Stable labor economy supports state

Minnesota's labor economy is one of the most stable in the Midwest, even as the nation's business climate continues to weaken.

Minnesotans filed fewer first-time unemployment claims in December than they did a year ago and fewer than nearly all of their Midwestern neighbors, according to the U.S. Bureau of Labor Statistics.

Still, layoffs have hit the state. The Fingerhut catalog production plant in Mora let 215 workers go last week; 419 more employees got pink slips at Minnetonka-based ADC Telecommunications.

"We've had layoffs and we'll have more layoffs, no doubt about that," said Minnesota state economist Tom Stinson.

But economists doubt things will get bad enough to bring Minnesota's jobless claims to the rates being recorded by its neighbors, such as Iowa, which filed more unemployment claims in December despite having a significantly smaller population.

"Our economy overall is rather more diversified than our immediate neighbors," said Paul Anton, president of Anton, Lubov & Associates. "But I don't think we're immune or resistant to a recession, if one shows up."

Minnesota had 7,140 new unemployment claims in December, or 2.2 percent of the national total. Iowa had 9,619 new claims, 2.94 percent, and Wisconsin had 16,952 claims, or 5.18 percent. Michigan, the center of the domestic auto industry, had 13.3 percent of the U.S. total with 43,436 claims.

The Bureau of Labor Statistics said December's numbers were the highest for that month since 1995, with 326,743 total new claims. The bureau, part of the U.S. Department of Labor, reported that manufacturing industries accounted for half of the new claims, with most of those from the auto industry.

In comparison, Minnesota's mix of manufacturing is about the national average and is much less reliant on the auto industry than some other Midwestern states, economists say.

While the Labor Department also reported that unemployment claims rose sharply for the week ended Feb. 3, the nation's unemployment rate stands at 4.2 percent -- its highest level in 16 months but still a low figure compared with past downturns. Minnesota's unemployment rate was at 3.1 percent in December.

In fact, Minnesota's low unemployment rate might explain why there have been relatively few layoffs in the state.

"Minnesota employers may be more reluctant to lay off people because (such workers) are less likely to be available when they want to hire them back," said Stinson.

The tight labor market might also explain the relatively low number of unemployment claims.

"For those laid off, they may be able to find another job almost immediately so they may not file an initial unemployment claim," Stinson said.