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Job growth: How is the Twin Cities doing?

A big part of the Twin Cities' job growth has been in call-center jobs
REUTERS/Erik De Castro
A big part of the Twin Cities' job growth has been in call-center jobs. Average annual pay: $36,640.

During this election and in fact, since the onset of the Great Recession, the nation has been fighting over two job creation philosophies. Conservatives say that we if cut taxes—or keep them low enough—the captains of industry will cause a jillion jobs to bloom. Liberals insist that government should stimulate the economy with  public goods like roads and sewers, which would directly create jobs and also boost demand from consumers for goods and services.

We've done some of both; yet the unemployment rate remains stubbornly high. Some metropolitan areas, moreover, have prospered while others continue to shed jobs. There are some obvious explanations. Bismark, N.D., has become a boomtown, thanks to fracking. And cities in Florida and California saw growth crater with the bursting of the housing bubble. But in most cases we have no idea which metros are doing well nor why.

Into this fog of ignorance comes an analysis by Economic Modeling Specialists International (EMSI), a Moscow, Idaho, economics and labor market data firm, now owned by CareerBuilder.com. It uses a technique called "shift share" to figure out to what degree job growth (or shrinkage) in the 100 largest cities is attributable to the national economy and how much to local competitive factors.

Using data gathered from 90 sources, both government and private, as well as projections and estimates, says Joshua Wright, senior editor at EMSI, "we teased out what was happening beyond the national trends for the last two years."

The company's number crunchers went deep into each industry to see where a city's new jobs were popping up or disappearing, how those industries compared to national trends in them and ultimately how a particular city was outperforming (or underperforming) the nation. The analysis shows that in a sense, job growth can be local, at least somewhat independent of what happens with the tax-cut-vs.-stimulus dispute.

Top of the list

Heading the list is San Jose-Sunnyvale-Santa Clara, Calif., aka Silicon Valley, which created 35,803 jobs or 3.5 percent more than what would have occurred due to the nation's growth in the last two years. EMSI attributed San Jose's outperformance to Internet and software publishing and broadcasting. Those big-time national and international businesses in turn spurred the growth of local enterprises, warehouse clubs and supercenters and private elementary and secondary schools.

The worst performing metro in the country was Augusta, Ga. After taking into account national job growth, the metro lost 9,000 jobs in the last two years. Declines in waste treatment, employment services and other areas are what EMSI sees as contributors to its lag.

So how we doing?

The answer is—ennh. The Twin Cities outperformed the national economy but not by much. In the last two years, we added 5,256 more jobs than would be expected from national economic growth,  an increment in local competitiveness of only 0.3 percent.

Where were the bright spots? Well, a table provided to MinnPost by EMSI shows that the top job growth category is a vague one that includes administrative work (routine caretaker functions: office administration, hiring and placing of personnel, document preparation and similar clerical services, solicitation, collection, security and surveillance, cleaning, and waste disposal). A big part of the category's growth has been in call-center jobs. Average annual pay: $36,640. The second locally competitive industry is health care with the most growth occurring in home health-care, which “has very low-paying jobs," says Wright.

Twin Cities metro job growth: Industries that outpaced the nation

Industry% Job Growth
(or Decrease)
in Sector
% Job Increase
(or Decrease) Due
to Local Competitiveness
Average Annual Salary
Administrative and Support177.85$38,603
Health Care and Social Assistance62.22$52,110
Finance and Insurance43.24$106,057
Construction44$60,048
Professional, Scientific and Technical Services71.35$88,462
Manufacturing50.88$82,889
Other Services (except Public Administration)41.64$27,897
Information-1-1.04$87,128
Unclassified Industry*11948.18$42,922
Utilities-1-1.9$135,674
Agriculture, Forestry, Fishing and Hunting-2-1.44$24,239
Mining, Quarrying and Oil and Gas Extraction-42-110.7$127,728
Wholesale Trade2-0.78$88,183
Real Estate and Rental and Leasing-3-4.3$55,866
Retail Trade1-1.1$31,796
Transportation and Warehousing0-3.74$58,193
Educational Services (Private)1-4.51$34,863
Management of Companies and Enterprises1-3.94$136,205
Accommodation and Food Services2-2.35$19,099
Government-3-1.32$61,983
Arts Entertainment and Recreation-11-14.09$39,171
Total30.28
Source: EMSI
* Unclassified Jobs (that fit into no Census Bureau category) increased dramatically but only constituted about 500 jobs.

