State jobs picture turns ugly

Minnesota ended 2007 with its jobs market in a tailspin.

"Minnesota is in a recession," the state's economist, Tom Stinson, said Tuesday after reviewing the latest jobs figures. "I don't see how you can label it anything else."

The state unemployment rate jumped to 4.9 percent in December, up from 4.4 percent the month before. The U.S. unemployment rate stood at 5 percent in December.

Minnesota lost 2,300 jobs last month, capping a string of declines, 23,000 jobs in all, over the last six months of 2007. That's the worst run of Minnesota job declines since the last U.S. recession in 2001. It also wiped away all of the job growth in the first half of 2007.

In contrast, the nation ended 2007 with a gain of more than half a million jobs since June.

"We should normally add somewhere around 23,000 jobs or a little bit more just to keep up with labor market growth," Stinson said. Instead, the year-over-year job total actually fell by 700.

The number of jobless people who are still actively looking for work rose 15 percent in 2007, according to the Minnesota Department of Employment and Economic Development (DEED).

That's not news to Sheila Spratt, 44, of Minneapolis. Recently laid off, she's spent two months looking for a job but has landed only three interviews despite 20 years of experience in office administration.

Fierce competition for jobs

"This is the first time I've done this kind of a job search, because I've always gotten a job before," Spratt said. The competition, she said, is fierce.

"I always feel good during the interview, and then they always say they want to interview 15 more people," Spratt said. With 20 years of experience, she considers $13 an hour too little "but right now I'd take $10" because employers seem to be looking for entry-level workers.

Minnesota employment had been growing, although slower than the national rate, in recent years. But 2007 saw an abrupt deterioration in its second half.

The housing bust and turmoil in financial markets undercut residential and commercial construction. Residential construction employment over the 12 months fell 14.1 percent. Building materials jobs dropped 8.9 percent and construction jobs other than housing fell 8.6 percent.

Rising fuel prices also trimmed demand for cars, light trucks, snowmobiles and all-terrain vehicles. Minnesota jobs making those products are down 13.3 percent for the year.

No clear culprit in some areas

Hine said the forces driving a 4.6 percent job decline in food production were less obvious. Amusement, gambling and recreation employment fell 7.3 percent for the year, another decline with no clear culprit.

Toby Madden, regional economist at the Federal Reserve Bank of Minneapolis, said recent job market reports portend "sluggish, slow growth" in 2008.

In addition, Minnesota has a disproportionate share of its workers tied to making windows, lumber, paint and other building materials. In an era of falling home sales, that has turned from an advantage to a problem for the Minnesota job market, Hine said.

"It's been a manufacturing-led downturn," said Scott Anderson, senior economist at Wells Fargo & Co. "The economy is dead in the water."

By December 2007, Minnesota had lost 11,700 manufacturing jobs compared to year-end 2006. State manufacturing employment in December stood at 336,400 -- the lowest level since March 1991, at the end of a recession.

More foreclosures ahead?

Anderson worries that people laid off will stop making mortgage payments, adding to a cycle of trouble in real-estate and financial markets.

The weakening has already occurred, in the view of many of the jobless.

The Rev. Jonathan Awasom, 37, of Minneapolis, a Presbyterian minister from Cameroon in Africa, is trying to find a similar job in Minnesota, such as a pastor, chaplain or a youth or community leader. He holds a master's degree in religion and theology but has spent the last seven years in the United Staets in housekeeping and sales jobs.

"There are too many people looking for these jobs, and they tend to go to U.S. citizens or people with more experience," Awasom said. "But I can't get experience if I can't get a job."

Susan McAninch, 61, of Minneapolis retired last spring as a Minneapolis public school counselor, but now wants to work so she can afford to take university classes or travel. She's seeking a job as a counselor, tutor or teacher. She had one offer, but backed out when she discovered it required more hours than she could take on.

"Who knew the economy was going to be this bad? I've been looking for a job since last August," McAninch said.