By Nick Woltman

Pioneer Press

ST. PAUL — Minnesota’s unemployment rate ticked down 0.1 percentage point in June to 4.5 percent — its lowest level since February 2007. And the state’s employers added 8,500 jobs from May’s levels.

While this sounds like good news, it’s kind of a mixed bag.

The decline in the unemployment rate was primarily driven by a drop in the labor force participation rate, said Steve Hine, the state’s director of labor market information. This is the percentage of people in the labor force who either have jobs or are actively seeking jobs.

Minnesota’s labor force participation rate fell to 70.3 percent from 70.5 percent in May. And because the official unemployment rate, known as the U3, only measures these folks, it also drops when people drop out of the workforce.

“It would be certainly be preferable to see our unemployment rate declining through employment growth, rather than labor force decline,” Hine said.

A broader measure of unemployment and underemployment, the U6, also dropped in the state 0.1 percentage point to 10 percent in June. This measures all the unemployed in the U3 plus people “marginally attached to of the labor force” including people working part-time for economic reasons, not by choice.

Hine projects the trend of withering labor force participation to continue well into the next decade as more baby-boomers age and retire.

Baby-boomers are Americans born between mid-1946 and mid-1964, and even though people may be leaving the labor force for a lot of different reasons, this large generation is skewing the statistics.

“Our situation is complicated by the fact that we have this huge glob of people who are approaching retirement age, or have retired already,” said Tom Stinson, an economics professor at the University of Minnesota and the former Minnesota state economist.

The number of Americans age 65 and older is projected to reach 83.7 million by the year 2050, according to the U.S. Census Bureau. That’s nearly double what it was in 2012.

Hine projects 500,000 Minnesota workers will turn 65 in the next 10 years.

And as labor force participation declines, the more difficult it will be for businesses to find employees and thus expand. Same is true as the unemployment rate drops, as more people who want jobs are finding them.