I suppose it's not horrible that we are growing low-paying jobs, especially since the Metropolitan Council estimates that over the next 30 years, the Twin Cities will attract about 463,000  immigrants. Those lower level jobs may give newcomers a foothold in an economy that might otherwise demand high skills and proficiency in English.

But in industries offering higher pay, only finance and insurance have shown a local competitive edge—3.4 percent over a national trend of 4 percent. In others, we have mostly held even with the rest of the nation.  

Higher-paying jobs

How we foster creation of those higher-paying jobs is a question that every economic development department and every chamber of commerce in every city wants to know. Lee Munnich, a senior fellow at the Humphrey School of Public Affairs at the University of Minnesota, along with his colleagues, is in the middle of a study trying to answer that question for the Twin Cities.

Their analysis will zero in on so-called trading clusters. What are they? Briefly, clusters are groupings of companies in similar industries that have common needs for talent, technology and infrastructure. "They could be anywhere," says Munnich, "but they tend to clump together."

Think medical devices. Companies in the industry locate here because the presence of other firms—say, St. Jude Medical, Medtronic and 3M—allows them to recruit qualified people immediately. And local support services, patent attorneys, attorneys familiar with the Food and Drug Administration and so on are already in place.

"Trading" means that the cluster produces something that can be sold beyond the immediate area. "Future wealth will come from traded industries," says Munnich.

A metro that produces goods and services only for its own residents is on a treadmill going nowhere. Take Phoenix, for example. It capitalized on climate to attract new residents, and a huge portion of its economy was devoted to building houses for them and providing them with groceries, dry cleaners, health care and so on. But when the housing bubble burst, erasing thousands of jobs, Phoenix had almost nothing to fall back on.

Munnich and his team are not only looking at industry data for the past 14 years but also plan to interview trading cluster companies to try to figure out how they can become stronger. He's hoping that the study, due out in mid-2013, will answer some big questions. For example, are our schools producing graduates with the necessary skills?

Once we have some answers, local governments, chambers of commerce and industry leaders can try out different ideas that will strengthen those industry hubs and attract new trading clusters—maybe with expanded transportation and housing choices, tax policies, worker retraining and who knows what else. Eventually, cities, ours included, will lead us out of our economic trough.

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Comments (7)

Random thoughts

Just to get the ball rolling…

The employer in the photo leading this article is obviously – sadly – not acquainted with www.despair.com.

Meanwhile, Phoenix is a fair example of what James Howard Kunstler has been saying for a couple of decades. There's no "there" there.

Beyond the ability to read, write, think critically, and type, what skills (as opposed to knowledge) could our schools teach that will not themselves be obsolete in a generation? Do the schools exist to create private-sector employees at public expense, or should they be creating citizens? It's not truly an either-or sort of question, but where should the emphasis lie?

Further Readings

Just to keep the ball rolling...

May want to review the OECD section on Entrepreneurship and business statistics: http://www.oecd.org/std/entrepreneurshipandbusinessstatistics/
and indicators of entrepreneurial determinants:
http://www.oecd.org/std/entrepreneurshipandbusinessstatistics/indicators...

Also, for schools, see Pasi Sahlberg's "Finnish Lessons", and Davis and Sumara's "Complexity and Education: Inquires into Learning, Teaching, and Research."

Might also consider "Complicity: An International Journal of Complexity and Education."

I think one must also question the economic/social model, i.e. capitalism, and consider what an ideal economic model would be.

