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More evidence suggests Minnesota manufacturing is on the mend

AGCO created a video touting its new tractor assembly operation in Jackson, Minn.

Upbeat reports from the Minnesota Department of Employment and Economic Development (DEED) continue to show manufacturing is starting to recover in Minnesota while our state unemployment rate continues to fall.

Lee Egerstrom

As city officials in Jackson, Minn., will tell you, this holds promise for Minnesota’s economy going forward. “Out here, our employment problem is where to find workers,” said Jennifer Bromeland, Jackson’s city administrator.

There are pockets of improvement like Jackson stretching to the Canadian border and along the I-90 corridor to Winona, but there isn’t a universal statewide manufacturing comeback, yet.

DEED announced in November that 31 businesses statewide revealed third-quarter plans to expand new or existing plants in Minnesota, creating 1,500 new jobs. Of these expansions, 13 are for businesses that federal statisticians call “manufacturing” but don’t include software and technology activities.

In all, by DEED’s count, 112 expansions have been announced through the first three quarters of this year with potential for 5,600 new jobs within the next two years. While the majority are in metropolitan areas, they do reach all corners of the state.

Sector has lagged in recovery

Minnesota’s official unemployment rate fell to 4.8 percent in October, the lowest in nearly five years. Manufacturing, however, remains the last great industry sector in Minnesota to recover from the Great Recession.

That could be changing. Job growth in the sector will follow after expansion plans initially create construction and related building trades jobs.

“We’ve been so fortunate because we’ve been gaining manufacturing jobs all along,” said Jackson’s Bromeland. The city’s industrial park has attracted growth, added Sue Pirsig, Jackson’s economic development coordinator. Of the 17 businesses located there, 10 are manufacturers.

A Dec. 7 report on Jackson by KARE 11’s Boyd Huppert noted that AGCO’s expanded farm-equipment manufacturing plant has increased employment from 850 workers to 1,400 as it moved Massey Ferguson tractor manufacturing to the Jackson plant two years ago.

A housing squeeze

Pirsig said housing construction hasn’t kept pace with job growth, creating a housing squeeze in Jackson like in other industrial hub centers of Thief River Falls, Roseau, Mankato and around Rochester.

That, too, may be changing. Housing construction activity flows to communities where livable wages make homes affordable.

Studying Minnesota DEED data from the semi-annual Jobs Vacancy Report, the nonprofit Jobs Now Coalition organization finds evidence that manufacturing jobs help lift wage rates across southern Minnesota.

In Southwest Minnesota, which includes the I-90 corridor from Jackson to Worthington, employers informed DEED that 211 of their 1,311 job openings were in manufacturing. The median wage offer for those positions was $13.01 per hour.

A bit higher wages in Mankato, SE

South-Central Minnesota, which surrounds the manufacturing hub of Mankato, had 318 openings in manufacturing, or 12 percent of the 2,715 open positions reported to DEED. The median wage offer for manufacturing in this area was $19.63 per hour.

Reflecting similar demand for skilled and semi-skilled workers, the Southeast Minnesota region that includes Rochester and Winona had 474 manufacturing job openings, or 9 percent of the region’s 5,421 openings at the end of the second quarter this year. The median wage offer for those jobs was $19.34 per hour.

Kevin Ristau, education director for Jobs Now Coalition, said manufacturing job openings accounted for 7 percent of all Minnesota open positions at the end of the second quarter, with a median wage offer of $17.41 per hour.

The St. Cloud exception

Manufacturing appears to help lift Minnesotans out of poverty in all areas of the state with the exception of St. Cloud, Ristau said. “The St. Cloud region (R7W, Central) is the most difficult to figure out, and it has to reflect an unusual mix of industries,” he said.

Jobs Now found 21 percent of all job openings in the St. Cloud region were in manufacturing, the highest in the state. But these positions had a median wage offer of only $10.92 per hour, the lowest for manufacturing among the state’s 11 tracked regions.

Crunching numbers, Ristau found Central Minnesota had 12,300 unemployed job seekers chasing 5,100 jobs that were available in the second quarter, of which 2,700 were full-time positions. That meant job seekers outnumbered full-time jobs by four-to-one.

The group’s Cost of Living calculator shows a single person with no dependents would need $12.51 per hour for full-time work to live in the St. Cloud area, and both parents would need $14.08 per hour for full-time work to sustain a family of four. But Ristau found 47 percent of St. Cloud region job openings were part-time, paying a median wage of $8.98 per hour; and only 37 percent of openings offered health care.

Push-pull forces at work on wages

Regardless of what causes the St. Cloud area anomaly, there are push-and-pull forces at work to raise wages and household incomes above poverty levels throughout the state. A revived manufacturing sector can help pull worker incomes upward. Efforts by faith-based organizations, labor and nonprofit advocacy groups to raise the Minnesota minimum wage to $9.50 an hour would provide a bottom-up shove.

Longer term, we know, Minnesotans can still make things — if other Minnesotans can afford to buy what their neighbors make.

Lee Egerstrom is an Economic Development Fellow at Minnesota 2020, a nonpartisan, progressive think tank based in St. Paul. This commentary originally appeared on its website.

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