Minnesota jobless rate now as bad as nation's

Minnesota manufacturers, service firms, government and other employers severed a whopping 20,700 jobs in January, jacking the state's unemployment rate to match the national rate of 7.6 percent, according to a state report issued Thursday.

The state has lost nearly 75,000 jobs in the past year, contributing to the national decline of 3.5 million.

Minnesota's one month jump, up from 6.9 percent in December, indicates a deepening of the recession, which already has strangled credit, undermined housing starts and caused managers to cut thousands of workers from 3M, Circuit City, Best Buy, Target, and other companies across the state.

"It's brutal out there. It's dire," said Roberta Pettes, who was laid off a few weeks ago from her job at Lyndale Plant Leasing, a company that takes care of indoor plants and trees for corporations. "I will grovel; I will take anything," she said.

Pettes recently completed a two-week class called "Employment Ready U" at the Minneapolis Workforce Center in Minneapolis. The course teaches interviewing, résumé writing and job-hunting skills. She also enrolled in a computer course at the center to improve her job prospects, which she fears are few.

"I'm a realist," Pettes said. "This economy is tanking."

Minnesota no longer lags the nation's unemployment rate. State officials, looking for anything positive to say, noted that Minnesota is faring better than Michigan, which hit an unemployment rate of 10.6 percent in December.

But that's little consolation to the families, friends and neighbors who suddenly find themselves without a paycheck, said Dan McElroy, commissioner of the Department of Employment and Economic Development (DEED).

And it appears the bad times are far from over. Steve Hine, DEED director of labor market information, said that the research firm IHS Global Insight has predicted that the U.S. unemployment rate will hit 9.4 percent by the second quarter of 2010.

In January, the U.S. unemployment rate for non-farm workers stood at 7.6 percent, up from 7.2 percent in December. But Thursday, federal officials reported that new U.S. claims for unemployment benefits rose unexpectedly last week by 36,000, reaching a 26-year-high at 667,000. Economists had expected new claims to drop by about 2,000.

U.S. unemployment claims now stand at 5.1 million, the most ever recorded. As part of the stimulus package, the federal government is increasing unemployment benefits by $25 a week beginning March 15, McElroy said while speaking at a workforce center in Duluth. In Minnesota, initial claims for benefits have fallen slightly over the past three weeks.

Still, the number of Minnesota non-farm jobs fell 2.8 percent from a year ago to 2.7 million; nationally, they declined 2.6 percent.

"Companies nationwide are concerned about the slowing economy and are cutting jobs to ensure their long term survival," McElroy said.

Minnesota has about 205,322 workers classified as unemployed. Those are people who are out of work and actively seeking employment. The number of discouraged people who could work, but have given up looking for jobs, is not tracked by the state.

January's biggest job losses were in manufacturing, which cut 9,600. Professional/business services shed 5,900 jobs. And government shrank by 3,900 jobs, largely because of the reduction in election judges and aides presiding over the prolonged ballot recount for Minnesota's senate seat, Hine said.

The catch-all "other services" category eliminated 1,700 jobs, while construction jobs fell by 1,600 in January, marking the 20th month of decline. Leisure and hospitality cut 500 jobs.

"We are in uncharted territory here in terms of the underlying causes and conditions" prompting the cuts, Hine said. He noted that the massive new federal stimulus package has yet to influence the economy.

Few sectors added jobs in January. Among them were education and health care, up 1,400; financial services, up 800 jobs, and the category of trade, transportation and utilities, which added 300.

But those gains did little to offset a year in which Minnesota manufacturers eliminated 21,500 jobs, professional and business service firms dropped 25,600 positions, construction firms chopped 18,600 jobs, and transportation, utilities and trade firms cut 14,600. Leisure and hotel jobs were down 6,800 for the year, while service jobs fell 2,500, government jobs shed 1,400 positions, information firms cut 700 and financial firms dropped 600 more. About 200 loggers and miners also lost their jobs.

DEED also reported that fourth-quarter job vacancies fell from 51,000 a year ago to 31,000. That means 5.7 workers compete for each opening in Minnesota. That's up from 2.5 people a year ago, McElroy noted. "The fact is, people are still getting jobs, but the competition for jobs is intense and it's not getting a lot better."

Employer hiring forecasts present "a more negative picture than we saw six months ago," McElroy said.

That's just what worries people such as Diane Harmon, who lost her job as a receptionist in Minneapolis Jan. 12. She completed the state's job-hunting course last week and said it helped boost her confidence. "I haven't updated my skills and I was really nervous" about finding another job, Harmon said.

McElroy said laid-off workers such as Pettes and Harmon are wise to use the resources at Minnesota's 47 workforce centers. "We can help," he said.

Dee DePass • 612-673-7725