Even a state hard at work can't shake hard times

  • Article by: JEREMY OLSON , Star Tribune
  • Updated: September 22, 2011 - 10:38 AM

Recession's "hangover" has a grip on Minnesota, survey finds.

A strong penchant for work -- any work -- buffered Minnesota against the latest economic recession, but the state still saw household incomes shrink, home values plummet and poverty rise last year, according to new U.S. census data.

The Twin Cities "employment ratio'' ranked first out of 50 large metropolitan areas, with 74.8 percent of working-age adults holding jobs in 2010. Minnesota as a whole ranked fifth among states with an employment ratio of 74.3 percent, compared with a national rate of 66.6 percent.

Coupled with a bleak census report released last week, the new survey reveals a period of continued economic pressure for Minnesota families, even after the technical end of the latest recession in mid-2009.

"Many families continue to feel [the recession]," said Darryl Dahlheimer, program director for financial counseling at Lutheran Social Service of Minnesota. "We still hear hundreds of stories from clients who are 'hunkered down in fear,' who have almost no savings and are juggling their bills or paying debts with other new debt."

The new data, from the annual American Community Survey, mimic last week's report but have more weight among experts because they are based on a larger sampling of households.

Even a robust workforce can be read two ways. Minnesota's high employment ratio is fueled in part by the number of highly educated adults, who are likely to seek work and hold good jobs. But in these economic times, the high ratio also might reflect a reality that families need jobs to get by.

"There probably are a lot of people getting whatever jobs they can, and multiple jobs at that, to keep things together right now," said Christina Wessel, deputy director of the Minnesota Budget Project.

Household income in Minnesota dropped from an inflation-adjusted $56,592 in 2009 to $55,459 last year, according to the American Community Survey. Median home values peaked at $213,800 in 2008, then dropped to $194,300 last year. Child poverty in the state increased from 11.4 percent to 15.2 percent in that two-year period.

The good news of the Twin Cities' high employment rate is tempered by the fact that it used to be better: 79.2 percent in 2008. Most of the decline took place from 2008 to 2009, though, giving some hope that the impact of the recession tapered off in 2010.

'No extra purchases'

The Norton family of St. Paul has seen the statistics play out in real life. Jon Norton, a computer programmer for UnitedHealthcare, is the family's primary wage-earner. His wife, Sarah, contributes by teaching singing to adults but recently lost three students because they didn't have the extra income for voice lessons. With college loans to pay off, medical debt from a car accident some years ago and a newborn along with two older children, the income isn't covering household expenses.

At a family meeting Tuesday night, the older children moaned as Sarah listed the new family cutbacks.

"No going out, no entertaining at home, no extra purchases at the gas station such as candy and pop," Sarah said as she re-read the list. "No online purchases, no Netflix, no GameFly, no Xbox Live. We're going down to basic cable. We're getting a new cellphone plan. The kids, normally for their chores, they'd get money. Now they'll get different rewards."

"We're on a financial freeze," she said, "that's what we call it right now."

Pooling resources

Census data show Minnesotans using other financial strategies, including a continued trend of families moving together to pool economic resources and couples working multiple jobs to support their households.

The median household size in Minnesota nudged up from 2.43 in 2008 to 2.47 in 2010. The state also continues to have one of the nation's highest rates -- 62.3 percent -- of married couples with preschool children in which both the father and mother work.

Marriage in general appears to be declining, though. The rate of unmarried women in Minnesota increased from 25.7 percent in 2005 to 28.2 percent in 2010. At the very least, women are delaying marriage, with the average age of marriage increasing a full year from 25.7 years old in 2005 to 26.8 years old last year.

Other incremental changes in Minnesota include its diversity. The state's foreign-born population edged up from 6.3 percent in 2005 to 7.1 percent last year.

Minnesota was fifth best among states for its low rate of residents without health insurance -- 9.1 percent -- but only 10th best for the number of residents covered by employer-based health plans.

Jeremy Olson • 612-673-7744

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