Minnesota jobs picture: Bleak and bleaker

A reader sent me the Minnesota unemployment map you see here. Unfortunately the source site, Locale Trends, doesn’t date the information, so it’s unclear whether this hot-spots map was made from December ’08 or January ’09 data. In any case it’s a good illustration of the most troubled areas.

I”ll have an interview next week in this space with Kevin Ristau of the Minnesota Jobs Now Coalition, so for now let me preview that talk with an excerpt of his recent testimony at the Capitol on behalf of an emergency jobs bill introduced by DFL Rep. Tom Rukavina:

To demonstrate the need for emergency jobs legislation, I’d like to share some figures from the new Job Vacancy Survey done by the insufficiently appreciated research staff at DEED. They do this survey twice a year; the most recent one looks at the fourth quarter of 2008.

What’s especially valuable about DEED’s research is that it shows not only the number of unemployed workers, or job seekers, throughout the state but also shows the number of unfilled jobs, or job openings. By looking at job openings as well as job seekers, the Job Vacancy Survey provides a more complete picture than the unemployment rate of what the labor market looks and feels like to a worker, especially a worker who either needs a job or wants a better one. What’s more, whereas the unemployment numbers treat all jobs as equal, the job vacancy numbers provide useful information about the quality of job openings: they tell us whether jobs are full-time or part-time, whether they provide health care, how much education or training they require, and, finally, how high the wage levels are.

Over the last few weeks I’ve analyzed this data and created one-page summaries for all thirteen of the state’s economic development regions. You will not be surprised to learn that there is not much good news here—in the three worst-looking regions of the state, job seekers outnumbered job openings by more than 11-to-1. But keep in mind that bad as these numbers are, they don’t fully capture the extent of our current downward spiral, because we’re looking only at fourth quarter data. We don’t have any 2009 job vacancy data and won’t have any until late summer; but we do have unemployment figures for January, so we can already see how much these number have spiked upward since the fourth quarter of last year.

First, let’s look at the Arrowhead region, where there were 12,600 unemployed workers competing for 1,700 unfilled jobs. This means that job seekers outnumbered job openings by more than 7-to-1. During the second half of last year, job openings in the Arrowhead region fell by 56 percent.

At the same time, the median wage for all openings in the region went up 45 percent to $12.00 per hour. Unfortunately, the rise in the regional median wage was not caused by adding more good jobs but by losing more bad jobs. For example, the food preparation and serving occupational group had 90 percent fewer openings than it had six months earlier.

The Southeast Minnesota region was another part of the state where job openings showed a six-month decline of more than 50 percent. Here the survey showed that job seekers outnumbered job openings by six and a half to one, which was identical to the average job gap for all of Greater Minnesota.

The Southeast region also provides a good example of just how understated these figures are; for when we look at the February unemployment data for the region, we see that the number of job seekers rose from a fourth quarter average of about 15,000 to a February figure of about 23,000. Put differently, in the amazingly short time between the fourth quarter of last year to January of this year, the number of job seekers in Southeast Minnesota went up nearly 50 percent.

Standard economic indicators like the unemployment rate paint an incomplete picture of the drastic deterioration of labor market conditions for our workforce. The Job Vacancy Survey tells the story: employers can’t hire–but the workers of Minnesota need jobs.

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Comments (5)

  1. Submitted by Steve Titterud on 03/27/2009 - 08:26 am.

    This timely information shows why the oft-quoted U3 unemployment number is not only an inaccurate indicator, it is positively misleading, taken alone. U6 must be considered alongside it, to cast its further light on the problem and enhance our understanding of the real scope of the unemployment problem.

    When job-seekers outnumber available jobs by 7 to 1, it doesn’t take much imagination to see how the numbers for “discouraged”, “marginally attached”, and those trapped in part time jobs are are REAL dimensions of unemployment.

    If U6 is nearly double U3, you could accurately say that U3 hides as much as it reveals.

  2. Submitted by Doug Moodie on 03/27/2009 - 08:35 pm.

    “At the same time, the median wage for all openings in the region went up 45 percent to $12.00 per hour. Unfortunately, the rise in the regional median wage was not caused by adding more good jobs but by losing more bad jobs.”

    I am not a cold hearted person. I respect how hard it is to be out of work. But a question begs to be asked – what is the real impact of the current unemployment situation on the economy?

    The distribution of incomes is extremely unequal. As the above quote notes, the jobs that are lost disproportionately pay less. If the population that is out of work also worked at the lowest paying jobs, the impact on the economy would be less severe. Every million dollar salary is worth forty 25,000 salaries, mathematically.

    How much do these particular job losses subtract from the totality of the wage base? How damaged is the economy thereby? If we live in a country where gross income inequality is the norm, and will be the norm in the future, why worry for the economy if the poorest paid 10% can’t find work?

    Again, for the purposes of this post I am ignoring, not insensitive to, the travails of the unemployed.

  3. Submitted by dan buechler on 03/28/2009 - 09:01 am.

    If jobs/employment are a distributive function then you also have to allow other distributive functions or you will have a permanent beggar class whether they be young, with children, old, disabled, or just unlucky to not get hired at the right time. Europe and Japan are also dealing with these situations with mixed results. The economist reports of two classes of workers full time with benefits and temporary often doing the same or similar job(s) at 1/2 the wage. Look at any family you can have 2 brothers or two sisters born and raised by the same family equally educated and one can be making twice the other often due to situations beyond the individuals control. Ill health, accident, not having union rep., living in different areas, not getting an in from an in-law etc. etc. .

  4. Submitted by Steve Titterud on 03/28/2009 - 11:40 am.

    Mr. Moodie is right, 40 jobs at $25k is the same gross income as 1 job at a million.

    But those 40 jobs are much more valuable to the economy & the well-being of all. Those 40 families will spend it on basic necessities – food, clothing, housing, transport – and the money will churn through the local economy. Some of those 40 will be college students, earning their tuition and fees, without which they can’t afford to go to school. Some will be single mothers, who stay off public assistance only because of that low-paying job.

    The guy with the million dollar income? His money is spent on things which, compared to the 40 families above, amount to fluff. Comparatively speaking, his money will have far less impact, in terms of economic benefit for all. Maybe he’ll buy some expensive toys, or install some Italian stone in his bathroom or kitchen. Or maybe he’ll pop for a derivative or two, take a long-shot on becoming a billionaire, which would really impress his peers.

    It takes a lot of poor men to make a single man rich.

  5. Submitted by Tim Nelson on 03/29/2009 - 07:30 pm.

    Since the 80’s, all the productivity gains have been by new technology. Worker overtime has actually been a negative balance to the total. At some point, people will realize that a smaller portion of the population needs to work.

    We have a template. The farming, manufacturing, and service economies were all automated. The remaining job growth sectors are health care, education, and government. As President Obama might note, that is not good news.

    It is telling that President Obama is after automating health care, improving (new tech?) education, and evolving beyond our old energy notions.

    This does not create jobs. In fact, just the opposite is true.

    If a smaller percentage of the population is needed to work, then a science fiction type of economy is upon us.

    Wages go down for those who work in a smaller economy, top earners may get cut over 50%, and welfare goes up, paid for with progressive taxes.

    A top salesman could get a bonus for mentoring, for raising the level of their sales competition, but never again for being top salesman.

    The entire wage disparity paradigm is going away. China has just as much problem creating (making up jobs) as we do, since their manufacturing is just as high tech as ours are.

    With the work being spread all over the world, the value of that work is limited by supply and demand.

    Full employment reduces wages, full employment is what we have now.

    Can there be full employment, and high unemployment, at the same time? Of course there can.

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