Compared to recent recessions’ comebacks, Twin Cities’ jobs recovery is slow — but many metros are doing worse

Compared to recent recessions' comebacks, Twin Cities' jobs recovery is slow -- but many metros are doing worse
CORBIS/Bruno Budrovic

You have to look back more than 30 years — probably all of the way back to the Great Depression of the 1930s — to see jobs crawl back as slowly in the Twin Cities as they have since the latest recession hit in 2007.

At this point in the recovery from the deep recession of 1981, the Twin Cities actually had regained all of its lost jobs and even pulled ahead a bit.

Not so this time.

By the end of March, (the 9th quarter after the recession started) employment in Minnesota’s largest metro area stood at 93.4 percent of its 2007 level, according to the Brookings Institution’s MetroMonitor. [PDF]

To be sure, the Twin Cities is doing better by several measures than some other U.S. metro areas. Most other cities could envy the Twin Cities’ latest unemployment rate — 6.4 percent for May this year. (Note to watchful wonks: Metro area figures are not seasonally adjusted, so this rate isn’t comparable to the 7 percent statewide rate you’ve seen for May.)

The Twin Cities’ rate is roughly the same as that for Minnesota as a whole. By either measure, we are not even close to the nationwide jobless rate, which sticks stubbornly above 9 percent.

Running against your personal best time
Another way to view the problem, though, is to think like a jogger in a 10K race: Unless you are one of a few elite runners, you are watching your personal best times, not the entire field. In other words, you run to improve or at least meet your own top performance.

Seen that way, the Twin Cities’ goal should be to match or beat its unemployment rate in November 2007: 3.9 percent.

We’ll have to pick up the hiring pace to get there any time soon.

Unemployment recovery 9 quarters after recession started (percent of jobs)

Unemployment recovery 9 quarters after recession started (percent of jobs)
Source: Brookings Institution MetroMonitor

The Brookings report provides some useful comparisons for “Twin Cities now” v. “Twin Cities past” in terms of recovery from hard times. It also shows how the Twin Cities is doing in the context of the nation’s 100 largest metro areas.

The metros are a big-deal barometer for the economy as a whole because the nation’s economic performance is driven largely by their economic engines.

National recovery largely jobless, increasingly fragile
Overall, the report portrays metro areas leading a nationwide recovery that is largely jobless and increasingly fragile.

“All of those economies saw some economic growth in the first quarter of 2010, and some returned to their pre-recession levels of output, but none recovered its pre-recession employment level,” the report says.

The Twin Cities was one of just a few metro areas where the unemployment rate dropped slightly during the 12-month period ending March 2010. Most metro areas continued to lose jobs, and several cities in California, Florida and Nevada saw their rates climb by about 3 percent early this year.

Look at the history of recent recessions, though, and you see a picture that is far more discouraging for the Twin Cities.

Historical perspective
At this point in the 1981 recession, the metro area had recovered from its job losses and even added more openings. The same was true after the recession that started in 1990. Jobs came back more slowly after the 2001 recession, but the Twin Cities economy was close to being whole again by this point in the recovery.

This March, by contrast, the Twin Cities had recovered just 93.4 percent of the jobs its economy was generating as the recession was starting in 2007.

The same picture held through 79 of the 100 metro areas reported in the Brookings study. Employment recovery was weaker nine quarters after the start of the Great Recession in those 79 cities than it was during the same time span after the start of any of the previous three recessions.

In terms of overall recovery, the Twin Cities ranks somewhere near the middle of the nation’s metro areas — not doing as well as nearby Des Moines, Iowa, and Madison, Wis., but doing far better than big cities in California, Florida, Michigan and Arizona.

Housing-price recovery lags
One drag was the housing market. Even while employment held relatively strong, the Twin Cities lagged in the recovery of its housing prices. The Brookings report ranks it among the weakest 20 metro areas in the housing price comeback so far.

The Twin Cities also stood among the weakest metros in terms of bank-owned properties in March this year. But the report says that the Twin Cities is pulling out of that trough.

All of these calculations and comparisons can help us understand where we have been and where we need to go. We shouldn’t lose sight, though, of the people represented by the unemployment rates, the people with the greatest stake in economic recovery for the Twin Cities, the state and the nation.

Looking for jobs
Nearly 119,000 workers in the Twin Cities metro area still were looking for jobs in May. They represented the majority of the 190,000 who were counted jobless statewide that month.

These are the people at the middle of the debate facing Congress after its July 4th break: whether to extend unemployment benefits yet again. The federal government’s emergency unemployment compensation extensions expired at the end of 2009. Congress has twice extended them, but now the last extension has expired and the jobless are being phased off the benefits.

More than 44,000 jobless workers in the Twin Cities (part of some 80,000 statewide) were on extended benefits this year, and several hundred of them exhaust their benefits each week. A state extension could buy additional time for some of them.

Blocked by Republicans in Senate
Meanwhile, Congress is under pressure to quickly pass another federal extension. Senate Republicans blocked the latest extension bill just before lawmakers left town for the holiday, arguing that costs of the extension must be offset by cuts elsewhere so they don’t drive up the deficit. Both sides, though, express concern for workers trapped in long-term joblessness.

With the pitch of the related political debates sure to rise, Washington Post op-ed columnist Eugene Robinson offered this thought:

“The employment numbers aren’t just a monthly set of partisan talking points. They represent actual lives. They represent mortgages that might not be paid and college educations that have to be deferred; they tally mental health crises and broken marriages. Those sterile, emotionless figures speak of pain and anxiety. They mock our faith in the American dream.”

