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
This is the percentage of the population living in poverty in Minnesota, by county, 2013. This data comes from the American Community Survey, 2013, 5-year estimates. The redder the county, the higher the poverty rate.
Here are the top 10 highest poverty rates:
|3||Blue Earth County||19.2%|
|8||St. Louis County||16.4%|
New job numbers for December throw cold water on what had been a run of gains in Minnesota, as employers cut 5,200 jobs in the month and November’s gains were revised downward by 4,000.
“We’ll file this one under the category of all good things must come to an end,” said Steve Hine, the labor market economist for the state.
Still, the state unemployment rate fell a tenth of a point to 3.6 percent, according to figures released Thursday by the Minnesota Department of Employment and Economic Development. The U.S. unemployment rate in December was 5.6 percent.
Minnesota job growth for the calendar year was the weakest since 2010, and in 2014, Minnesota lagged behind the nation. U.S. job growth for 2014 was 2.2 percent, nearly double the 1.2 percent rate of growth in Minnesota.
Asked how the unemployment rate can fall when the number of jobs in the state declined, Hine noted the unemployment rate and the total number of jobs are from different surveys, each with its own margin of error.
“They are counts of different things done by different surveys with different methodologies,” Hine said.
Average wages for all private sector workers fell 3 cents in December from $25.77 per hour to $25.74 per hour, and have fallen 20 cents since December 2013.
Most industries shed jobs in December, especially government, manufacturing, real estate and health care. Trade, transportation and utilities led all industries by adding 4,100 new jobs.
“We’ve had a string of months with very strong job growth both here and nationally,” Hine said. “It’s not at all unusual for a series of months that are as strong as that to be followed by a one-month correction.”
Stepping back to look at the bigger picture, Minnesota added 33,100 jobs in 2014, according to the numbers released Thursday. That compares to 59,300 in 2013, 43,500 in 2012 and 53,700 in 2011.
Construction, which showed some encouraging signs in 2014, now appears to be flat for job growth on the year.
Across the state, Mankato closed a strong year of job gains, adding more than 2,000 jobs for 3.7 percent growth.
The Twin Cities and St. Cloud both grew jobs at 1.8 percent. Rochester grew at 0.7 percent, and Duluth-Superior lost jobs at a rate of 0.7 percent.
Check back for updates to this story.
If you read much, you’d be tempted to believe that the Southeast is getting all the manufacturing jobs these days, and that the Midwest and the North in general are losing out.
It's a familiar narrative -- that the historic factory prowess of former Union states is rusting away and being supplanted by a new factory belt in the South.
The anecdotes keep coming. Polaris, the first snowmobile firm ever, and founded in northwest Minnesota, is opening a big ATV plant near Huntsville, Ala. Mercedes USA is moving its headquarters to Atlanta – from New Jersey. BMW is in Spartanburg, S.C. Volkswagen is in Chattanooga, Tenn. The list goes on.
Meanwhile, Detroit is limping out of bankruptcy and Michigan and Illinois are muddling along economically. Ohio and Wisconsin aren't dynamos right now either.
Heck, the New York Times even published something this fall about how the Midwest is losing all its good football players. “It is no coincidence that the Big Ten had postwar glory years, when the Midwest thrived on the back of the auto industry,” wrote Marc Tracy. “The Rust Belt and the decline of Big Ten football are not unrelated.”
Well, Ohio State (kickoff versus Oregon is 7:30 CT tonight) challenged the narrative of a permanently declining Big Ten by beating Alabama in the Sugar Bowl, and it turns out, when you look at the numbers on manufacturing jobs, they show that the Midwest is outperforming the Southeast, by a pretty healthy margin.
This was a surprise to me. In the past five years, the Midwest (Iowa, Minnesota, Illinois, Wisconsin, Indiana, Michigan and Ohio) has outpaced the Southeast (Louisiana, Mississippi, Alabama, Tennessee, Georgia, South Carolina and North Carolina), and has even widened the gap between the two regions when it comes to manufacturing jobs.
Hold on, you might say. Sure, the Midwest has done better than the Southeast in the past five years, but that's a small sample, and the Rust Belt has been rusting harder than the South for a long time.
You'd be wrong.
This chart shows the change in manufacturing employment over the past 25 years for both regions. I made the starting point in 1990 into 1 for both regions and then charted where the line went for both. Again, both have seen a negative trend since 1990, but the Midwest hasn't lost as much ground (relative to itself) as the South.
