Northeast Planning Region
A Shifting Employment Terrain

By Drew Digby
September 2009

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Traditional jobs in mining and other fields in northeastern Minnesota are being surpassed by employment in the knowledge industries, such as health care and education.

Jobs are slowly coming back in parts of northeastern Minnesota, but many of them are different from the ones that workers lost earlier in the recession. This creates questions and concerns among those who want to help dislocated workers.

In June, the unemployment rate in the Northeast Planning Region reached 10.7 percent, 0.1 percent higher than the previous peak of 10.6 percent in March and up from 6.5 percent a year earlier.

The slow changes in the unemployment rate, however, mask far more dramatic changes for workers, many of whom are facing tough choices. Should they wait for the industry where they’ve worked for the past 10 or 20 years to come back? Will it ever come back? And if it does come back, will technological and production changes mean some workers are no longer qualified to return to their industry?

Some of the dramatic differences in the region:

• In Duluth, the June unemployment rate was 8 percent, lower than the region as a whole because of strong recent hiring in health care as well as seasonal hiring in construction, engineering and the tourists trades.
• Meanwhile, the June unemployment rate in Virginia, Minn., was at 17 percent and expected to rise as the full effect of recent layoffs in iron ore mining began to be felt.

As an acknowledgement of the change, the heads of the two Workforce Investment Boards in the region have asked for regular updates about what jobs have been available in the region, most specifically by monitoring the state’s job Web site, MinnesotaWorks.net.

While data from the MinnesotaWorks site changes daily as jobs are posted and then filled, some key trends have developed:

• Job openings in northeastern Minnesota took a deep drop from mid-December through January; the number of listings was about one-third of the number available the previous year.
• From January through April, the number of job openings steadily rose, up about 40 percent from the lowest point in January.
• Of those jobs, a significant majority (about 77 percent) were in the immediate Duluth area. And of those jobs in Duluth, about two-thirds had something to do with health care. Within health care, the job openings spanned a broad range of occupations, with about one-fourth of the jobs in support and administrative posts that had little or no patient contact.
• Job postings in May and June dropped back again, though not quite to the low levels seen in early January.

The trend toward greater employment in health care has long been predicted in northeastern Minnesota. In Duluth itself, in the fourth quarter of 2008, data show that health care employment accounted for more than 28 percent of all jobs in the city and more than 30 percent of all wages. The shift is a continuation of trends that have been under way since the 1980s; a reduction of manufacturing jobs and an increase in jobs in knowledge industries like health care, education, and professional and technical services.

Five- to 10-year projections show an acceleration of this trend. [1] Even though employment in traditional goods-producing industries is expected to grow slowly, slightly above national trends, the strongest growth areas are in the knowledge industries, according to research done for the Northland Works Regional Economic Development Strategy Leadership Team.

In the larger region, including northwestern Wisconsin, jobs in knowledge industries are expected to grow by 13 percent by 2014, compared with 2 percent growth in goods-producing industries during that period. (see Figures 1 and 2).

Knowledge industries include information, professional and technical services, management of companies and enterprises, educational services, finance and insurance, health care and social assistance, arts, entertainment and recreation. Goods-producing industries include mining, utilities, manufacturing, transportation and warehousing, forestry and agriculture.

In mining and in professional and technical services, the problem has been exacerbated by the success of the industries themselves. A recent study by the Bureau of Business and Economic Research at the University of Minnesota Duluth, in cooperation with DEED, found that while employment in Iron Range mines has held steady for the last five years, productivity increases have allowed the output of the mines to increase 130 percent, far faster than other industries.

An earlier study by DEED found that employment in mining is expected to increase by 400 people (11 percent) by 2016 on the Iron Range because of expansion projects in the region. That estimate may have to be trimmed back, however, because of the impact of the recession on the industry.

The Workforce Investment Boards and the Northland Works Regional Economic Development Strategy Leadership Team have debated what these changes mean for northeastern Minnesota.

As part of that transition, Lake Superior College in Duluth sponsored a two-day event in May, “Train for Change,” designed to show dislocated workers and other job seekers, as well as staff from the college and workforce centers, how the job market has been changing and what training programs might be available. The Northeast Higher Education District is also working on a similar program.

While the future is hard to predict, workforce development officials are working with a broad range of industries to identify how the occupations of tomorrow will be different from occupations of today and make the appropriate training available. The good news is that the future job picture is bright. The tough news is that many workers will require new training to get the best jobs.

End Notes

 [1]Economic Modeling Specialists Inc. (EMSI) projections are used here and for the Regional Information Grants (RIG). EMSI allows analysts to develop customized regional employment projections. These are then compared with standard regional projections. See the DEED Web site at positivelyminnesota.com/data  to verify reasonability. The projections start with the state projection and break it into segments. They then add in non-covered employment by using county business patterns data.