development.

More older workers have dropped out of the workforce. The question is, where have they gone, and why?

"I think the likelihood is the labor force declines are likely temporary decisions based on safety concerns and the need to care for children and family members, rather than based on long-term decisions," said Oriane Casale, of DEED Labor Market Information.  

As more bars and restaurants shut down with the latest COVID-19 restrictions, the state expects the numbers to get worse.

"I think that in the short term we are going to see some suffering for this,” said Grove. “We know that. We know that in the short term there will be more workers on unemployment, there will be more businesses who are challenged, and sadly we know there are more businesses who will not make it through the end of this year."

It’s in part why Governor Tim Walz sent a letter Thursday to congressional leaders urging them to pass a new stimulus package.

On the state level, Representative Dave Baker is asking for business relief in the next special session in December. He’s especially calling for unspent COVID response funds to target businesses and employees, waiving or delaying state sales tax payments and delaying repayment dates for businesses on state-based or administered loans.

This all hangs in the balance as the economy once again teeters on the path of the virus.

"Literally the fate of our economy is in the hands of Minnesotans," said Grove. "If we are careful we can come back and continue job growth and hopefully be at a better place next month when we gather to discuss the data."  

Grove says economic modeling shows that if we continue to mitigate the virus that the state could regain all of its lost jobs in the third quarter of 2022. However, if everything spins out of control and there are rising hospitalization rates and worker safety concerns, he says then the recovery wouldn’t come until 2023.