Minnesota's unemployment rate, once battered by the COVID-19 pandemic, fell in November to 3.3 percent to match its pre-pandemic level.

But the jobless rate alone doesn't provide the complete picture: Minnesota's labor force -- the people either working or unemployed and looking for work -- remains 88,000 people smaller than in February 2020. That means the effective rate of people on the economic sidelines is 6.3 percent, Minnesota economic development officials said Thursday.

Minnesota has regained 304,000 of the 416,000 jobs lost at the start of the pandemic, or 73 percent. Growth over the past 12 months was strongest in leisure and hospitality, the industry hardest hit by pandemic-era restrictions.

Business owners and government officials are grappling with understanding and addressing the labor shortage across sectors. The pandemic led a flood of older workers to retire early, while some younger workers have transitioned to stay-at-home parenting. Virus concerns continue to weigh on the economy.

Businesses have raised wages and launched sign-on bonuses. Gov. Tim Walz's administration has freed up $50 million in federal money to give bonuses to workers at long-term care facilities. Federally enhanced unemployment benefits have long since ended.

The tight labor market is driving wages up. The average hourly pay in Minnesota rose to $33.79 in November, up 5.4 percent from a year earlier. Inflation increased at 6.8 percent over the same period, eating up wage gains.

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