Minnesota construction workers have suffered more than most across the United States since the recession started, and while other portions of Minnesota’s economy have shown signs of recovery, economists don’t foresee much improvement in construction numbers any time soon.
At 19.7 percent unemployment, Minnesota’s construction industry ranks in the bottom half nationally, according to 2009 Bureau of Labor Statistics figures, the newest available. Across the United States, construction workers faced 17.3 percent unemployment through the same period. Meanwhile, Minnesota continues to lose private construction jobs at a rate faster than any other in the five-state area that includes the Dakotas, Wisconsin and Iowa.
Although construction workers constituted just over 3 percent of Minnesota’s total labor force, they account for nearly one-third of jobless claims through November 2010, according the Minnesota Department of Employment and Economic Development (DEED).
Why are nearly 20 percent of Minnesota’s construction workers out of the job when the state’s unemployment rate is less than half that?
A slowdown in construction at the beginning of the economic downturn battered the industry, but Tom Stinson, the state’s chief economist, said a housing bubble that was worse than its national equivalent was largely to blame.
“You don’t think of Minnesota as being a place that was overly optimistic in housing, but obviously we were,” Stinson said. “We just didn’t realize we were creating a significant bubble as well.”
And while construction workers believed the stimulus bill would put many back to work, the bill targeted mainly transportation construction, which is only a small sector of the industry. The stimulus had neither the scope nor the scale to buoy the entire industry.
“I don’t think the stimulus bill was even intended — nor should it have been intended — to sustain residential construction,” said Steve Hine, research director at DEED.
Workers like Charlie Ryan, who spent 30 years as an electrician and was laid off in June 2009, are faced with long-term unemployment with little hope for a reprieve.
Ryan said he doesn’t expect to see another job for two to three years. By that time, he’ll be 55, and contractors will likely look past him to younger workers, he said.
“You get caught in a vortex. It’s like a black hole,” Ryan said. “At my age, when you come through a contractor’s door, they see a worker’s comp claim waiting to happen.”
The housing crash
Even before the economy belly-flopped in 2008, new home construction began to drop dramatically.
Nationally, new home construction fell by 75 percent in the third quarter of 2010 compared with five years earlier.
But in Minnesota, the plunge in the housing market started earlier and has been deeper than the national average, Stinson said.
As new home construction continues to lag in Minnesota, a return to pre-recession building rates is unlikely in the near future, Hine said.
“The fact of the matter is, there was too much housing construction,” Hine said. “There were too many jobs to be sustained forever.”
For now, the state’s residential construction sub-sector has continued to hemorrhage jobs, losing nearly half of the 17,000 jobs it had in 2005.
“There is going to be suffering from the painful rebalancing,” Hine said. “This is going to take years.”
Keeping up morale
In better times, Brian Peterson, hiring hall manager for the Minneapolis electricians union, was busy 50 hours a week placing electricians on jobsites. But with few jobs to be found, Peterson now spends much of his time encouraging union “brothers and sisters” to “tough it out.”
“It’s a different kind of busy now,” he said, referring to efforts to keep morale up among workers. And it’s getting harder.
Some Minnesota construction workers, known in the industry as “tramps,” have begun looking for some of those jobs outside the state or even out of the country, Peterson said.
One of them, 64-year-old electrician Tim Jordan, has gone as far as Kuwait, Afghanistan and twice to Iraq since 2005 because he couldn’t find steady stateside work that offered health insurance to cover his wife’s diabetes.
Health care costs of more than $1,000 a month forced Jordan to spend as much as 13 months away from home for a single job. The conditions were like a minimum-security prison, Jordan said, and he worked within earshot of fatal explosions at an Afghan training site.
“If I didn’t have health insurance issues, I’d deliver pizzas, but my wife’s a diabetic,” Jordan said. “I don’t want to go back, but as a backup plan, if I run out of money, I guess I will.”
Jordan’s job was one of 40,000 the Minnesota construction industry lost through 2009, since hitting its 2005 peak of 129,000 jobs, according to DEED.
Initial 2010 figures show a continued plummet in summer employment of nearly 10 percent from 2009.
And unions say Minnesota’s unemployment rate among construction workers might quietly have crept much higher than the 19.7 percent reported by the Bureau of Labor Statistics. The AFL-CIO projects that more than 30 percent of its members who normally work construction fields are unemployed, said Harry Melander, president of the Minnesota Building Trades Council in Minnesota.
The organization compiles its figure based on actual hours logged by its members monthly, while government figures are calculated using census data and population survey results.
Transportation and stimulus
“It’s not what [the stimulus] has done. It’s what is has not done,” said Peterson, the hiring hall manager. “Our expectations were high, but it didn’t happen. The money all went to roads and bridges.”
But workers in heavy construction echo Peterson’s disappointment. They say they expected the stimulus to give them jobs to put their shovels to, but the funds that did go to transportation and construction projects simply weren’t large enough to meet their expectations.
“This is a depression,” said Dave Semerad, president of Associated General Contractors of Minnesota. “We are begging for work. The average person had unrealistic expectations for the stimulus. Most of the money went elsewhere.”
About $521 million in federal stimulus funds went to transportation construction projects over two years. That money accounted for about 10 percent of Minnesota’s stimulus funds, most of which went to education and human services.
Some stimulus dollars have gone toward materials and architecture, while machinery has greatly reduced the need for workers with shovels in hand.
“The technology has changed a lot since [the Great Depression],” Stinson said. “One guy with a Bobcat now can move a lot more dirt than 100 guys with shovels.”
Although initial hopes for the stimulus were high, by the time stimulus projects started, contractors and workers were reining in their expectations for job creation. By 2009, most state contractors said they didn’t expect the stimulus to create new jobs in 2010, according to a survey by the Associated Contractors.
Minnesota construction unemployment tops the five-state area through 2009
In 2009, the year the majority of stimulus projects began, Minnesota lost 18,000 construction jobs, 16 percent of its 2008 construction workforce.
“The Minnesota market remains one of the slowest in the country, and we have not seen any significant effect from the stimulus dollars that have been put into place,” one respondent said in the AGC report.
With few exceptions, Minnesota has fared worse than its border states in retaining construction jobs each quarter since 2002.
The number of private construction jobs in Minnesota declined by 11.5 percent from March 2009 to March 2010. That number is worse, by nearly a full percentage point, than the losses in Wisconsin, which had the next worst losses in the five-state area, according to the Bureau of Labor Statistics.
Those losses mirrored a five-year trend of greater private construction losses in Minnesota than its neighbors.
And it stands in stark contrast to North Dakota, where an economy fueled by the energy industry gained private construction jobs at a rate of 5 percent over the previous year.
Workers who can’t pick up and move find themselves scraping together a living any way they can.
Through 18 months without a steady job, unemployed electrician Charlie Ryan landed a spot as the fiddler in a bluegrass band, playing county fairs and festivals to help pay the bills. He’s also dusted off his bartending certificate as a last resort.
He even applied for the conductor’s spot on the choo-choo train at Rosedale Center. He found out after Thanksgiving that he didn’t get the job.
“After a while, you avoid places and people. I don’t want to sound like a broken record to people,” Ryan said. “You go from feeling confident to not being able to run the third shift at the Dairy Queen.”
This story was produced in partnership with students at the University of Minnesota School of Journalism and Mass Communication, and funded in part with a grant from the Ethics and Excellence in Journalism Foundation.