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

Posts about Economics

Fourth quarter job vacancies in Minnesota hit a 9-year high

Posted by: Adam Belz Updated: April 1, 2014 - 1:29 PM

Minnesota employers reported nearly 60,400 job vacancies in the fourth quarter last year – the most job openings in the state during a fourth quarter in nine years, according to figures released Tuesday by the Minnesota Department of Employment and Economic Development.

The agency said job vacancies in Minnesota were up 2.6 percent from the same period a year ago. Statewide, there were 2.1 unemployed people for each vacancy, compared with 2.6 unemployed people per vacancy in the fourth quarter of 2012.

“While there are still hardworking Minnesotans looking for employment, our data suggest the labor market is coming back into alignment in the wake of the recession,” said DEED Commissioner Katie Clark Sieben. “Increased job vacancies are a sign that the economy is growing and companies are looking for skilled workers.”

According to the study, 33,160 vacancies, or 54.9 percent, were in the seven-county Twin Cities metropolitan area, while the remaining 27,240 vacancies were in Greater Minnesota. Compared with a year ago, job vacancies were up 11.3 percent in Greater Minnesota and down 3.6 percent in the Twin Cities.

Many of the openings don't pay well. The median wage offer for 16,202 of the openings was $9.50 per hour -- the minimum wage proposed at the State Capitol -- or less.

However, 12,643 vacancies had a median wage offer of more than $20 an hour.

Health care and social assistance had the most job vacancies -- a fifth of the total. It was followed by retail trade (14.6 percent), manufacturing (10.9 percent), accommodation and food services (8.9 percent) and construction (6 percent).

Middle-sized firms (businesses with 10 to 249 employees) accounted for 64.5 percent of the vacancies, while large firms (250 or more employees) had 22.8 percent of the vacancies and small firms (fewer than 10 employees) had 12.7 percent of the vacancies.

Here are some other findings from the survey, which is released twice each year, and is full of interesting data:

1. 39 percent of the vacancies were for part-time jobs (defined as fewer than 35 hours a week).
2. 14 percent of the vacancies were for temporary or seasonal work.
3. 38 percent of the vacancies required at least some post-secondary education or training beyond high school.
4. 53 percent of the vacancies required one or more years of work experience.
5. The median (50th percentile) wage offer for all job vacancies was $13 an hour.
6. 56 percent of the vacancies offered health insurance.

Deloitte: North American CFOs feeling less optimistic

Posted by: Adam Belz Updated: March 31, 2014 - 4:14 PM
A broad survey of executives at major companies shows that chief financial officers are feeling less optimistic about the economy, hiring and long-term investment than they were a year ago.
 
Consulting firm Deloitte released the first quarter 2014 results from its regular survey of CFOs from over 100 of North America’s biggest companies, and optimism is down year-over-year on concerns about economic weakness in China and Europe, and how a stalling labor market might affect consumer spending.
 
In past years, the survey has shown a first quarter bounce in optimism with forecasts for sales, earnings, and capital spending peaking before declining as the year grinds on.
 
The first quarter of 2014 was different. There was no bounce, earnings forecasts are at an all-time low, and CFOs are less optimistic regarding the growth prospects of their organizations in 2014 than they have been at the start of each of the previous three years.
 
“A lot of what we’re seeing is that we’ve had this around-the-corner recovery for a few years now,” said Greg Dickinson, director of the survey for North America. “What we see now is largely what we’ve got, at least for the foreseeable future.”
 
Earnings growth projections are down from 12.1 percent in 2013 to 7.9 percent in 2014. Sales growth projections are down from 5.4 percent to 4.6 percent. Domestic hiring projections are flat at 1 percent.
 
As a result, more companies are planning to sink cash into divvidends and stock buybacks. Expectations for dividend growth are at a three and a half year high of 5.7 percent. Nearly 30 percent of CFOs say they will significantly increase dividends this year, and roughly the same proportion expect a major buyback, according to the survey.
 
“That’s kind of an indication too, that they don’t necessarily feel like they can justify especially long-term investments,” Dickinson said.
 
The Affordable Care Act continues to impact health care costs, according to the survey: 60 percent of CFOs now say they plan to pass health care costs on to employees; 23 percent expect to reduce the scope of benefits offered to some employees; 16 percent expect to reduce the level or value of benefits provided; and 12 percent expect to pass costs on to customers.
 
However, CFOs predicted higher capital spending, and the share of surveyed CFOs who view the North American economy as either good or not getting worse rose from 60 percent at the end of 2013 to 72 percent in the first quarter.
 
“We’re not talking about people spending less or hiring less than they have in previous years,” Dickinson said. “You’re just not seeing the kind of acceleration that we might have hoped for.”

Hiawatha light rail line caused little development through 2010: study

Posted by: Adam Belz Updated: March 25, 2014 - 6:20 PM

Light rail was supposed to bring a development boom to the Hiawatha corridor, and the Met Council claims that it has, but a new study shows that the Blue Line has had very little effect on land use near rail platforms.

Sarah West, an economics professor at Macalester College and Needham Hurst, a graduate student at Harvard, have a new paper coming out in Regional Science and Urban Economics, demonstrating that the Blue Line, which started carrying passengers between the Mall of America and downtown Minneapolis in 2004, caused almost zero increase in the likelihood of new development in its first six years.

“The effects of light rail, at least through 2010 in Minneapolis, are very small, and are limited to industrial and single-family parcels,” West said in an interview.

Using Census data not released until 2012, as well as the Metropolitan Council’s Generalized Land Use Survey and City of Minneapolis parcel data, West and Hurst looked at land parcels near light rail platforms and calculated the likelihood of land use change, then compared that to the likelihood of land use change for parcels throughout Minneapolis.

