What are the forces moving the Minnesota economy? Adam Belz tries to identify the trends and show the connections between Minnesota and the larger U.S. and global economies. You can connect with him on Twitter: @adambelz
The debate over immigration policy is fast taking on more economic significance as the aging Minnesota and Midwestern labor force is shrinking.
The Minneapolis-St. Paul metro area added 108,000 immigrants to its population in the first decade of the millennium, more than any metro area in the Midwest other than Chicago and at a far faster rate than Chicago. It appears immigration has allowed the Twin Cities labor force to keep growing even as the overall workforce in Minnesota has started to decline.
The immigrant population statistics are laid out in a report published a month ago by the Chicago Council on Global Affairs. Whatever your politics, the figures illustrate that job markets in the Midwest are quietly beckoning a lot of people from other countries, as more baby boomers retire, leaving companies to search for employees in a smaller pool of workers.
Mark Brunswick wrote about this report already for the Strib, but at a time when the state labor economist says the workforce is hitting a 15-year period of little or no growth, it’s worth looking at the data a little more, and discussing why businesses are pushing for immigration reform.
The Minnesota labor force has shrunk each of the past four months, after peaking just over 3 million strong in the spring.
As baby boomers retire, “businesses that are going to want to expand are going to have to compete hand over fist, and tooth and nail for qualified workers,” said Steve Hine, economist at the Minnesota Department of Employment and Economic Development, in June.
Enter immigration, and the rapid growth of it in the Midwest.
More than a third of the population gain between 2000 and 2010 in Minneapolis-St. Paul, Chicago, Milwaukee, Cincinnati, St. Louis, Ann Arbor and Topeka was immigrant population growth.
In Duluth, immigrants accounted for ALL of the population growth, and offset a decline in the native-born population. The same is true of the Quad Cities between Illinois and Iowa, and South Bend and Terre Haute, Ind.
In Chicago, Akron, Ohio, and Sheboygan, Wis., immigrants accounted for more than half of all population growth between 2000 and 2010.
The numbers include naturalized citizens, legal permanent residents, temporary visitors who are here to work or study, and undocumented immigrants.
The shrinking labor force is something businesses are watching closely. It’s a key reason that groups like the Minnesota Chamber of Commerce are touting the economic contributions of immigrants, and pushing for comprehensive immigration reform.
“Americans need to continue to act with economic and cultural self-confidence in the presence of globalization, and continue to welcome immigrants,” the chamber report said.
Here's a spreadsheet I created using the Chicago Council's data, which was compiled from U.S. Census reports. It's the top 40 Midwestern cities by immigrant population growth in absolute terms.
As you can see, some cities, like Detroit and Cleveland, had big growth in their foreign-born populations, but not enough to offset a dramatic decline in population overall.
Minnesota employers added 8,500 jobs in June, according to figures released Thursday by the Minnesota Department of Employment and Economic Development.
It was the second straight month of solid job growth after a slower-than-usual spring.
“We do continue to see new highs in employment, the number of unemployed Minnesotans continues to fall,” said Steve Hine, a state labor market economist. “We have good reason to anticipate that this growth will continue.”
May's gains, initially reported as 10,300, were revised downward to 7,200 jobs. But in the past 12 months, the state has added 53,779 jobs, a 1.9 percent annual growth rate, which matches the U.S. growth rate for that period.
The state unemployment rate fell to a seasonally adjusted 4.5 percent in June, down 0.6 percent from one year ago, mostly because the labor force participation rate in the state fell two-tenths of a percentage point. About 136,000 Minnesotans are unemployed. The U.S. unemployment rate in June was 6.1 percent.
Government led all sectors, adding 3,900 jobs in June, with all of the expansion in local government, evenly split between municipal governments and public schools, Hine said.
“Perhaps that’s a sign that fiscal constraints that impeded local government hiring have been lifting,” he said.
State and federal government hiring fell on the month. Education and health services added 3,500 jobs. Trade, transportation and utilities (up 2,200), financial activities (up 600), information (up 500), professional and business services, and logging and mining all added jobs.
