Listen: MN will be dealing with higher unemployment for a while

MPR’s Annie Baxter reports on the lingering issues of high unemployment rate in Minnesota as the U.S. economy comes out of recession.


2011 RTDNA Murrow Award, Radio - Large Market, Region 4 / Audio Reporting: Hard News


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ANNIE BAXTER: [? Mahdi ?] Abdullah has been sitting on the sidelines a lot lately-- at his 12-year-old daughter's softball games--

[? MAHDI ABDULLAH: ?] Come on, [? Samila. ?] Let's get a homer here.

ANNIE BAXTER: --and he's sitting on the sidelines of the economic recovery too. He's been out of work for more than a year as a professional cement finisher. His daughter's games help fill the big void in his schedule.

[? MAHDI ABDULLAH: ?] I'm coming to a lot of the softball games, and that's a good thing to be able to spend with your kids. There you go. That's a good hit, baby. That's a good hit. That's a good hit, baby.

ANNIE BAXTER: Abdullah hasn't been getting any good hits in his hunt for work lately. His last job pouring concrete was on the 35W bridge reconstruction that wrapped up a year and a half ago. Abdullah is on unemployment now. But he says, he used to pull in $50,000 a year in his line of work. That income allowed him to live comfortably, raise four children, support one in college, and travel from time to time. At 45, Abdullah is now bracing himself for a lower income. He doubts his next job will be in the area for which he spent years apprenticing.

[? MAHDI ABDULLAH: ?] Right now, I'm not feeling too confident. It could be where you might have to relocate or something like that. But even with that, you just don't have the money. So you're kind of in a catch-22. So it's a tough thing. I just pray and hope that something will come along. That's all right. That's all right.

ANNIE BAXTER: Abdullah is part of a big group of people who probably wish they had nothing in common. But there are the roughly 214,000 unemployed Minnesotans, the faces of the state's 7.2% jobless rate Abdullah is also part of other demographic segments where the jobless rate runs even higher. First of all, men, since so many workers in hard hit industries like construction and manufacturing are male, and secondly, African-American men.

Last year, the unemployment rate for Black men in Minnesota was nearly three times as high as the state jobless rate. Now, the overall unemployment rate for Minnesota has fallen from a year ago when it reached its peak for this recession. Despite the drop, economists say it will take a long while to reach the low levels the state once enjoyed.

TOM STINSON: Even by 2014 and 2015, the unemployment rate is going to seem high compared to the historical normals.

ANNIE BAXTER: Minnesota's state economist Tom Stinson says, the jobless rate will fall over the next five years to 4% or 4.5%. But--

TOM STINSON: That's still more than we're used to. I mean, we had a long period where we were down in the 3's.

ANNIE BAXTER: One of the perverse things that happens when an economy rebounds and jobs sprout is that the unemployment rate can climb. That's because of people who gave up on finding a job during the recession. Heidi Shierholz with the Economic Policy Institute says, someone who's quit looking for work is not counted as unemployed.

HEIDI SHIERHOLZ: When things start to pick up and that person starts looking for a job, they will enter the labor force as an unemployed person.

ANNIE BAXTER: But the economy may not pick up enough for all those unemployed people to find new jobs. Two trends coming out of the recession are likely to put a brake on the economy. Consumer spending is weaker than normal, and lenders are more cautious with credit.

HEIDI SHIERHOLZ: Growth in the economy is not going to be fast enough to generate healthy jobs growth.

ANNIE BAXTER: In the bowels of United Machine and Foundry in Winona, workers dropped big chunks of scrap metal into a heap, they'll melt it into a liquid, then pour the mixture into molds. Gray soot fills the air and coats the men's faces. The president of the company, Tom Rank, says he didn't cut any of those workers in the recession. But as the economy improves and his business picks up, he also doesn't plan to add any jobs.

TOM RANK: Our intention is maintain the existing workforce and just increase productivity, is basically what we want to strive to achieve.

ANNIE BAXTER: Rank wants to automate more of the work by installing machines that require fewer workers to operate them. And his workforce will likely thin out on its own. Many of his workers are nearing retirement age. That includes Randy Johnson, who's worked at the Foundry for 30 years. He's gray haired with slumped shoulders but darts around quickly, filling buckets with heavy sand.

RANDY JOHNSON: I don't know if we even had a forklift when I first started. A couple of wheelbarrows and a bobcat. But we've come a long way, a long way.

ANNIE BAXTER: His boss, Tom Rank, says, Randy Johnson is typical of many factory workers.

TOM RANK: This particular industry has had a rap for quite a while as having an aging workforce.

ANNIE BAXTER: And the retirements of those older workers will have a huge impact on the job market. The big change looming traces back to 1946. That year was notable not just for Perry Comeaux's hit release "Prisoner of Love"--

PERRY COMEAUX: (SINGING) I'm just a prisoner of love--

ANNIE BAXTER: It was also the first year of the baby boom. Baby boomers start turning 65 next year. Even if some delay retirement for lack of funds, millions of boomers will need to be replaced in the workforce in the coming decade. The US Bureau of Labor statistics estimates that by 2018, so-called replacement jobs will outnumber new jobs by a ratio of 2 to 1. Steve Hine, the State's Chief Labor Market Analyst, says the upcoming wave of retirements is just one part of major demographic changes coming.

STEVE HINE: Many more people are going to be leaving the labor force at the retirement end of the pipeline, and far fewer are going to be entering it through the graduate pipeline at the young end of the age distribution.

ANNIE BAXTER: Hine says, those forces will put downward pressure on Minnesota's jobless rate in four or five years.

STEVE HINE: We may be surprised at how quickly the unemployment rate does begin to fall when those demographic changes really start to play out.

ANNIE BAXTER: Tom Stinson, the state economist, agrees with some caveats. He says, robust growth of new jobs, not just replacement jobs, is needed to pull the unemployment rate back down to the 3% range the state once enjoyed.

TOM STINSON: The increase in the number of people retiring will drive the unemployment rate down, but I'm not convinced that it'll drive it down to those low levels that we saw in the late 1990s.

ANNIE BAXTER: No matter how much those demographic changes end up benefiting the economy and lowering the jobless rate in the next few years, over the long term, those changes will create big problems. In 10 or 15 years, so many baby boomers will retire and so few young workers will be available that economists say, there may actually be a labor shortage that crimps American prosperity.

That may be hard to imagine now with millions of workers out of jobs, but Hine, Stinson, and state demographer Tom Gillespie all view this potential worker shortage as a real crisis facing Minnesota. And every state, for that matter. Gillespie calls it the new normal where fewer people will be working and creating wealth.

TOM GILLESPIE: The new normal is in the long run, over the next quarter century, half century is going to be slower economic growth.

ANNIE BAXTER: In the end, it's these long term demographic trends that economists in the state really worry about, more so than the immediate effects of the recession and the high unemployment rate. But the worker shortage is far enough in the future that it's unlikely to make a difference for unemployed people like Mahdi Abdullah anytime soon. As his daughter's softball team offers high fives to their opponents, Abdullah says, for his part, he'll be watching for the unemployment rate to reach healthier levels.

[? MAHDI ABDULLAH: ?] It means a lot because that's going to dictate what's going to happen for me.

ANNIE BAXTER: But the near-term outlook for construction workers like Abdullah is not bright. More on that in tomorrow's story. Annie Baxter, Minnesota Public Radio news. So that was it, huh?

[? MAHDI ABDULLAH: ?] That was it.


Materials created/edited/published by Archive team as an assigned project during remote work period and in office during fiscal 2021-2022 period.

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