Business

5 years after recession's end, state's scars still show

By Adam Belz

June 22, 2014 at 8:46PM

The state’s construction industry still has not recovered prerecession production. (The Minnesota Star Tribune)

Five years after the official end of the recession in June 2009, the Minnesota economy has recovered all the jobs it lost and is growing again. But it's changed — in ways both obvious and unexpected.

The job market has shifted even further in the direction of the service economy. Construction and manufacturing employment is still well below prerecession levels, while the state has made gains in health care and professional jobs.

To some extent, Minnesota and other Midwestern states west of the Mississippi have benefited from a growing farm economy and the oil boom in North Dakota, while Midwestern states to the east that have historically been more dependent on manufacturing — like Wisconsin — have fallen a little behind.

And even though the Minnesota economy is creating dramatically more job openings compared with five years ago, average weekly wages have hardly moved in the state.

The state's economy is growing faster than before the recession

From 2004 to 2007, the state averaged 1.7 percent growth in real gross domestic product. From 2010 to 2013, annual GDP growth has been, on average, 2.7 percent. That's thanks to notable gains since 2008 in manufacturing, real estate, finance and insurance, agriculture and forestry, and health care. Construction, transportation and warehousing, wholesale trade, and government are the only industry sectors whose output has declined since 2008.

The distribution of jobs by sector has changed

Businesses are generating professional jobs, health care has kept right on hiring, and there are more management positions in Minnesota than before the recession. But, as of May, construction employs 6,100 fewer people, retail employs 14,400 fewer people, and government hiring has declined. And — no surprise here, despite the gains in manufacturing output — factory jobs have gotten scarcer. Minnesota still has 23,100 fewer manufacturing jobs than it did at the prerecession peak. The recession eliminated manufacturing jobs not just in Minnesota but across the Upper Midwest.

Western part of Midwest has grown faster than the eastern part

This is thanks in large part to North Dakota, whose oil-boosted economy has grown 55 percent since 2009. This has been a boon for surrounding states like South Dakota and Minnesota. Five Midwestern states west of the Mississippi have all grown by more than 10 percent since 2009. East of the Mississippi, Illinois and Wisconsin have grown more slowly, while Indiana, Ohio and Michigan have rebounded more strongly.

Average wages in Minnesota have hardly moved in the recovery

The weekly inflation-adjusted wage for the average Minnesotan was $956 in 2007. By 2013, the figure had risen only $8 to $964, an increase of less than 1 percent.

Job openings have nearly doubled over the past five years

And the openings offer higher median and average wages. The average pay for the more than 60,000 job openings in Minnesota at the end of 2013 was $16.26 per hour, compared with $14.34 per hour at the end of 2008.
Adam Belz • 612-673-4405

Twitter: @adambelz

The state’s health care industry boasts 50,900 more jobs than before the recession. (The Minnesota Star Tribune)

Despite its smaller workforce, manufacturing in Minnesota has made gains in production. (The Minnesota Star Tribune)

The North Dakota oil boom has had a positive impact on Minnesota’s economy. (The Minnesota Star Tribune)

The state’s manufacturing industry has 23,100 fewer employees than before the recession. (The Minnesota Star Tribune)

The state’s retail trade industry has 14,400 fewer employees than before the recession. (The Minnesota Star Tribune)