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Improved jobs numbers are only part of the story

Courtesy of MnDOT
Road construction is partially responsible for Minnesota's low unemployment rate.

The lifeguards at the swimming pool and the Parks and Rec summer employees, home from college, who are teaching 4-year-olds to play T-ball are part of the reason Minnesota has a nationally enviable unemployment rate.

Lee Egerstrom

You can attribute pothole repairs, patching up after this past winter’s unkind weather, for part of our employment progress. Makeup days for snow days that pushed the school year into June at many Minnesota public schools helped as well.

These are among anomalies that helped drop Minnesota’s June unemployment down a tick to 4.5 percent, seasonally adjusted, from 4.6 percent in May and kept Minnesota among the top 10 states nationally for low unemployment. The national rate was 6.1 percent in June, down from 6.3 percent in May and down from 7.6 percent in June a year ago.

While we are giving thanks, thank the Minnesota Legislature and Gov. Mark Dayton for stimulating the Minnesota economy. They are repaying stacked up IOUs to school districts that help schools with staffing, and they are helping local communities keep parks and summer programs going by restoring local government aid (LGA) assistance.

All of the jobs and funding mentioned above helped Minnesota with June employment and, by extension, helped reduce unemployment. July employment data, to be released in August, might give a clearer picture about what impacts weather and state public policy may be having on local governments, said Steve Hine, director of labor market information at the Minnesota Department of Employment and Economic Development (DEED).

Biggest driver

Government hiring was the biggest driver of jobs gained in June by accounting for 3,900 of the 8,500 jobs that were added in the month. Subsequent month data will help reveal what were quirks and what might actually reflect labor market trends, Hine said.

Motorists driving almost anywhere around the Twin Cities metro area these days encounter road repairs in progress. Hine said local government workers who are included in government employment statistics are repairing local streets. Major highway and freeway projects, however, are done under contracts with private companies and their workers are counted under the “construction” employment category.

While analysts are sorting out data differences, the overall statistics do reflect improving state and national economic trends. The MinnPost article on June employment in Minnesota quoted DEED Commissioner Katie Clark Sieben as observing, “The unemployment rate hasn’t been this low since February 2007, while new claims for unemployment benefits dropped to their lowest level in nearly 14 years.”

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It isn’t just happening in Minnesota, Hine said in a telephone interview this week. It is happening all across America, to different degrees, and it reflects differences in state and local economies as well as demographics found throughout the land.

Unemployment fell in 22 states

Nationally, June unemployment fell in 22 states, the District of Columbia and Puerto Rico, the Bureau of Labor Statistics recently announced while unemployment increased in 14 states and stayed the same in 14 others.

North Dakota, undergoing an enormous oil and gas boom, continues to hold the lowest unemployment rate among states at 2.7 percent. Nebraska, Utah and Vermont all had 3.5 percent unemployment in June; South Dakota was at 3.8 percent and Wyoming was 4.0 percent. Iowa and New Hampshire had 4.4 percent, nudging Minnesota, Montana and Oklahoma at 4.5 percent to make 11 states holding “Top Ten” honors.

Agriculture has helped stabilize Midwest economies in recent years and energy development has caused job gains in several states. Together, these economic forces have teamed with growth in healthcare and tech industries to help the Midwest and nearby Plains states’ economies.

In May, rural Minnesota counties had the extremes of the lowest unemployment rates in the state (Stevens, 2.6 percent; Clay, 2.7; Rock, 2.7; Jackson, 2.8; Wilkin, 2.8) and the highest unemployment (Clearwater, 10.5 percent; Koochiching, 9.1; Itasca, 6.1) rates.

A few anomalies

There are anomalies here as well. The forest industries continue to struggle with various economic forces, and poverty and unemployment persist on northern Minnesotan Indian reservations.

Some of the low unemployment counties, meanwhile, reflect trends in neighboring states. Part of the reasons some counties have low unemployment rates is they continue to lose population with young people and unemployed moving to urban centers in search of work. North Dakota’s oilfields attract people from South Dakota, Wyoming and rural counties in Midwest states where there is no job growth to keep people home.

Similarly, large states such as California, Florida, New York and Texas are again seeing large job gains but have ground to catch up with their large populations. Their unemployment rates remain higher than those found in and around Minnesota.

The jobs picture is improving in Minnesota and for about half of America. But like summer jobs on playgrounds and patching potholes, there are still questions about which jobs will prove sustainable and offer full-time employment.

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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Comments (10)

  1. Submitted by Thomas Swift on 07/25/2014 - 08:06 am.

    Credit where credit is due.

    Lee’s fellow 2020 Fellows usually tuck the truth of their propaganda in the cushions; Lee puts it on the table.

    So, if you think temporary jobs, government tax & spending is something to be proud of, all kudos to Dayton & Co. If private sector, permanent employment is what you’re after, not so much.

