With an economy on the upswing, Dayton is tough target

Minnesota Republicans hoping to seize control of the governor's residence have a problem when it comes to the economy: The news is too good.

With business on the upswing and a state unemployment rate that's among the lowest in the nation, Republicans lack a key issue voters often gravitate to during election season.

Four years ago, when the unemployment rate topped 7 percent and the state faced a projected $6.2 billion deficit, then-gubernatorial candidates Republican Tom Emmer and DFLer Mark Dayton presented voters with starkly different plans to stem the hemorrhaging of jobs and balance the state budget.

Since Dayton took office, the economic picture has brightened considerably. Minnesota employers have added more than 150,000 jobs, helping the state recover all the jobs lost during the recession. The real estate market has rebounded, and state finances are also strong. The most recent report available showed a projected state budget surplus of more than $1.2 billion, generated in part by the higher tax rates Dayton pushed through in 2013.

"There's no question it would be easier for me as a challenger if everything appeared to be in shambles, that's clear. But it's not." said Jeff Johnson, the Republican nominee hoping to unseat Dayton this fall. "I actually rise to that challenge of sharing a message that aspires to something much better than we have right now."

Johnson, who secured his party's nomination in May, said that the state has been performing well economically but that it could do better. Minnesota's regulatory and tax climate is hindering business expansion, he said. Companies such as Medtronic and defense contractor Alliant Techsystems have relocated corporate headquarters, taking with them high-paying jobs, he said. He also wants to improve the state's entrepreneurial activity, which ranks near last in the nation, according to a recent Kauffman Foundation index.

Meanwhile, the official jobless rate of 4.5 percent also doesn't account for Minnesotans who are "underemployed," or working in jobs where their skills and education make them overqualified, Johnson said. Roughly 1 in 2 working Minnesotans exceed their job's education requirements, according to a calculation by the state Department of Employment and Economic Development using census data.

Palmer graduated last winter with a master's degree in public affairs from the University of Minnesota and spent about 18 months looking for work that would make good use of her education. She settled for a part-time job as a domestic violence specialist with a local police department in June. Her annual salary is $20,000.

"I don't think the unemployment rate is indicative of the health of the economy," she said. "Having a master's degree in this position isn't required, but it's been helpful. I just really wish it were full-time hours."

Turning to a relatively new and obscure statistic such as underemployment underscores the difficulty Republicans could have in delivering a clear, strong economic message to voters. Beyond the headline figure of the statewide unemployment rate, many voters don't typically follow the minutiae of the labor market from month to month.

The underemployment figure Johnson cites is one the state began tracking only recently. It relies on job data provided by the Bureau of Labor Statistics to define education requirements. But the measurement has limitations. For instance, it doesn't shed light on job satisfaction, or whether workers are stuck in part-time work while seeking full-time employment. The official rate of part-time employees looking for full-time work was 4.3% last month, according to the state.

Dayton criticized Johnson for seizing on what he calls a misleading statistic. "I think they're desperate for something to make people concerned about," Dayton said. "There's nothing in fact for [Republicans] … to stand on, so they have to reach for a questionable and tangential factoid."

Dayton argues that survey would count the state's police officers as "underemployed" because the Bureau of Labor Statistics' occupational handbook shows that police officers need only a high school diploma. That's at odds with state requirements. In Minnesota, police officers are typically required to have two- or four-year degrees.

For all the progress the labor market has made, both candidates acknowledge there is room for improvement. Johnson, a Hennepin County commissioner, has pledged to roll back tax increases instituted under Dayton and to streamline regulation to encourage more businesses to flock to the state, bringing highly skilled jobs with them. Dayton said his priority, if elected to a second term, would be aligning higher education programs with the needs of local employers.

The high rate of residents who exceed educational requirements for their jobs is unsurprising because Minnesota historically has had a well-educated workforce, said Steve Hine, a state labor market economist.

"Our challenge is not with a lack of an educated workforce. That's always been our strong suit," Hine said. "It's a misalignment between requirements of the job and the educational attainment of the job holders."

Jared Leese, a 28-year-old leasing and marketing coordinator for a property management firm, said his college degree has been a boon in his job, which requires only a high school education. "I don't think I would consider myself underemployed," the Bloomington resident said.

With fewer than three months until the general election, the Minnesota Chamber of Commerce Leadership Fund, the political arm of the state chamber, has not yet decided whether it will make an endorsement in the gubernatorial race, said interim president Bill Blazar.

Its priority this fall is to help elect candidates who are "pro-business, pro-jobs," Blazar said. The Chamber's PAC has already made dozens of endorsements for House races.

Blazar said the economy will continue to be an issue voters look to, citing a recent slowdown in the pace of growth. State figures show that employers have added only 2,900 jobs since January. "The economy doesn't have the same kind of excitement," he said.

"I think anytime you see a weaker job number, you wonder if it's the start of a trend," Blazar said. "Election or no election, people and the business community follow those numbers very carefully."

Ricardo Lopez • 651-925-5044