Our troubled economy

Minnesota jobs: Troubling signs

  • Article by: MIKE MEYERS , Star Tribune
  • Updated: October 16, 2008 - 10:57 PM

September marks the state's third month in a row of job declines, as experts foresee more on the way.

After more than a generation of providing jobs for almost anyone who wanted one, Minnesota's labor market is enduring a series of setbacks that may not end for many months, experts say.

Most Minnesota workers in their 40s were in their teens the last time the state faced the kind of travails that lie ahead for both job holders and job seekers.

The latest labor market reading, released Thursday, showed the state lost 2,300 jobs in September -- the third consecutive monthly job decline this year. The state's unemployment rate, a more volatile measure of labor market activity, blipped lower, however.

Minnesota's jobless rate last month fell to 5.9 percent, down from 6.2 percent in August. A year ago, the seasonally adjusted state unemployment rate stood at 4.6 percent.

In the aftermath of the 2001 recession, the Minnesota unemployment rate rose 1.3 percentage points. In 1991, the gain was 1.4 points.

But even before a recession has been called, this time the state jobless rate already is up 1.2 percentage points and threatening to go higher.

In the 1982 recession, the state's unemployment rate climbed 3.1 percent higher than the pre-recession peak. In the 1974-1975 downturn, the unemployment rate climbed 4.1 percentage points as the state economy contracted.

Global Insight, a leading economic forecasting firm, recently predicted the national unemployment rate will jump from 6.1 percent last month to 7.5 percent by the end of next year -- a rate not seen since the mid-1980s.

"Younger people have grown up with 25 years of prosperity," said Dave Senf, labor market analyst at the Minnesota Department of Employment and Economic Development (DEED).

"Now there's a dose of reality," Senf said.

In the last 12 months, Minnesota lost 18,800 jobs, a drop of 0.7 percent, or nearly double the 0.4 percent national decline.

"The economy is going to continue to deteriorate in the coming months," said Eugenio Aleman, senior economist at the Minneapolis office of Wells Fargo & Co. "I would imagine that job creation is going to be really weak possibly into the next year."

Others echoed that theme.

"We aren't officially in a recession yet," said Toby Madden, regional economist at the Federal Reserve Bank of Minneapolis. "But we've been facing some pretty strong headwinds that are reminiscent of the 1991 recession and the 1970s recessions."

At last count, three Minnesotans were looking for jobs for every vacancy, according to DEED.

But that was in April, May and June, before a string of back-to-back job losses in July, August and September.

"It's a very difficult market for job seekers," said Oriane Casale, DEED assistant director of labor market information. "It's really not surprising, given what's going on in the larger economy."

With federal officials working to avert a credit crisis and the free-fall of housing prices, two stalwarts of the Minnesota economy swooned in September. Construction and financial activities each lost 1,000 jobs in the month.

Other industries showing declines included leisure and hospitality (down 700 jobs); professional services, an industry dominated by temp agencies (down 500); other services (down 1,100); government (down 1,100) and manufacturing (down 300).

Deterioration in those industries partly was offset by gains in education and health services (up 2,100 jobs), trade, transportation and utilities (up 700) and information services (up 600). Natural resources employment was flat.

Mike Meyers • 612-673-1746

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