Manufacturing lost 900 jobs, while leisure and hospitality and construction were down slightly. Construction's gains in May were also revised downward, but the trend for that industry is still quite good, Hine said.
“Construction certainly is continuing to do well,” Hine said. “I’m not too concerned about the one-month pause.”
The state's metropolitan statistical areas have all added jobs over the past 12 months, some faster than others. St. Cloud is up 2.8 percent, Minneapolis-St. Paul is up 1.8 percent, Mankato is up 1.6 percent, Rochester is up 0.4 percent and Duluth-Superior is up 0.3 percent.
The folks at LifeScience Alley have embarked on an admirable project, trying to quantify the amount of investment in health and medical device companies Minnesota each quarter.
Their data for the second quarter of 2014 shows that investment in diagnostics, medical device, health IT, pharmaceuticals and other healthcare firms rose 65 percent compared to a year earlier, and 46 percent compared to the first quarter. That includes venture capital, angel funding and investment in small firms by large companies.
More than half of the 34 companies raising money are in non-medical device industries, but medical device firms accounted for the lion’s share of the dollars.
The medical device numbers were driven by major deals at Plymouth-based Holaira, which raised $42 million to pave the way for a European clinical trial of the company’s catheter-based system to treat obstructive lung disease, and Maple Grove-based Inspire Medical, which raised $40 million to commercialize its sleep apnea therapy.
However, 71 percent of the deals in the second quarter were under $1 million, according to LifeScience Alley.
ThisCLICKS, a company with about 30 employees in St. Paul, has hired a new VP of marketing out of Silicon Valley.
The firm, which sells user-friendly software that allows small businesses to manage scheduling and payroll, has grown revenue by double digits month-over-month for the past 18 months, CEO Chad Halvorson said.
The company's software is used by more than 5,000 companies representing more than 250,000 employees worldwide — including the Atlanta Braves, SoundCloud, the Columbus Zoo and UPS Store. In January, thisCLICKS received $4 million in funding from its first outside investors.
It also moved into new offices in the Drake Building across the river from downtown St. Paul. At an event in June, Mayor Chris Coleman looked on while CEO Chad Halvorson crushed an old-fashioned time clock with a sledge hammer on the patio outside the building.
The company is part of a small but growing group of technology companies in St. Paul that are hiring, a group that includes GovDelivery.
The new VP of marketing will be Sujan Patel, who helped lead strategy for companies like TurboTax, SlideShare and Salesforce. He joins thisClicks from San Francisco-based startup Bridge US.
“What we’re building in Minnesota is an incredible company that solves a huge business problem for a commonly overlooked market. Great ideas and great execution can happen anywhere — not just on the coasts,” said Chad Halvorson, CEO of thisCLICKS, in a statement. “Sujan is a great combination. He’s deeply skilled in marketing and committed to our vision — as anyone who enthusiastically leaves sunny California for Minnesota winters would have to be."
As the economy has recovered and the unemployment rate fallen, there have been no shortage of objections to the statistics.
A gentleman emailed me this week, after we ran a story on the Twin Cities having the lowest unemployment rate of any large metropolitan area in the nation, saying that U.S. unemployment has fallen only because more people are collecting disability payments. Another said I should have taken into account which jobs are created by government and which by "actual market demand." (That's a discussion for another day.)
But the most common objection to the good news of declining unemployment has been that the reason it's falling is because more people are giving up the search for a job and dropping out of the work force.
This has (sort of) been true in some months. The number of “discouraged workers,” as the Bureau of Labor Statistics puts it, rose dramatically during the recession. Those workers are not counted as unemployed, because they are not technically looking for a job, so, the argument goes, the unemployment rate doesn't accurately reflect the job market.
But the number of discouraged workers in America can no longer be used as an explanation for why unemployment is falling. In June, according to the latest numbers from the Department of Labor, the number of discouraged workers fell to 676,000, its lowest level since December 2008.
As you can see the total number of discouraged workers has been falling steadily since the recession:
There are other reasons the unemployment rate is falling, particularly in Minnesota. More people are retiring, so the labor force has begun to shrink. But discouragement is no longer a serious reason for the falling unemployment rate.