State doles out millions to laid-off workers amid shaky job market

Categories: Economy
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The state lost nearly 14,000 jobs in November, yet the unemployment rate fell. WTF?
Yesterday, the state Department of Employment and Economic Development announced it has awarded more than $2.2 million in grants to provide services for 585 workers who were recently laid off at eight Minnesota businesses.

The grants represent a significant public expense meant to help out-of-work adults develop the skills they need to compete in today's brutal job market, including career counseling and training.

Although DEED estimates that Minnesota continues to lose jobs, the state's declining unemployment rate will soon trigger the elimination of benefits for about 7,000 long-term unemployed residents, perhaps making the DEED grant money more important than ever.

In November, the state's unemployment rate fell to 5.9 percent, the lowest since October 2008 and well below the national rate of 8.6 percent.

If you read the previous two paragraphs closely, you might be wondering how the state could lose 13,700 jobs in November and see the unemployment rate drop in the same month. One factor explaining this discrepancy is that the unemployment rate is determined by a survey conducted by federal employees in D.C., while the survey of employers is conducted by the state. Both use limited sample sizes, meaning it's possible one or both of the surveys could be inaccurate.

With regard to this issue, DEED Commissioner Mark Phillips said his department intends to "look closely at the quality" of the state's employment data, but added that indicators like temporary hiring and new claims for unemployment benefits suggest the improvement in the job market indicated by the falling unemployment rate is closer to the truth.

Another factor behind the discrepancy is that the unemployment rate doesn't account for discouraged workers who haven't actively looked for work for a month or more. Hence, the unemployment rate could fall not because the economy is improving, but rather because the job market is so dire some people simply throw in the towel and seek ways to meet basic needs other than gainful employment.

Even if Minnesota's job market is improving, finding work is still way more difficult than it was a decade ago.

In an interview with Southside Pride, Kevin Ristau, Jobs Now's education director, compared the job markets in 2001 and today as follows:
In 2001, the metro region had about 51,000 unemployed workers competing for 72,000 unfilled jobs. For each job seeker, there was more than one job opening. In contrast, by the summer of 2011, the number of job seekers had more than doubled, rising to 104,000. Meanwhile, the number of job openings had fallen to less than 30,000--a drop of nearly 60%... We have twice as many job seekers in the Twin Cities than we had 10 years ago, but less than half as many job openings.
In sum, don't take the unemployment rate at face value. It's still quite difficult to find a quality, full-time job -- a fact the state is acknowledging with the $2.2 million in DEED grants.

If you're curious, here's a cheesy DEED video about how how the department's dislocated worker program works:

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3 comments
Anthony Alongi
Anthony Alongi

Aaron - Thanks for the link to the Dislocated Worker video.  We find when we present this video to groups of people who've just been laid off, it works rather well in empathizing with what they're feeling at that point in time, and giving them the basic info they need.  To folks who are not going through that immediate trauma - yes, it can come across as "cheesy"!  We've been talking about doing an update; but I hope everyone could understand there are higher priorities for our limited budget right now.  We'll keep doing our best for our job seeking customers and taxpaying investors.  - Anthony Alongi, Director, Minnesota Dislocated Worker Program

Aaron Rupar
Aaron Rupar

Thanks for the note, Anthony. I meant no harm with my 'cheesy' comment -- hopefully you understand I was just making cracking a little joke. I appreciate the good work you guys do!

Anthony Alongi
Anthony Alongi

All good - we've got a sense of humor about it, too!  (I still slap my forehead when I see the shot of the guy looking through classifieds.  We know virtually no one does this anymore!  Awful.  And yet...we cannot look away.)

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