Economists try to sketch out Minnesota's job future

The latest reading on Minnesota's job market comes out later this week, and the big question is whether the state will see job growth for a second month in a row.

In July, Minnesota employers added jobs for the first time in almost a year, which could be a sign of a recovering job market. But even if the August employment data also reflect growth, many economists say it will be too soon to cheer.

State economist Tom Stinson believes that at some point, Minnesota's job picture will look dramatically better. But when will that happen?

"Eventually. But that's a big word, of course," said Stinson.

It's also a big question. "Eventually" could last a very long time. A significant stop along the way, Stinson says, could come in the year 2012.

He estimates that's when the state will finally recover the 115,000 jobs lost since the start of the recession in December of 2007.

Job growth during the first parts of the recovery will be slow, Stinson says, because employers will first ramp up production with their current workforce.

"After you get your existing workers working the number of hours you'd normally have them, then you'd begin to hire," he said. "But the last thing you want to do is hire someone and then lay them off two weeks later or three weeks later because there's not enough work for them."

But it's not just the laid-off workers the labor market will need to absorb. State labor market analyst Steve Hine says there are 125,000 or so workers who have quit the labor market either out of discouragement or for personal reasons. The hope would be some portion of them can find new jobs. And then, Hine says, there are the new additions to the workforce.

"Currently, we're adding about 40,000 workers through natural population growth," said Hine.

Hine scribbles on a piece of paper to add up these pools of workers. Over four years, they total about 460,000. For all those people to find jobs by 2013, Hine says the state would need to add 10,000 jobs every month.

The problem is, that's never been done.

"And that includes a time horizon of four years," he said. "So if it's going to be very difficult to regain full employment in four years if we started today, it's going to take some time to get there."

And some even question whether the state will add any jobs--at least in the near term.

Naveen Joshi of IHS Global Insight, a leading forecasting firm, is one of them.

"Over the next year, we know approximately 22,000 jobs will be lost in the state of Minnesota before it starts recovering," said Joshi.

Joshi says those jobs will go away by the second quarter of 2010.

Joshi's long-term outlook is pretty grim, too. He says it will take more than a decade for Minnesota's jobless rate to drop to the 5.4 percent level seen last year.

"In 2008, the unemployment rate in Minnesota was 5.4 percent, and by 2021, Minnesota will reach the 2008 level," said Joshi.

He says the national rate will return to 2008 levels somewhere around 2020.

Mark Zandi, the senior economist at Moodys.com, doesn't have such a dire outlook. He predicts the national unemployment rate will be back around 5.5 percent by 2014. But he knows that's probably an impossibly long way off for laid-off workers. So, he argues that the government will likely have to expand the safety net.

The federal stimulus package did fund unemployment insurance extensions -- in Minnesota, jobseekers can get unemployment benefits for up to 79 weeks. Zandi says more extensions and additional help with health insurance could be necessary.

"Maybe even consider providing some help with mortgage payments to make sure this foreclosure crisis doesn't get even worse as people stay unemployed for long periods of time," he said.

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