Unemployment Rates in Southwest Minnesota - Relative Lows and Record Highs

By Jennifer Ridgeway and Cameron Macht
December 2009

The Lowest Rate in the State

When unemployment rates were released in the fall, the 23-county Southwest Minnesota Planning Region reported the lowest rate in the state, continuing a long-term trend. Since the recession started in December 2007, southwest Minnesota’s unemployment rate has been the lowest in the state more than 60 percent of the time; it was higher than the state rate just three of the last 24 months—January, February, and March 2008.

Since April 2009 unemployment rates have been lower in southwest Minnesota than any other region in Minnesota, steadily about 1 percent below the state rate and about 2 percent lower than the national rate (see Figure 1).

Figure 1: Unemployment Rates Since the Start of Recession by MN Planning Region

It’s All Relative

Despite being the lowest in the state, unemployment rates in southwest Minnesota are significantly higher than they were just one year prior. At 6.5 percent through third quarter 2009, the region’s rate was more than 1.5 percent higher than in third quarter 2008 and 2.5 percent higher than in third quarter 2007. In October half the counties in southwest Minnesota had unemployment rates at least one full percentage point higher than the year before. But only four counties—Le Sueur, Waseca, Martin, and Blue Earth—had increases that exceeded the statewide change of 1.8 percentage points (see Figure 2).

Figure 2: Over-the-Year Change in County Unemployment Rates

Between 2000 and 2007 southwest Minnesota’s annual unemployment rate was below 4.5 percent every year but 2003. In 2008 southwest Minnesota’s annual rate climbed to 5.2 percent and is on pace to finish 2009 above 7 percent. If that happens, it would be significantly higher than any annual rate recorded in the region over the last 20 years. So while the region’s rates remain relatively low, they can only be considered so in comparison to the relatively high unemployment rates being experienced across the state and nation.

Substantial Labor Force Growth

With nearly 227,000 available workers, the size of the labor force in the 23-county region has been steadily expanding throughout the year in spite of the recession. Economic Development Region (EDR) 9—Blue Earth, Brown, Faribault, Le Sueur, Martin, Nicollet, Sibley, Waseca, and Watonwan counties—has the largest labor force in the planning region with an average of about 132,740 available workers through the first three quarters of 2009. EDR 8—Cottonwood, Jackson, Lincoln, Lyon, Murray, Nobles, Pipestone, Redwood, and Rock—had a labor force that averaged approximately 67,740 workers, while EDR 6W—Big Stone, Chippewa, Lac Qui Parle, Swift, and Yellow Medicine—averaged about 26,200 available labor force participants.

All three regions were experiencing recent labor force growth despite the recession, surprisingly at a much faster pace than the state and nation. EDR 9’s labor force expanded by nearly 5,000 workers from fourth quarter 2007 to third quarter 2009—a 3.8 percent increase. EDR 8 gained about 2,700 additional workers since the start of the recession, a 4.1 percent increase, and the total workforce in EDR 6W climbed 5.2 percent, with 1,300 net new available workers. In comparison, Minnesota’s labor force grew 2.5 percent, while the national labor force held steady (see Table 1). Click here for larger image.

Table 1- thumbnail

The downside to this growth is that the region’s rising unemployment rate also means that many more of these labor force participants are now unemployed. Between third quarter 2008 and third quarter 2009 the number of unemployed people in the region jumped 35 percent against a 1 percent increase in the number of employed people.

Relative Hiring Demand

The region’s relatively tight labor market makes it critical that job seekers have access to career information, especially as area employers cut back on hiring during the recession. According to the Minnesota Department of Employment and Economic Development (DEED) Job Vacancy Survey, the number of open-for-hire positions was down 33 percent in EDR 6W and 48 percent in EDR 9 between second quarter 2008 and second quarter 2009. Much like the state of Minnesota, double-digit reductions in the number of job openings has been the norm throughout the region since mid-2008 (see Table 2).

Table 2
Area	Job Vacancies 2Q 2008	Job Vacancies 2Q 2009	Percent Change 2Q 2008 - 2Q 2009
SW Planning Region	3,232	2,087	-35.4%
EDR 6W	395	263	-33.4%
EDR 8	796	765	-3.9%
EDR 9	2,040	1,059	-48.1%
State of Minnesota	51,722	31,358	-39.4%
Source: Minnesota Department of Employment and Economic Development, Job Vacancy Survey

Compare the reductions in hiring to the rising numbers of unemployed, and the region currently has roughly 7.8 unemployed workers available for every job opening. That’s similar to the 7.7 ratio statewide but more than double the region’s ratio just one year ago (3.4 unemployed persons per job opening) and significantly worse than the period during and following the 2001 recession (see Figure 3).

Figure 3: Ration of Unemployed Persons to Job Vacancies

To help job seekers respond to a tough labor market, DEED publishes the results of its regional Occupations in Demand (OID) tool online.[1] The OID tool provides a relative ranking of current demand (although job openings are down across the board right now and competition is high) and helps job seekers investigate future employment options.

Training for Occupations in Demand

The latest OID results, updated during fall 2009, show current hiring demand in southwest Minnesota is greatest among health care occupations like registered nurses, home health aides, nursing aides, and licensed practical nurses as well as among high-turnover jobs in food service and retail. In EDR 6W current demand is also relatively high for truck drivers, accountants, welders, and CNC operators. In EDR 8 jobs like sales representatives, health services managers, and meat packers are added to the list; while in EDR 9 diesel mechanics, social workers, doctors, and network systems analysts also rank near the top for current demand.

For some job seekers, pursuing an occupation in demand might require upgrading their skills to help them better qualify for reemployment as the economy recovers. That’s what seems to be happening right now: instead of searching for a job, many workers facing unemployment are going back to school to train for a new career. Enrollment at the community and technical colleges and four-year universities in the region has shown rapid growth over the last two years. Enrollment gains in the region were between 2 and 6 percent in the last year (see Figure 4).

figure 4: Over-the-Year Change in Headcount at Regional MnSCU Institutions

Investing in the Future

All indications point to a good return on an investment in education. In 2009, 41 percent of all job vacancies in the Southwest Planning Region required some form of post-secondary education. The trend likely will not reverse any time soon, as future employment projections predict that more than 60 percent of job growth in the next decade will happen among jobs that require training beyond high school.

Although limited, hiring is still occurring in the region, and competition for jobs is high while employers are looking for people with the proper skills or education. For many job seekers that means now is the time to go to school. Unemployed people wanting to identify jobs with higher levels of current demand can use DEED’s OID tool, which not only ranks jobs by their current level of regional demand, but also links users to educational programs in the region. This should put job seekers in the best position to move from unemployment to employment when the labor market recovers.

[1] DEED Occupations in Demand (OID) tool: www.deed.state.mn.us/lmi/tools/oid/default.aspx

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