Sharon Schmickle covers science, economics, international affairs and other topics.

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Comments (8)

  1. Submitted by Thomas Swift on 07/08/2010 - 08:58 am.

    An important point this informative piece misses is the downward trend on the salaries of those of us who are still employed (in the private sector).

    My collegues and I accepted a 10% pay cut last year, and we do not expect to see any increases this year, and we know we are not alone.

    Additionally, benefits such as 401K contributions by many employers have been temporarily (we hope) halted or reduced.

    This is why so many feel it is absolutely necessary for the public sector to step up and do their part.

    While government, in truth, can do little to directly effect the economy in a positive fashion, public sector spending (including salaries and benefits), taxation and regulation must be carefully anaylized to ensure that government isn’t making things worse.

    Most importantly, the federal government must stop the irresponsible spending spree it has been on since the day President Bush unwisely pushed through TARP I. Stimulous spending hasn’t worked, and there is nothing to make the thoughtful person believe that another round won’t be putting good money after bad.

  2. Submitted by dan buechler on 07/08/2010 - 09:26 am.

    Good article Sharon, and once again Mr. Swift refuses to acknowledge the impact of the Bush tax cuts, the expansion of two unfunded wars and its contribution to the deficit.

  3. Submitted by Richard Schulze on 07/08/2010 - 10:23 am.

    Just a thought:

    Given the sharp drop in equity markets and home values, and a corresponding deep decrease in personal assets, more American workers may have felt compelled to stay in the workforce to rebuild their lost wealth.

    Or, said another way, the steep loss in personal equity may have been so great that fewer were able to move directly to retirement, than may have otherwise occurred.

    Re: stimulus spending. Is it really too hard to figure out that emergency measures are not meant to do anything other than deal with an emergency ? The purpose of fiscal stimulus is, initially, to keep things from getting worse, and then, once they’ve stabilized, to give the private sector an extra nudge toward growth. Keynes didn’t recommend it except for downturns too severe for monetary policy to work, and expected governments to run surpluses when the economy went well, so that the complete cycle would be budget-neutral. The perpetual deficit was invented by politicians of both colors.

    If you’re only recently worried about stealing the future from our children, you must have been asleep for the last 20 years of Republican administrations. They presided over a 67 GDP percentage point increase in total government debt. 20% of our current deficit goes towards paying the interest on borrowing from previous administrations. It is important to recognize that over 70% of the current deficit is due to the economic downturn and Bush’s tax cuts.

  4. Submitted by Thomas Swift on 07/08/2010 - 10:25 am.

    Dan, I don’t acknowledge two unfunded wars because they have been funded very well, that’s why it’s true they have added to the deficit.

    If you wish to make the point that Bush spent like a Democrat, I’m with you. But tax cuts don’t cause deficits; over spending causes deficits.

  5. Submitted by dan buechler on 07/08/2010 - 03:43 pm.

    Yes if you believe it is tax cuts acting as a stimulus or the laffler curve (which many economists don’t). I am glad my son is taking semantics at the U this fall as a high school student so that perhaps we can get at the underlying issue in miscommunication. The wars increased discretionary spending dramatically and there was no corresponding duty (tax) hence deficit spending. Thomas you are arguing with two guys (or at least speaking for myself) who are at least are willing to engage you in a positive way. Frankly I was appallled that teacher pay raises were allowed in this enviroment (see my last two posts of the last two days one in response to the nurse’s strike and the other in reply to steve cramer’s post)
    But this steady deficit drumbeat or concern (“for our children”) stated about a year ago as it was ginned up by the republican machinery (FOX). Frankly there are technocrats who know how to govern or attempt to solve some of our problems. But they are impeded almost every step of the way (and I will include some teacher’s unions here). Honestly maybe 60% of the population does’nt care how minority students are doing in the inner ring cities. But if you look at the long term trends and care about the country’s future perhaps more better.

  6. Submitted by dan buechler on 07/08/2010 - 03:48 pm.

    Ms. Shmickle, I also think we are overdue for an article on the link between joblessness and suicide. A recent study states that worthlessness and alienation are the two prime movers in pushing those who are able to kill to do so. They have the fearlessness (risk taking) and ability (access to guns whatever).
    You know I mean this in the best of ways and I am certainly understanding if no one wants to take up this task.

  7. Submitted by Richard Schulze on 07/08/2010 - 04:16 pm.

    Tom, My understanding of math tells me that unless the tax cut/break is revenue neutral it is deficit spending.

    Two things: It’s difficult to contract your way to growth and a tax break is never a tax break. It’s a tax increase for all the rest.

    Back to the topic:
    There is a tremendous amount of slack in the economy. Businesses can simply tap some of this unused capacity rather than hire more employees.

    The number of hours worked dropped during the recession. Companies can simply increase the hours worked by their existing work force before hiring new people.

    Productivity is still increasing. This means businesses are still getting more and more out of their existing workforce. Because of high unemployment, there is the added benefit of lower wages/salaries. From a business owner’s perspective, this is a win/win scenario.

  8. Submitted by Tuan Dang on 07/11/2010 - 05:22 am.

    There is a very important issue i have never see an article page mention about it, how about blocking UI benefits will create more crimes ?

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