Progress on jobs, but challenges continue

Minnesota's jobless rate may be stuck around 7 percent, but this is one instance where lack of motion obscures real progress.

In the past year Minnesota went from bleeding jobs to adding jobs, and that has produced sharp declines in unemployment across 74 of Minnesota's 87 counties. This progress, feeble though it may be by historical standards, has been especially vivid in greater Minnesota, where in the past 12 months more than two dozen counties have experienced a drop of one percentage point or more in the jobless rate.

President Obama, Congress and the now much-reviled stimulus bill signed in February 2009 deserve more credit than they are getting for these gains. As spending and private investment shriveled and near full employment became almost record unemployment, federal spending -- including money for road projects, business loan guarantees, unemployment benefits and the near-stealth "making work pay" tax credit -- prevented things from becoming even worse.

And things got plenty bad in outstate Minnesota, where the national slowdown in the manufacturing and building sectors hit hard and deep. As demand tumbled, companies across the state slashed their workforces. Between October 2007 and October 2009, the unemployment rate more than doubled in Le Sueur, Steele, Morrison, Martin and other counties.

Flash forward a year, to October 2010: The unemployment rate in Chippewa County, 5.7 percent, is 19 percent lower than it was in October 2009. In Sibley County the October 2010 rate of 5.8 percent marks a 25 percent improvement from a year earlier.

This does not mean 25 percent more people are working than a year ago. One of the measures used to calculate the unemployment rate is a survey of households, and state economist Tom Stinson cautions that the sample for non-metro counties is relatively small. Joblessness also remains well above pre-recession rates in all but a few counties. And in this still-fragile recovery, the misfortune of a single employer, such as wind-turbine maker Suzlon in Pipestone, could send the county unemployment rate back into the stratosphere.

Still, Stinson acknowledged, "If you look at what's happened across the state over a period beginning in October 2007, it's a pretty good story."

Team Industries, a firm that designs and manufacturers powertrains for all-terrain vehicles in Bagley, about 250 miles northwest of the Twin Cities, recently paid out bonuses for the first time in several years. Payroll has grown by about 100 people in the past year, and the company just completed one of its best years in the past decade, said Tony Passanante, Team's senior director of marketing and strategic planning.

During the depths of the recession, privately held Team saw nearly 30 percent of its sales evaporate. The company closed a plant in Baxter and laid off almost 500 employees.

Team survived, in part, thanks to a $7 million federal loan it received through the stimulus bill passed by Congress in February 2009.

"It helped us fight through the trough," Passanante said. "It allowed us to get past the tightening credit and operate and keep growing our businesses."

Other Clearwater County businesses, including a lumber company and publishing company, received loans backed by the Small Business Administration. Other federal money went to road and bridge projects in Clearwater County, as well as schools, which were able to minimize or avoid teacher and staff layoffs.

Nationally, the jobs picture has begun to improve. Between Nov. 13 and Nov. 20, 34,000 fewer people filed unemployment claims than a week earlier, and the total for the past four weeks is the lowest in almost two years. Personal income also rose again in the most recent quarter, another encouraging sign.

But with nearly 15 million unemployed Americans, including 6.2 million who have been out of work for 27 weeks or longer, nobody is calling this a robust recovery. Congress' decision to not extend unemployment benefits means an estimated 2 million Americans, including 132,000 Minnesotans, will begin losing a government check that averages $300 a week.

Hine and others who track the economy fret about the impact of that money disappearing from local economies across Minnesota.

"We look at that money as stimulus spending because it goes directly to consumer spending, which is a necessary ingredient in turning the economy around," Hine said.

Businesses will feel the impact of people having less to spend, and that could be enough to reverse a year's worth of hard-won progress.