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Minnesota jobless rate drops to 6.9% even as state sheds 7,400 jobs

Minnesota lost 7,400 jobs in September, driven by a 14,400 decline in private-sector employment that was offset in part by a faster ramp-up in back-to-school hiring.

Despite the overall job loss, the state’s unemployment rate fell 0.3 of a percentage point to 6.9 percent, according to figures released today by the Minnesota Department of Employment and Economic Development (DEED). The state continues to track well below the U.S. jobless rate, which remains stuck at 9.1 percent.

“Minnesota is slowly pulling out of the recession, gaining 53,600 jobs over the past two years,” said DEED Commissioner Mark Phillips in a prepared release. “Declining requests for new unemployment insurance claims, strength in the temp help sector and other positive data are hopeful signs that the recovery will continue.”

In a conference call with reporters, Steve Hine, DEED’s director of Labor Market Information office, struggled to explain the job losses. He suggested that the measures, which come from two separate surveys, do not always move in sync month to month but have both improved over a longer period.

The state has gained 53,000 jobs, or about one-third of total jobs lost since employment rolls hit a trough two years ago at the depth of the recession, Hine said.

Over the past year, Minnesota employers have added 27,700 jobs, representing a growth rate of 1 percent, DEED reported.

Hine also said the unemployment rate is “smoothed” over several months of data and is still being affected by the state government shutdown. If it were unsmoothed, the unemployment rate would be 6.2 percent, which Hine said is the lowest rate of unemployment in three years.

 “A lot of the declines [in jobs] can be understood as a correction or seasonal adjustment,” he said. Even so, “some sectors here in Minnesota did not have a particularly good month,” he added.

Gains in government jobs (7,000), mostly related to education hiring, led all sectors in September. Others sectors that added jobs were other services (1,600), financial services (1,300), and mining and logging (100). The information sector held steady during the month.

Job losses occurred in trade, transportation and utilities (4,800), leisure and hospitality (3,800), manufacturing (3,700), education and health services (2,300), construction (1,900) and professional and business services (900).

The lockout among Crystal Sugar plant workers was one factor cited by Hine in the manufacturing job decline.

Despite the mixed news, certain sectors are seeing strong demand for jobs, and wage increases are expected.

After two years of little or no wage increases, employers surveyed by Robert Half Associates are expecting starting salaries to rise 3 to 4 percent on average nationally in 2012. The survey covers finance, technology, legal, marketing & communications, and office administrative positions.

Selected skills, particularly in information technology, are expected to rise even more, according to the Half survey. The largest increases, 6.9 percent, are expected for senior web developers and database developers, with salaries ranging from the mid-$80s to nearly $120,000.

“Employers are screaming for certain types of IT people,” observed Jim Kwapick, district president for Robert Half. Speaking in his downtown Minneapolis office, Kwapick said demand for certain IT skills is being driven by stepped-up investments in major enterprise-wide database systems, which he described as “large-scale  transformative projects.”

In addition to IT, Kwapick said demand is up “significantly” for employees skilled in accounting operations, both locally and nationally. He also has seen a recent spike in demand for temporary workers in mortgage processing firms locally, in response to falling mortgage rates.

The finance and banking, manufacturing and health care employers in Minnesota are all showing strong demand for IT and accounting personnel, he added.

Given the length and severity of the recent downturn, employers “got as lean as they could get,” Kwapick said. As a result, with a “significant investment in IT coming out of the recession,” employers have stepped up permanent hiring for specific technical skills.

In addition, with virtually no salary increases the past couple of years, employers are starting to worry about retaining their employees, he added. “Employers have done well [financially] the last couple of years.” Now they are starting next year’s salary planning with employee retention in mind.

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