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August job growth: "Holding pattern" continues
by Jeff Horwich, Minnesota Public Radio
September 15, 2004

Manufacturing jobs, on a seasonally adjusted basis, fell by more than 2,000 in August after growing since March. The August job numbers failed to deliver the strong growth many are waiting for. (MPR Photo/Jeff Horwich)

Job growth is not a technical requirement for an economic recovery. Minnesota and many other states have learned this the hard way since 2001. Even as the economy grew, the jobs lost during the recession of that year have been slow to return. Minnesota has regained less than 60 percent of the jobs lost since the start of the recession. The latest Minnesota jobs numbers, for August, don't do much to raise that tally.

St. Paul, Minn. — The state's top labor analyst uses terms like "still waiting" and "holding pattern" to describe the employment picture in Minnesota. He's been using them all summer, and for much of the past year. Steve Hine might have hoped August would bring him some new vocabulary. No such luck.

"We do seem to be in a holding pattern," Hine says. "This employment report certainly prolongs the summer lull. Over the past three months we've added only 900 jobs."

Now, April and May -- those were good months. The Minnesota economy added more than 21,000 jobs during those 61 days. But June was flat. In July, it went backward. Last month Minnesota gained 3,700 jobs -- that's the right direction, at least, but hardly impressive.

"Job growth of 4,000 per month is necessary just to keep pace with population growth," Hine says. "And job gains well above that are necessary for progress toward full employment. And this kind of progress does remain elusive."

We never get despondent at the Workforce Center. We're always optimists. - Jim Schultz, Midway Workforce Center

One tough number to see is the loss of 2,000 manufacturing jobs in August. That's not huge, but manufacturing has been growing since February.

Hine's prediction is that we are still more likely to move forward than back in the coming months. One year ago, workers were getting more productive, at a rate of 9 percent a year -- more than enough to fuel the economy's growth. In the latest quarter, productivity growth slowed to less than 2 percent. That would seem to suggest companies need to add workers to keep up.

But that's been the case for months -- part of why Hine remains puzzled by the August numbers.

There were anecdotal signs of life in the August job market. Late last month at Midway Workforce Center in St. Paul -- where job-seekers come to troll for jobs online and polish their resumes -- Director Jim Schultz was inclined to emphasize the positive.

"We never get despondent at the Workforce Center," Schultz says. "We're always optimists."

Brave face aside, Schultz says August was plenty busy. But that's not necessarily a bad sign.

"Some discouraged workers may be returning to the labor market -- people who had perhaps left the labor force because they couldn't find anything," he says. "I think some of those people are returning to look for work right now, because we've certainly been busier than ever in the last couple weeks."

Schultz also says temp agencies seem to be posting many more jobs and placing more Workforce Center clients lately. That is borne out by the August jobs numbers.

Over the past year, one sector has seen faster job growth than any other -- a boring-sounding category called "employer services." This is largely temp agencies, hiring workers themselves to meet the demand.

"I wouldn't say it was slow in July, but it definitely started building and August was particularly strong," says Alison Ault-Hilk, a district director for Spherion staffing and president of the Staffing Association of Minnesota. She confirms the industry has been busy placing temps in a number of different jobs.

"Material handlers, forklift drivers, packaging and assembly seem to be busy," says Ault-Hilk. "Clerical support, data entry -- those types of positions are what we're seeing."

Some advocates for Minnesota workers point out that temp jobs lack security, and often lack decent benefits. But economists like the state's Steve Hine say the upshot is that temporary staffing often foreshadows a surge in permanent hiring.

"Many businesses may need to ramp up production. But until they're certain about the long-term prospects they might do so with temporary help," Hine says.

One little detail: That quote was from a story we did in 2003 -- about how growth in temp hiring could soon give way to permanent positions. More than a year later, economists like Hine are still watching for some reason to change their tune.

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