For many of Minnesota's 200,000 unemployed people, the competition for jobs is getting a little less fierce.
The state Department of Employment and Economic Development reported Wednesday that the number of job openings in Minnesota rose 32 percent in the second quarter, to 41,397 openings from 31,358 a year ago.
The department's twice-annual Job Vacancy Survey showed retailers, restaurants, schools, office support and health care making the biggest contributions. But even hard-hit sectors such as finance and manufacturing reported an increase in job openings.
This marks the first time since mid-2007 that Minnesota companies have significantly increased their search for workers, after the worst job downturn since the Great Depression.
After years of paring costs, a number of area companies are announcing major expansions and hiring again. Goodrich Corp., a Charlotte, N.C.-based aerospace company, last month announced plans to begin construction on a new testing facility in Burnsville that is expected to create 50 jobs upon completion in 2012. Best Buy Co. Inc. is opening 50 to 55 more stores nationally this year, with 100 new hires at each store. And SAGE Electronics in March announced plans to build a $110 million manufacturing facility near its headquarters in Faribault, a move that will add 160 new jobs in southern Minnesota. But some economists warn that more job openings do not necessarily indicate better opportunities for all job seekers. Indeed, the past recession was so severe that the long-term correlation between job openings and the unemployment rate -- they typically move inversely to each other -- has broken down, economists say.
Firms are hiring, but they can't immediately find people with the right skills or experience. People want to work, but still can't find jobs.
This mismatch between job seekers and job openings stems from a variety of factors. Many of the jobs that went away during the last recession are not coming back, leaving some people with specialized skills unable to find work in their professions. Matching workers with jobs also becomes more difficult if unemployed people owe more on their homes than they are worth, making them less willing to relocate. And employers tend to shy away from people who've been out of work a long time, further eroding the labor market's flexibility, say economists.
And while Minnesota firms are advertising more job openings, that doesn't mean they're in a hurry to fill them. Many have the luxury of waiting, knowing there is a large pool of talented applicants who are unlikely to find work elsewhere, economists said.
"When you have so many alternatives to pick from in the labor force, it takes a long time for firms to decide when to hire," said Eugenio Aleman, a senior economist at Wells Fargo & Co. in Minneapolis. "Companies are taking their time, because they know they can take their time."
The competition for jobs is still tight. In Minnesota, the number of unemployed people for each opening declined to 4.8 in the second quarter from 7.9 a year ago, but the ratio is still well above the 10-year average. At the end of the 2001 recession, there were 1.4 unemployed people for every vacancy. The ratio stayed below 3 until 2008, then shot up dramatically.
The competition is apparent at Ashco Exteriors, a storm damage restoration contractor in Anoka that is looking to hire 20 to 30 people in the Twin Cities.
The firm's national hiring manager, Chris Hixon, said he's received 150 to 200 telephone calls in just two days after advertising an open house Wednesday evening at his firm's headquarters. He got 50 responses within a half hour after the ad went online.
"We can afford to be selective," Hixon said. "There is a ton of people out there looking for work. We can pick people with more of a solid work ethic."
The mismatch between available jobs and workers is a new development. In the 2001 recession, a sharp increase in job openings was followed by an immediate decrease in the unemployment rate.
However, starting in 2008, this relationship began to break down, and the unemployment rate rose much faster than the decline in job openings. In two of the past five quarters, job openings increased while the state's unemployment rate also rose.
In a recent speech, Minneapolis Federal Reserve president Narayana Kocherlakota said he expects the nation's unemployment rate will remain above 8 percent into 2011, largely as a result of the "structural problems" in the labor market. He questioned whether the Federal Reserve's efforts to stimulate the economy, by lowering interest rates and purchasing $2.3 trillion of assets, would do much to solve the problem.
"Most of the existing unemployment represents a mismatch that is not readily amenable to monetary policy," he said. He added that monetary stimulus can provide the conditions so that manufacturers want to hire, but, "The Fed does not have the means to transform construction workers into manufacturing workers."
Chris Serres • 612-673-4308
