State job growth and unemployment rate continue to outperform nation

Welder at Atlas Manufacturing
A welder works at Atlas Manufacturing in Minneapolis on Nov. 16, 2010.
MPR Photo/Annie Baxter

Minnesota's October job numbers will be released later this morning. Over the past year, the state has experienced more significant job growth than the national average, and the unemployment rate in Minnesota has hung well below the nation's.

At Atlas Manufacturing in Minneapolis, the place is humming now, as the company is bringing welders and machinists back to its payroll. The company makes things like computer racks for retail and industrial clients.

But a year ago, this factory sounded nowhere near as busy.

"You would've heard someone sweeping the floor at times," said John Peterson, co-president of Atlas Manufacturing. Last year the company idled much of its machinery and slashed its workforce of 75 by a third, he said..

The remaining crew was sent home without pay the week of Thanksgiving.

"That was not fun. Especially at the holidays," Peterson said. "And then when they came back they were at 32-hour work weeks."

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Business came roaring back last February, Co-President Mark Engle said.

"A lot of our clients who had been dormant came alive with projects that were on the books, so much so that we were pressed against our capacity constraints," he said.

And Engle says customers appear to have the confidence to keep going.

"They're all very progressive and launching new products and very excited about the future. Their backlog is up, so business seems really strong right now," Engel said.

Atlas has been profitable since the first quarter. They've hired back as many workers as they cut, bought a second facility in Wisconsin, compensated office staff for lost pay from last year, and offered factory workers the chance to work plenty of overtime.

Stories like this help account for why Minnesota's job growth is beating the nation's. In fact, the state started adding jobs about three months before the nation did in 2009.

Between September of 2009 and the same month this year, the state's payrolls have plumped up by about 28,000 jobs. On a percentage basis, that's an increase nearly 4 times bigger than the national growth rate.

Some of those gains come from manufacturers like Atlas. The manufacturing sector has enjoyed a greater comeback in Minnesota than it has nationally.

Toby Madden, an economist at the Federal Reserve Bank of Minneapolis, said the state's natural resources industries also provided a useful buffer.

"Our mines are producing a lot of iron ore, and our farmland has been producing lots of crops," he said. "Even though that's a small proportion of our economy, that does add to growth in employment."

The state's strengths are also showing up in the jobless rate. It's high, but at 7 percent it's well below the national rate. Some of that difference, Madden said, is due to the state's relatively learned workforce. Education levels correlate to employment levels.

"We're ranked second in high school attainment in the nation. We're ranked 11th in the nation for college attainment," he said. "So that means we're more productive, and when we're more productive we get paid more."

Madden said educated workers have more to lose by being out of work, so they're more motivated to work.

The jobless rate is lower in Minnesota because the housing boom and bust weren't as pronounced as in some of the hardest hit states. State Labor Market Analyst Steve Hine said those states have populations big enough to drive up the nation's average unemployment rate. That makes Minnesota -- and a majority of states -- look better by comparison.

"In September, 34 states had rates below the national rate. The 15 states above the national rate included those big states," Hine said.

As those big states rebound, the gap between Minnesota's and the nation's average unemployment rate will narrow, Hine said. He expects the difference to shrink to about 1 or 1.5 percent from its current gap of more than 2.5 percent.

Hine said the construction sector in Minnesota will likely continue to struggle because of lingering problems in the housing market, but the rest of the state's job sectors picking up steam.

On the factory floor at Atlas Manufacturing, Mark Engel shares that perspective.

"I see on the sales side, all industries up: retail, tech, medical, industrial enclosures... they're all up," he said.

And to keep up with the pace, Atlas plans to hire 5-10 new employees in the next couple of months.