Minnesota unemployment rises to 6.9 percent

Minnesota shed more than 55,000 jobs in the year ending last month. The worst of the layoffs happened between March and the end of last year.

Dan McElroy, commissioner of the Minnesota Department of Employment and Economic Development or DEED, said December's job numbers added more gloom to an already dismal job picture in 2008.

"The jobs news is not good," McElroy said. "The December job losses is that we were down 11,800 jobs."

Those losses pushed Minnesota's unemployment rate up a hefty half-percentage point in December, to 6.9 percent. That's still better than the national unemployment rate in December of 7.2 percent.

Employers in nearly every sector in Minnesota slashed jobs.

Retail trade had a bleak showing in December, with a decline of 1,600 jobs. The holiday season usually brings job gains to that sector, but not this time around.

2008 was a bad year for industries tied to housing. Construction employment dropped 10 percent. McElroy said the pain spread to the manufacturing sector, which shed 4.6 percent of its jobs.

"Many of the manufacturing areas that are down are in things like wood products, which would include things like oriented strandboard, dimensional lumber, and windows and doors, and in furniture manufacturing, which includes kitchen cabinets," McElroy said. "So the fact that housing starts are down 75 percent, 2008 compared to 2005, has had a stunning impact on Minnesota's economy."

But, as McElroy put it, today's report had some crumbs of good news in a forest of not very good news.

Financial Activities, which includes Finance & Insurance, posted a year-over-year gain in December of 1,500 jobs. Educational and Health Care Services added 11,000 jobs in that period. Those were the only major industry areas that saw job gains.

And job growth in health care is slowing. The industry isn't performing as well as it did during the last recession.

That's prompting some health care workers to take note.

"Health care used to be the area where it's a safe job, you can pretty much close your eyes and point on the map, you can get a job," said Dan Lovinaria, a nurse anesthetist at several Twin Cities area hospitals. "But that's not true anymore, I think, personally."

Lovinaria is taking note that patient volumes are down at many hospitals. People are steering clear of the doctor because they've maybe lost their insurance or can't afford their high deductibles in the bad economy. So, Lovinaria's telling his students to brace for a tough job market, and he's offering this advice.

"You not only have to be good, you have to be great to be competitive in this field," he said.

But DEED officials said the economy may have seen the worst of the recession.

The state relies on an economic forecasting company called Global Insight for its planning. State labor market analyst for DEED, Steve Hine, explained some of the Global Insight projections they're relying on.

"2009 first of all would bring an additional, roughly 60,000 jobs lost," Hine said. "The good news in that forecast, though, is that the fourth quarter, the one that we've just survived, was really the bottom of this downturn. The rate of job loss, while continuing through 2009, is projected to lessen throughout the year, and eventually turn positive throughout 2010."

But the state economist, Tom Stinson, is neutral about that possible good news. He said no one knows what will happen in the first three months of 2009.

"Global Insight has large declines in the economy in both the fourth quarter of 2008 and the first quarter of 2009," Stinson said. "They could flip flop and the first quarter of 2009 could be a larger decline than it was in the fourth quarter of 2008."

The December jobs report included a technical revision to the November jobs count, which more than doubled the month's total job loss to nearly 24,000. State officials are downplaying the significance of the change. But even without the revision, Minnesota has shed nearly as many jobs in the last three months as the state lost during the entire 2001 recession.

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