They found “no effect” on development near light rail compared to the period from 1997 to 2000, and found that parcels within a ½ mile of rail platforms were only 1.39 percent more likely to be developed after the line started operating compared to the years the rail line was under construction, from 2000 to 2004.

West and Hurst are careful to point out that their paper does not address development since 2010 -- "casual observation of activity along the line in 2012 and 2013 suggests that substantial changes are taking place now that market outlooks have improved," the authors wrote -- and that the effects of light rail can take a long time to manifest themselves.

“It can take decades for the effects of the introduction of new public transit to be felt in a city,” West said. “It’s too early to close the book on the effects of the Blue Line.”

Still, the research is a cautionary note for optimists as Metro Transit readies to open the Green Line that runs from downtown St. Paul to the site of the Metrodome, where it will connect with the Blue Line.

Past studies have shown that the light rail line has increased property values along its route, particularly for single family homes. But major redevelopment and development of vacant property have been only slightly more likely to materialize compared with parts of the city not near the rail.

A recent story by Eric Roper explained how little has changed at the intersection of Hiawatha Avenue and Lake Street, a busy hub that was supposed to be a prime location for construction as a result of the rail line.

Hennepin County Commissioner Peter McLaughlin said Tuesday that big picture, the history of the Hiawatha corridor is clear. There was little meaningful development for 30 years, and now, 10 years after the Blue Line opened, the route is dotted with new development. The 7,200 new housing units projected to be built along the Blue Line by 2020 have already been exceeded, he said.

Gauging the success of the line with a study period that ends in 2010 doesn’t give an accurate picture, he said, because the recession brought development “to a halt for about three years."

“We were hemorrhaging jobs when Barack Obama took office,” McLaughlin said. “Nothing was being financed.”

Further lines of inquiry include determining how much city land use policy has helped or hurt the ability of developers to bunch together parcels and start new projects, West said. She also said it would be worthwhile to figure out how much the interactive experience of each platform affects the likelihood of development.

The 38th Street station, for instance, is easy to get at from the west side of Hiawatha, West said, but much less welcoming from the east, where pedestrians have to walk past grain elevators and over nearly 50 yards of freight rail tracks and vacant lots – and that’s before they hit Hiawatha Avenue, which is six lanes of traffic at the intersection.

Having grown up just east of Hiawatha Avenue, West said she’s watched new apartments go up since the line started operating. Yes, multifamily development has been built along the corridor, she said. But it’s also been built in other places.

“You can’t conclude that we’ll never measure an effect,” West said. “You can’t conclude that there’s no effect. You can’t conclude that the Green Line will be exactly identical to this.”

The Green Line is set to open on June 14, and will run through the University of Minnesota and along University Avenue to downtown St. Paul, where the line will end at the Union Depot.

“My first sense is the Green Line is a better line,” said David Levinson, a civil engineering professor at the University of Minnesota. “It’s going to a denser area.”

Levinson points out that the Green Line – and any subsequent additions to the light rail system – will also improve the value of land along the Blue Line, thus making it more ripe for development as the network gets bigger and more people use it.

“That positive feedback system sort of kicks in, and it reinforces the growth,” Levinson said.

(Photo by Richard Sennott, Star Tribune)

This piece has been updated and amended since it was first posted.

Personal income rises in Minnesota, but more slowly

Posted by: Adam Belz Updated: March 25, 2014 - 10:36 AM

Personal income in Minnesota grew slightly faster than the national average in 2013, and the state remains ranked 11th for per capita personal income, according to figures released Tuesday by the U.S. Department of Commerce.

Personal income -- the sum of net job earnings, property income, and personal current transfer receipts – rose 2.8 percent in Minnesota in 2013, compared to 2.6 percent growth nationally.

Per capita personal income in Minnesota – total personal income divided by the population -- is now $47,856 per year. In the Upper Midwest, only North Dakota’s number is higher than Minnesota's – at $57,084.

Illinois, Nebraska, South Dakota and Iowa all have per capital personal income above the national average of $44,543.

As you can see, the trend lines haven’t changed in the Midwest much over the past 10 years, except for North Dakota’s rapid rise, South Dakota’s leveling off in the past couple years, and Ohio surpassing Missouri.

In Minnesota, earnings in all categories of work rose, except for civilian federal employees and members of the military, the only two categories where earnings fell.

Minnesota exports picked up pace in fourth quarter, grew 6 percent

Posted by: Adam Belz Updated: March 18, 2014 - 11:32 AM

Minnesota exports of manufactured, agricultural and mining products grew to $5.4 billion in the fourth quarter of 2013, a 6 percent increase from the same period a year earlier.

Minnesota was one of 19 states that grew exports more than 5 percent in the quarter, and the state’s export growth bettered overall national growth in the quarter of 4 percent.

“This 6 percent growth was really driven by two markets – China and Mexico,” said Kathleen Motzenbecker, director of the Minnesota Trade Office.

Exports to China – Minnesota’s second-largest market – grew 35 percent to $743 million, driven by medical devices, plastics and recycling and ores, slag and ash.

Sales in Mexico climbed 32 percent to $439 million.

The overall uptick in fourth quarter exports – which do not include exports of services -- was a reversal of a two-year trend of flat or minimal growth.

Manufactured exports, which accounted for $5 billion in state sales during the fourth quarter, grew 7 percent from the same period a year ago, compared with 3 percent growth for manufactured exports nationally.

“I’m always pleased when I see the needle going in the upwards direction,” Motzenbecker said.

Iowa and Wisconsin exports were flat in the fourth quarter, North Dakota's fell 15 percent, South Dakota's fell 6 percent, Michigan and Indiana exports fell slightly, and Illinois exports grew 11 percent.

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