Our troubled economy

Minnesota lost more than 10,000 jobs last month

  • Article by: MIKE MEYERS , Star Tribune
  • Updated: December 18, 2008 - 8:58 PM

The state is shedding jobs so quickly that forecasts made just months ago are already obsolete. Businesses are trying to cut their way to survival in the worst recession in decades. Worker advocates say the state's rising unemployment rate raises alarm bells.

The decline of Minnesota's job market accelerated in November, with 10,500 jobs vanishing and the state's unemployment rate jumping sharply to 6.4 percent from 5.9 percent the month before.

Official projections of ensuing job losses, made only two months ago, already have proven obsolete. With a drop of 20,000 jobs in October and November, Minnesota has already lost two-thirds of the jobs that state labor officials predicted would take place over the span of a year.

In the last 12 months, Minnesota has lost 30,800 jobs. The state's employment stood at 2,745,500 in November.

"On every scale, this is shaping up to be a bigger event in the labor market than any past recessions in the postwar period," said Scott Anderson, senior economist at the Minneapolis office of Wells Fargo & Co.

"We're at the point in the recession when business people throw up their hands and say 'We have to hunker down,'" Anderson said. "They cut payroll as a means to economic survival."

Just six weeks ago, the Minnesota Department of Employment and Economic Development (DEED) foresaw 30,000 jobs disappearing from third quarter 2008 to third quarter 2009.

"Things are happening so rapidly," said Steve Hine, DEED labor market information director. "We were trying to keep up with events, as best we could."

Hine said a prediction by state economist Tom Stinson seems more plausible: a 50,000 decline in Minnesota employment in the year ahead. "We're in a dire set of circumstances here," Hine said.

Stinson echoed the theme, albeit in somewhat more measured terms.

"What this shows is that the recession isn't passing Minnesota by," he said.

Indeed, Minnesota would have lost several thousand more jobs in November without a boost in temporary hiring linked to a national presidential election. In past presidential election years, hiring help to manage the polls and ballot counting has added an average 6,000 jobs to the tally of Minnesota.

Even sectors of the labor market that have been strong in recent years showed signs of weakening in November.

For instance, education and health care employment dipped by 100 -- a small drop but one that's rare.

Only eight times in the last four years has Minnesota witnessed any decline at all in education and health employment, Hine noted.

Trade, transportation and utilities last month led the pack of industries shedding jobs (down 4,200). Other job-losing industries included leisure and hospitality (down 3,600), construction (down 2,100), professional and business services (down 2,000) manufacturing (down 1,600), financial activities (down 1,000), other services (down 700) and information (down 200).

Apart from government, which showed a gain of 4,900 jobs in the month of the election, only natural resources and mining showed a job hike (up 100).

Worker advocates said the latest Minnesota jobs report is an alarm bell for state and federal action to spur job growth.

Kris Jacobs, executive director of the Minnesota chapter of the Jobs Now Coalition, called for a return of an early 1980s subsidies program that paid businesses $3,000 to $5,000 for each new job they created, to be filled with workers who have exhausted or never qualified for unemployment benefits, or who were on welfare.

Such a program in Minnesota created 43,000 jobs across the state from 1983 through 1987, Jacobs said. A state auditor's report found the program generated $3 in public benefits for every $1 in public expense, she said.

"It's not an exaggeration to call the economic situation in this country a crisis," said Donald McFarland, spokesman for Americans United for Change, a coalition of labor and consumer advocate groups based in Washington, D.C.

"There's a lot of Minnesota families that have known that for months and months and months because they've lost their jobs, they've lost their health care, they've lost their savings," McFarland said.

Mike Meyers • 612-673-1746

  • about this series

  • The Star Tribune's coverage of the housing crisis, the credit crunch and their effect on Minnesotans.

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