Also consider what an ideal democracy should be. i.e. direct democracy? and the implications/ramifications for the way society works.

High Tech High Paying Jobs with Manufacturing Job Links

We all know that industries come and go, they start up and expand and eventually transition ot a plateau and then decline. Each region/cluster experiences that cycle as technology, business and the economy changes. We should however consider why the metro area has seen a very significant decline in aerospace and defense high tech and related manufactuirng companies and jobs. Over the past 15 years the Mpls/STP area had a very significant capability and resources related to aerospace and defense. This provided high tech jobs and the complementary manufacturing jobs. Most of this capability today is gone---- it is time for the so called economic pundits to ask why this shift and decline occurred--why did we go from a very unique defense capabilty to minimal without any presssure or focus on keeping that diversified industry in place. Not only did the companies provide directly related jobs and experience but may of the professional employees moved from defense to transition unique technical, manufacturing, and management skils to other companies. Today we have no clear emerging replacement for these jobs and we wonder why? The Mn professional and labor resources match the excellence in education objective of the state but we did not recognize or support these companies as they began to exit-- again why not. Now we need to find a replacement focus industry or industries--some say robotics-- how about nanotechnolgy--how about the full range of biotech--some of which is occuring. Lets hope that those studying the change in economic opportunties in Mn will reflect a bit on what we lost and why and also consider how we can bring some of that back.
Also a recent discussion with DEEDs showed that they hired a Florida company to write proposals for Mn companie but when asked why not use Mn resources the response was --There are no Federal Proposal resources in Minnesota-- my response --there are hundred who can do that based on related work-- bottom line the State of Mn does not have and idea of what is available in Mn how can they help grow the economy? :|Lets do a Mn capability inventory to get a real resource picture.

Dave Broden

Dave Broden

It's cold here

Minnesotans aren't doing anything wrong when it comes to job creation. In fact, we should be glad we are able to get as many jobs as we have. The problem is that it's cold here, and everyone knows it. Entrepreneurs and job creators are looking at warmer climates.

North Dakota Jobs

Bismarck must mentioned in passing in this article but there is a jobs boom in all in ND from high tech in Fargo/Grand Forks to the oil boom in western ND. There are literally thousands of well paying jobs in the oil fields of ND. There are certainly issues to moving to western ND but there are jobs and plenty of them. Do a Google or Linkedin search for Bakken (name of the oil fields) and do some research to find a job.

Warmer or Colder Minnesota has Unique Assests --Be Positive

We far too often blame the cold for the lmited business climate and growth. Get off that wagon!! Think about how Minnesota got to have the significant number of Fortune 500 companies, why do we have such unique arts, what about a leader in health care, quality education, and more. With a little more positive view and actions like the Itasca Group and the Greater MSP initiative the growth and strength we had will return-- one point to keep in mind how we grow is up to all of us not a "we --they" pointing exercise. Mn across the state must build and execute a vision of excellence and being top of the line-- we have the core assets-- leveraging the assests is key and there are signs of action. lets all get on board! Follow the actions that are working to build the future of MN. Many are participating in activities for grow -- civic involvement does make a difference. Complaining aboout Mn cold is not the answer- selling the strengths is the answer for growth.

Dave Broden

Cold is a factor

Minnesota has done an incredible job attracting and keeping some impressive businesses. However, the cold IS a factor, particularly with recruiting and bringing in diversity. Fortunately for those businesses, Minnesota does a reasonably good job raising and training good employees (which is why we really need to keep focusing on good and affordable education), and it's not as difficult to recruit well-trained immigrants than it is to recruit well-trained Georgians or Californians. Of course, the diversity we do manage to recruit (immigrants or otherwise), in addition to our well-cultivated arts culture (I hope that our orchestras manage to fit in there again, soon), helps to make the Twin Cities an attraction to those who are already used to the cold. While there are jobs in ND due to an oil rush, the appeal of those jobs is limited. MN has cultivated an environment that the surrounding states are hard-pressed to match or compete with.