Growing number of dislocated workers presents funding challenge
When we last talked with 54-year-old Curt Peterson in October, he was pretty down-in-the-dumps. Peterson was one of about 140 workers who lost their jobs at Ainsworth Lumber Company in Bemidji. Now, Peterson is enrolled in the state's Dislocated Worker Program, which is giving him the opportunity to go back to school.
This week, he started a two-year nursing program at Northwest Technical College in Bemidji, free of charge.
"It does give us an opportunity to get on with our lives, and I think one of the biggest things this program has done, it's kept us focused and kept us from falling into depression," Peterson said. "It's kept our heads high and we can look ahead to the future."
Many former Ainsworth workers would have rather stayed in the workforce. But with competition so tight for jobs, more than 40 of them decided retraining for a new career was a better option. Doug Scott will spend the next two years studying manufacturing engineering technology. His books and tuition are on the taxpayers' dime, and Scott will collect unemployment benefits while he's a student.
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"When there are no jobs, the nice thing to do is to be able to pull back out of the job market, get some retraining, let the economy heal itself," Scott said. "It will do that and it will come back and the jobs will be open and we will be a better trained workforce."
We're seeing all large industries in our rural areas really experiencing a downturn and laying off in large numbers and closing plants.
The Dislocated Worker Program offers some generous benefits for a reason. It's designed to reduce the amount of time people are unemployed, and help prevent future job loss by ensuring their skills are up to date. In 2007, 86 percent of people enrolled in the program found new jobs.
While it provides relief for people like Peterson and Scott, the program is straining under the volume of the newly unemployed.
Enrollment in this fiscal year is expected to approach 19,000. That's a nearly 20 percent jump over last year. Craig Nathan is a regional manager overseeing Workforce Centers in central and northwest Minnesota. Nathan said, in some rural counties, the number of people coming into job centers has more than doubled.
"What we're seeing now is something rather dramatic and that is that we're seeing all large industries in our rural areas really experiencing a downturn and laying off in large numbers and closing plants," Nathan said.
Downsizing, both large and small, has accelerated over the past few months. More than 33,000 Minnesotans filed for jobless benefits in December. Nathan said Workforce Centers have to hire more job counselors to keep up with the demand.
"You can only hope that this doesn't go on for an extended period of time, because what happens is you've got financial capital that runs out and then you have human capital that runs out," he said. "Hopefully, we'll see an uptick in our economy before either of those happen."
State officials say they have adequate resources to fund the Dislocated Worker Program for the rest of this fiscal year. But things don't look so good beyond that. The state faces a budget shortfall approaching $5 billion. Program director Anthony Alongi said the deepening recession is putting more pressure on state funding sources.
"The year starting July of 2009 is the year where I start to worry, because we normally bring a little carryover into each year," Alongi said. "In a good year, that carryover can be in amounts of $10 million to $15 million. We do not think we will have any carryover. We will have, at best, $1 million as we go into the next year."
Most funding for the Dislocated Worker Program comes from a fee on employers' payroll. Alongi said lawmakers this session may have to consider raising that fee to ensure adequate funding.
The growing jobless ranks are putting pressure on other parts of the budget. State finance officials say the trust fund that pays for Minnesota's unemployment compensation is running dry. They project a year-end deficit of $34 million. If the economy doesn't improve, that shortfall could grow to more than $1 billion by 2013.