These charts don't say anything about wages, or the quality of jobs, but they do show that the narrative of a rising manufacturing sector in the South and a declining one in the Midwest is not exactly correct.
CoCo, an incubator of several successful startups that offers shared workspace to entrepreneurs in Lowertown, at the Grain Exchange in Minneapolis, in Uptown and in Fargo, is celebrating its fifth anniversary this month.
Co-founders Don Ball and Kyle Coolbroth shared some thoughts on the history of the organization, which kicked off in St. Paul’s Lowertown.
“The day we opened our doors happened to be the first day of light rail construction right outside our door,” said Ball. “The entire building was shaking from the pile drivers. We had to wonder whether we had made a critical error in judgment.”
When CoCo opened, there was no co-working in Minnesota, Ball said. After some modest success, Minneapolis Mayor R.T. Rybak asked CoCo to consider opening on the 16,000 square foot former trading floor of the Minneapolis Grain Exchange.
"We were already looking at spaces in Minneapolis when the mayor called. He seemed to think it would work and even suggested we rename it the “Brain Exchange,” said Coolbroth. “We weren’t sure we could ever find enough members...but we also knew that we’d never find a space as beautiful.”
A key moment of affirmation came in November 2011 when Google Chairman Eric Schmidt visited -- another idea of Rybak's. It was the beginning of a fruitful relationship between Google and CoCo.
“It was a media circus, with reporters and camera crews all over the place,” Ball said. “The best moment of the day was when Eric Schmidt told the media that he’s been all around the world and hadn’t seen anything quite like this."
In the last couple years, CoCo has expanded twice again, opening a space in Uptown and another in downtown Fargo, ND.
Here are some of the businesses that have been part of the CoCo community. Lots of recognizable names and success stories:
· Anaplan - graduated from CoCo due to high growth
· Apruve - graduated to their own space in Butler Square
· Docalytics - received funding from AOL Founder Steve Case at Google Demo Day
· Hyper IQ – acquired by Buzzfeed on Dec. 17, 2014
· Kidizen - received funding from AOL Founder Steve Case at Google Demo Day
· Lead Pages - grew from 10 to 100 employees in one year, while at CoCo St. Paul before graduating into their own space
· Mindsailing - a marketing firm that is choosing to grow within CoCo
· Mobiata - the mobile development arm of Expedia, which works out of CoCo Minneapolis
· Mobile Realty Apps - grew up at CoCo St. Paul and later on CoCo Minneapolis before graduating into its own space
· Rowbot - an ag-robotics firm that has received significant funding
· Spark Devices - an Internet of Things startup whose cofounders met at CoCo
· Zipnosis - graduated from CoCo Minneapolis into their own space
· Locations: 4
· Members: 800
· Events in 2014: 176
· Cups of coffee consumed in 2014: 52,695
· Tours in 2014: 456
· Visitors in 2014: 10,065
· Funding sources: membership revenue and sponsorships
(Photo: CoCo co-founders Kyle Coolbroth and Don Ball in the Grain Exchange in 2011. Photographer is Richard Sennott, Star Tribune.)
The Minnesota economy should gain momentum in 2015, with falling unemployment, a quicker pace of job growth and modest increases in wages.
The unemployment rate should fall to 3.3 percent (right now it is 3.7 percent) and personal income should grow faster than last year, economists at the Federal Reserve Bank of Minneapolis predicted Tuesday in their annual outlook based on surveys of businesses and statistical models.
“The Minneapolis Fed’s forecasting models are projecting solid employment growth and a decrease in the unemployment rate for Minnesota,” said Rob Grunewald, an economist for the Minneapolis Fed. “In individual sectors of the economy, manufacturers expect growth and home building is expected to be flat.”
Business leaders profess near record levels of optimism in the Upper Midwest, and are at an all-time high in out-state Minnesota. They expect to do more hiring in 2015 than in 2014, and most bosses expect to offer workers 2 or 3 percent wage and salary increases.
The Minneapolis Fed's region, the Ninth District, includes the Upper Peninsula of Michigan, northern Wisconsin, Minnesota, the Dakotas and Montana.
A few areas of weakness remain in the economy, notably sluggish wage growth and continued weakness in new home construction.
Before they are willing to declare economic victory, economists are watching for faster wage growth.
“That still has yet to happen,” Grunewald said.
Also, housing construction is expected to be flat in 2015, thanks to slow household formation among young people and the continued need for a correction from the heady days of housing development in the mid-2000s, said Toby Madden, an economist at the Minneapolis Fed.