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Improved jobs numbers are only part of the story

You can thank the Minnesota Legislature and Gov. Mark Dayton for stimulating the Minnesota economy. 

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

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.

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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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