  2. Submitted by Dan Landherr on 07/25/2014 - 10:12 am.

    Patching potholes

    I’m pretty sure that patching potholes in Minnesota is a sustainable job. There is never a pothole shortage.

  3. Submitted by Dennis Tester on 07/25/2014 - 10:45 am.

    Let’s be clear

    Although the 3,900 government-hired employees are grateful for a paycheck, we should all be in agreement that the growth of government employment is not a sustainable solution for any economy and that the success and subsequent growth of private employers should be the goal of any local or state government.

    The taxpayers cannot be seen as an ever-increasing source of revenue to fund an ever-increasing cost of government. The proverbial perpetual motion machine doesn’t exist.

    • Submitted by Steve Titterud on 07/25/2014 - 01:25 pm.

      Good point, but for temporary relief of suffering, government…

      …is the only entity capable of stepping in.

      During the Depression, all those WPA and CCC jobs really made a difference for a lot of people. They were temporary, but held out a very high value to those who got those jobs.

      • Submitted by chuck holtman on 07/25/2014 - 05:26 pm.

        Well, no, it’s not a good point.

        The distinction between private and public employment is simply the mechanism that is used to determine the demand that each exists to respond to: the first uses an individual mechanism, the second a collective one. The individual mechanism to determine demand (better known as the “market”) is better suited for the production of certain goods and services, and the collective mechanism (better known as “democracy”) is better suited for others. Excessive reliance on the collective mechanism is certainly theoretically feasible and sustainable (and not a “perpetual motion machine”), it just wouldn’t do very well at optimizing social welfare. The same for excessive reliance on the individual mechanism.

        The popular “truisms” that public workers don’t produce anything and that public jobs aren’t real jobs are neither true nor coherent.

        • Submitted by Dennis Tester on 07/25/2014 - 09:46 pm.

          Nonsense

          The government doesn’t produce anything. Its employees are paid by taxing the labor of those who do.

          Without the wealth produced by the private economy, there would be nothing to tax to pay for the government employees who would otherwise end up self-funding their paychecks through their taxation on their earnings. The perpetual motion machine would grind to a halt.

          • Submitted by Richard Helle on 07/27/2014 - 07:57 am.

            Yepl

            Government doesn’t produce anything. Not a thing. Unless you count roads, schools, water treatment and delivery systems, sewage treatment systems, police, fire fighters, food inspection, environmental standards and regulatory standards. Yep, not a thing. Unless you count everything that makes living and working in a modern society possible.

            • Submitted by Dennis Tester on 07/28/2014 - 12:02 pm.

              And where does that money come from?

              The money used to pay for all those government functions comes from taxing the income and wealth of people who actually produce something. If the private economy didn’t exist, where would the public economy get its funds to operate? It wouldn’t, because it doesn’t have the ability to create wealth. It only spends the wealth of others.

          • Submitted by chuck holtman on 07/27/2014 - 10:24 am.

            It is clear from your myriad comments

            That you don’t value the goods and services that the public economy produces. This of course is different from the notion that it doesn’t produce those goods and services.

            And of course in fact you do value those goods and services, your ideological rigidity just doesn’t permit you to say so. The most fundamental service produced by the public economy is a structure in which contracts can be made and enforced. Without that service there would be no private economy, except for that which could exist on the basis of agreements performed under threat of private force.

            Much of the goods and services produced by the public economy are to ameliorate the collateral damage of the private economy (e.g., social services, social insurance). By their nature they are difficult to produce efficiently. The public economy produces them inefficiently, but there is a demand for them and the private economy would produce them even more inefficiently. If you want a society that produces less of these public services, your focus should be on addressing the structural and endemic distributional and market failures in the private economy.

  4. Submitted by beryl john-knudson on 07/27/2014 - 11:33 am.

    Pot hole and road repair and tax payers dollars beyond….

    I’m stretching a bit here but road construction is an issue and since there are bigger pot holes we as tax payers have been paying for; blood too reflected in the ‘other’ puddles one could say?

    There has been little, no coverage of road repair and street construction on a greater issue funding human massacres in Gaza and the story needs some wee bit of coverage maybe?

    I suppose this is essentially just a regional, entertainment and local/regional political rag but there is a greater world out there and too much of such greater story lines are missing here lately..what happened to world coverage or world perspectives?

    Check out Al Jazeera and a film done where road deconstruction is bigger that a pot hole… but do wonder and look with some degree of horror where our dollars have funded the Israeli military with our tax dollars in the billions?

    Check out this one: “Shujayea: Massacre at Dawn”; a film, on the street; recent coverage by film makers Amjad Allmadid and Amad Ashour. Al Jazeera English video.

    It’s a long one but take time after coming home from church, synagogue, mosque or you tea party group. It extends beyond the neighborhood pothole to other streets being ‘deconstructed with our tax dollars so embedded?

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