Minnesota manufacturers, construction firms, retailers and other employers slashed 11,800 jobs in December, driving the state's unemployment rate to a staggering 6.9 percent, just behind the national rate of 7.2 percent, according to a report issued Thursday.
State and federal officials said Minnesota lost more than twice as many jobs in November than they previously reported, raising that month's figure to 23,800, from 10,800. The revision came after federal officials conducted a closer investigation of job trends across the country. Even so, November's unemployment rate, which is based on the number of people looking for work, was unchanged, at 6.4 percent, officials said.
The credit crunch, the collapsing housing market and cascading downturns in construction, manufacturing and retail contributed to painful job losses during the fourth quarter.
"Unfortunately the job news is not good," Dan McElroy, commissioner of the Department of Employment and Economic Development, said Thursday when announcing the figures at a state WorkForce Center in St. Paul. "Employers are cutting jobs in nearly every sector, reflecting continued anxiety about the economy."
The latest data show the state lost 55,400 jobs in 2008, or 1.8 percent of its total. The rate of loss now matches that of the country, officials said.
About 202,800 Minnesotans are listed as unemployed -- people who are out of work but are actively seeking jobs, said Steve Hine, the department's labor market information director.
That number excludes an unknown number of people who could work but have given up looking for jobs.
"Nationally, the number of discouraged workers has certainly been trending upward. It's gone from 363,000 a year ago to 642,000 this past December," Hine said.
And that total may grow.
Wholesale losses
The country lost 524,000 jobs in December alone. Companies such as 3M Co., DuPont, Dow Chemical, AT&T, Ford Motor Co., General Motors Corp. and Anheuser Busch collectively whacked tens of thousands of jobs in a matter of days last month.
Minnesota officials said the job losses occurred so fast that research firm IHS Global Insight suggested that the economy might be nearing the peak of job cuts.
McElroy explained that layoffs are expected to continue, but at a slower rate. "Global Insight's opinion is that the fourth quarter would show the largest job loss, and that it gets better from here," he said.
Global Insight predicts that the national unemployment rate could reach 8.7 percent by the first half of 2010, Hine said. To compare, Minnesota's highest unemployment rate was recorded at 9 percent in November 1982.
In December, the state's transportation, utilities and trade employers shucked 5,300 jobs. Other employment sectors showing losses included government and manufacturing (2,900 each), professional services (1,600), hospitality (1,400), construction (1,110) and financial services (600).
Only health care and education reported job gains in December, with a total of 4,100 new positions.
Minnesota now has about 3 million jobs, including about 300,000 non-payroll positions such as those held by the self-employed, contractors or agricultural workers.
For the year, Minnesota's manufacturing sector lost the greatest number of jobs: 15,600. Transportation, trade and utility firms cut 15,300, professional services shed 14,400 and construction dumped 11,200. Leisure/hospitality companies cut 8,400 jobs and information services lost 1,300, as did a category called other services. Mining dropped 300 jobs and government shrunk by 100.
On a percentage basis, construction and manufacturing jobs saw their sharpest declines since December 2007, falling 10 percent and 4.6 percent, respectively, as the housing crisis "hit Minnesota hard," McElroy said. Housing starts dropped 75 percent last year, which hurt related industries such as window and door makers, lumber makers and wood products manufacturers, he said.
In 2008 the state paid $1 billion in unemployment insurance benefits. On average, job seekers collected payments for 18 weeks, up from 14 weeks in 2007. Minnesota pays as many as 26 weeks of unemployment benefits, and the federal government recently extended benefits for seven more weeks. The number of job seekers reaching the state's 26 week maximum is up about 50 percent over 2007, Hine said.
The metro area, with the greatest population, took the brunt of the losses, followed by the Duluth and St. Cloud areas. Rochester showed a tiny, 0.1 percent gain for the year. But that may not last. IBM just laid off several dozen workers at its plant there.
As McElroy and Hine ticked off job statistics, former IBM worker Charles Chwol, 36, busily filed online applications in the WorkForce Center for five engineering jobs.
"I was assembling [computer] mainframes in Rochester ... but they let 25 people go," Chwol said. He said he's been staying with a friend in St. Paul hoping to find more job opportunities than Rochester can offer. "I've applied for a lot of engineering jobs, and It's hard," Chwol said.
Ida Icard pecked away on one of the WorkForce Center's computers searching for a new employer after losing her $12-an-hour maintenance job at the Tubman Family Alliance in Minneapolis. Icard, a single mother, put in her last full workday Dec. 31. When she and two other people reported to work Jan. 2, their jobs were gone, she said.
"They said it was the state that cut their funding," Icard recalled.
"They said, 'We are laying you off. Get your stuff and leave.'"
Dee DePass • 612-673-7725
