Inside the highest jobless rate in the state

At 17.1 percent in December, Brainerd's unemployment rate was the highest in the state for cities with a population of more than 10,000 people.

The number reflects a labor force of 7,298 people living in the city, but not necessarily working in the city, of which 1,248 are filing for unemployment benefits.

But why is Brainerd so high?

Craig Nathan, operations manager at the WorkForce Center in Brainerd, has a few theories.

One, Nathan said, is that Brainerd's housing stock is for the most part low cost, both owner-occupied and rental, attracting low-income earners with lower skill sets. Low income earners also can't afford to travel far to find work, he said.

"They're the first people to go and the last to be hired," Nathan said.

The other theory Nathan has is that Brainerd, like other northern Minnesota communities, can no longer rely on legacy industries like paper, timber, mining and railway.

That theory shows in statistics from the Department of Employment and Economic Development, where other northern Minnesota cities similar in size to Brainerd are feeling the unemployment pinch.

In December of 2009 Grand Rapids had an unemployment rate of 13.7 percent, Bemidji a rate of 13 percent, Hibbing a rate of 10.9 percent, Virginia a rate of 10.7 percent and Alexandria a rate of 9.6 percent.

"You had generations of people that worked at these industries," Nathan said. "That's why they were legacy industries. But you know what, those industries don't exist anymore. That kind of leaves people with a lack of hope, but you still have to pay the bills."

Paying the bills means taking jobs in the service sector, Nathan said. While someone can sustain themselves on service sector wages, they are not saving any money or building wealth.

"They are one paycheck away from disaster," he said.

The one bright spot Nathan sees in Brainerd is the health care industry, but even that is a product of retired people moving into the city who need that service. People who need work, he said, are moving away.

Sheila Haverkamp, Brainerd Lakes Area Development Corp. executive director, said one way to look at the unemployment situation is by doing so in a larger picture. Brainerd currently has almost 12,000 jobs within its city limits, which she said isn't reflective of the city's unemployment rate.

Haverkamp said 67 percent of all jobs in Crow Wing County are in Brainerd and Baxter, though only 30 percent of the people in the county live in those cities. Within Brainerd, 23 percent of the city's 12,000 jobs are filled by Brainerd residents and 33 percent are filled by people who do not reside in the county.

It's important, Haverkamp said, to look at not just the city of Brainerd but Crow Wing County and the region as a whole, where the unemployment rate is closer to the national average of 10 percent.

"We're all interconnected," Haverkamp said.

Also, higher unemployment in Brainerd during the winter months is nothing unusual. Nathan said historically unemployment in the area has gone up during the winter months when resorts and related industries are less busy.

Brainerd peaked at 21 percent unemployment in January of 2009. Tracing back through the decade, Brainerd's January unemployment rate has always been the peak unemployment time in the city - 13.4 percent in 2008, 12.4 percent in 2007, 10.9 percent in 2006, 9.7 percent in 2005, 12.6 percent in 2004, 12.7 percent in 2003, 10.6 percent in 2002, 9 percent in 2001 and 7.8 percent in 2000.

It's all cyclical, Nathan said, and Haverkamp is hopeful the area is coming to an upward trend when it comes to new businesses and employment opportunities. Business contacts with BLADC have been increasing, Haverkamp said, and anecdotal information she's seen shows more job opportunities in the area.

However, Haverkamp said when she's visiting with people, there's guarded optimism when it comes to adding new employees.

"Even though they're getting a little more confident things are looking up, they hesitate to employ people until they're a little more sure that the future is going to be brighter," Haverkamp said. "They don't want to hire people and then have to lay them off right away."

MATT ERICKSON may be reached at matt.erickson@brainerddispatch.com or 855-5857.