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ANNIE BAXTER: If you're familiar with the Brainerd area, you probably know it as a destination for tourists. The scores of nearby lakes are teeming with resorts, each vying for guests.

SPEAKER 1: Our croquet lawns are the best.

ANNIE BAXTER: And Twin Cityans have flocked here to buy second homes from eager builders and realtors.

SPEAKER 2: And since we're in the lakes area, we make buying fun.

ANNIE BAXTER: Commercial and residential construction projects tied to the lake culture here once fueled a robust building industry. It used to be that the roar of power tools competed with the sound of waves lapping against the shorelines of the area's lakes. But lately, you mostly just hear the waves.

[LAKE WAVES]

For one of the major builders in this area, Keepers Incorporated Architects, and Builders, demand for cabins, lake homes and commercial projects started to tilt downward a couple of years ago. Steve Keepers is the executive vice president of the family-owned business. He says, by the fall of last year, it was clear that there was serious trouble in the company and the industry as a whole.

STEVE KEEPERS: It became apparent for everybody what was starting to really happen. And that's when he started seeing the layoffs. You started seeing suppliers close up, a lot of turmoil and stuff that way.

ANNIE BAXTER: At the peak of the market, the Keepers had 170 workers pounding nails and pouring concrete. But once customers became skittish about the future and backed out of projects, the Keepers had to lay off nearly half their workforce. The Keepers and other builders were at the epicenter of the downturn in the Brainerd area.

NATE DORR: If we're focusing on job losses, I think construction is probably where we've lost the most.

ANNIE BAXTER: Nate Dorr analyzes regional labor market data for the Minnesota Department of Employment and Economic Development. According to deed statistics, construction jobs are some of the most economically important in the Brainerd region. That's in terms of the number of people employed, and the wages they're paid. So that means when a workers drill goes silent due to a layoff, the stakes are higher up in these parts than for the state as a whole. And as recently as September, those devastating construction layoffs continued around Brainerd at a brisk pace.

NATE DORR: Specialty construction trades like tiling, roofing, siding, that's the same as residential. They're not getting back to work as fast as they want to.

ANNIE BAXTER: But the picture is changing for Steve Keepers. He says after a bruising couple of years, business was starting to pick up.

STEVE KEEPERS: Starting in probably July, August of this year, we started to see a stabilizing effect, people starting to move forward on projects both commercial and residential.

ANNIE BAXTER: The Keepers are getting enough new business to ramp up their staffing. They've rehired 14 crew members temporarily. Steve Keepers hopes to make them permanent. But first, he wants to be sure that the worst times are fully behind the company.

Would you say we're in a recovery right now?

STEVE KEEPERS: I have no clue. I really don't. Maybe? [LAUGHS] Come ask me for this interview in the spring, and we'll see how it's going. If it's been going the way it's been going for the last four months, I'll have a huge smile on my face. And I'll tell you, no problem. We definitely were at the bottom.

ANNIE BAXTER: Keepers is cheered by the fact that some clients are moving ahead with plans for lake homes after slamming on the brakes last year. And in one encouraging case, the client has been adding to the construction budget rather than scaling it back.

Workers are putting the final touches on that project. It's an expensive home on pelican lake, about 15 miles northwest of Brainerd. The homeowner initially asked for a $1.5 million home. And then spent another half a million on upgrades, including pavers lining the driveway.

Steve Keepers feels reasonably confident he'll build more homes like this as the economy improves. But some of the independent contractors on this project are not as upbeat. Toby Wooden, an electrician, doubts that tomorrow will be a better day.

TOBY WOODEN: So far, we've been getting by. But it's coming to a brunt. The winter is going to be pretty slow, yeah.

ANNIE BAXTER: Slower than last year even, says his colleague Mike Nolan. And things were already pretty bad then.

MIKE NOLAN: What we have on our work board at this time compared to last year is a lot less.

ANNIE BAXTER: Not only is there less work, but the jobs they can find tend to be hours away from home. Experts say the construction industry's woes definitely account for a lot of job losses in the Brainerd lakes region and quite likely in the town of Brainerd itself.

But construction alone probably doesn't explain Brainerd's huge spike in unemployment. The city's jobless rate swelled to 21% in January. That's the biggest spike of Minnesota's largest cities. By contrast, the jobless rate of the area surrounding Brainerd peaked at 13%

Labor market analyst Nate Dorr says, Brainerd's rate might have climbed higher because of demographics and the largely rental-based housing stock of the town.

NATE DORR: You have lower income housing. You have people maybe with less skills or lower wage jobs that are more likely to be laid off. And so the people that reside in Brainerd, and this is my theory, that they're more likely to be unemployed.

ANNIE BAXTER: Brainerd's jobless rate has dropped considerably. But it's still over 12%, a lot higher than what's normal for this time of year. Experts say, regardless of the specific causes of Brainerd's own peculiarly high rate, the area, as a whole, won't recover, until construction bounces back. That's also the view of carpenter Mike Shanks. On a Friday afternoon at a bar in Brainerd, he delivers his assessment of the area's economy from his perch on a bar stool.

MIKE SHANKS: Until the housing market comes back, there's going to be a lot of people that aren't going to be able to freaking make anything. I'm serious.

ANNIE BAXTER: Among those who won't make ends meet without a housing recovery, Shanks includes himself. Annie Baxter, Minnesota Public Radio News, Brainerd.

[CHATTER]