Minnesota recovers all the jobs lost in the recession

Minnesota's job market in August surpassed its pre-recession peak, adding 12,200 jobs in its strongest month since January.

The unemployment rate ticked downward to 5.1 percent, compared to a national unemployment rate of 7.3 percent, the Minnesota Department of Employment and Economic Development reported Thursday.

It is a watershed moment for the state, which becomes the 17^th in the nation to return to its prerecession levels of employment, said Steve Hine, labor market economist for the state.

"We have certainly passed a milestone that's a significant one," Hine said. "After 19 months of rapid decline and 47 months of modest growth, we're now 5,100 jobs above our previous peak."

The peak was set in February 2008, when 2.78 million people in Minnesota had jobs.

But the mix of available jobs has shifted. While some industries with high-paid jobs have added employment, key middle-class sectors like construction and manufacturing still employ far fewer people than they did in 2008.

"A lot of the job mix that we see now compared to 2008 would be shifted towards generally lesser-paying occupations than we might have seen before the recession hit," Hine said.

Minnesota had a near-record number of job openings this summer, and good jobs are available, but the median wage offer has fallen to $12.50 an hour and available jobs have increasingly been temporary.

Logging and mining, financial activities, professional and business services, education and health care, leisure and hospitality, and government all employ more people now than they did in early 2008.

Construction, manufacturing, trade transportation and utilities and information still employ fewer people than they did in 2008.

About 152,000 people remain unemployed in Minnesota. That's the lowest number since April 2008, but not low enough to signal that all is well with the state economy.

"We would be much happier with about 30,000 fewer unemployed Minnesotans by these official numbers than we currently have," Hine said.

As of July, 16 states had surpassed their pre-recession employment levels, Hine said.

Colorado, Iowa, Montana, Nebraska, North Dakota, Texas, Utah and West Virginia were above their peak. Employment in Alaska, the District of Columbia, Louisiana, Maryland, Massachusetts, New York, Oklahoma and South Dakota had risen above the prerecession peak in the past 12 months, but since declined.

Wisconsin is Minnesota's only neighbor in neither category.

The big gainers in Minnesota in August were private education, which recovered from an inexplicable dip in July, Hine said, and retail trade, transportation and warehousing, and health care.

The state's labor force participation rate – the percentage of people who could work who are either working or looking for a job – fell to 70.3 percent, its lowest rate since January 1982.

But Hine said that's mostly a reflection of the state's aging population, as the number of discouraged workers appears to have fallen over the past 12 months.

"The number of discouraged workers in Minnesota has fallen from 10,900 last August to 6,900 this August, so that does suggest that the decline that we're seeing in participation rates is driven more by demographic or permanent factors," he said.

One area of concern is manufacturing, which shed 3,400 jobs on the month and has lost 8,500 jobs since January.

"Manufacturing is really struggling," Hine said. "It's the third consecutive month of decline for the sector."

The state has added 63,100 jobs in the past year, a 2.3 percent growth rate that exceeds the national rate of 1.7 percent.

(Photo: Shoppers at Target. Retail added 3,600 jobs in the state in August. Marlin Levison/Star Tribune file)