With the campaign season heating up, Mark Dayton and the DFL are pushing the theme that happy days are here again in Minnesota.
And why not? The official unemployment rate in Minnesota is the lowest it has been since the great recession hit, and by some measures the economy has recovered. If I were running Mark Dayton’s campaign that is exactly what I would be doing.
But looked at from the perspective of the average Minnesotan, the picture isn’t quite so rosy. While it is true that the unemployment rate is low, one of the main reasons is that over the past few years a huge number of people gave up on working altogether.
Just a few years ago, more than 75 percent of adults in Minnesota were in the workforce. Now that number is 70.1 percent—yet that 5 percentage-point difference isn’t actually counted in the unemployment number, because unemployment only measures people “in the workforce.”
That’s thousands of people who fall into the category of “discouraged worker;” you and I probably think of them as having given up looking for work.
The last time the workforce participation rate has been this low is—you guessed it—1979, when the economy was really bad. As the economy expanded, opportunities for getting jobs and the rewards for doing so got better and better.
When that happens, more people enter the workforce.
Workforce participation peaked in the Clinton years, and slowly drifted down post 9/11. Finally, in 2006 it started rising again, as the economy recovered until the crash.
Since then, it has plummeted, and is still declining.
When an economy is really booming, the workforce expands because opportunity is out there. We simply aren’t seeing that, and people aren’t feeling it either.
In fact, during 2014 job growth in Minnesota has been essentially flat, and we lost 4,200 jobs in July alone, with June numbers revised downward by 3,900.
There are other warning signs we should be paying attention to: tax revenues have come in under projections in 5 of the past 6 months, signaling that the economy isn’t doing as well as economists predicted. Much of that shortfall is due to poor income tax collections, indicating that people aren’t making as much money.
The Department of Employment and Economic Development also has some troubling news for us to ponder: more than half of all employed Minnesotans are underemployed.
That means that people with college degrees are working in jobs that don’t require them, and people with High School degrees are working as unskilled labor.
They have jobs, but nothing like a job with a future, or one that can pay them what their education, training, skills, or experience are really worth.
This isn’t the kind of economy that Minnesotans grew up with, or one that we were led to expect as we grew up.
All this shows up in how people feel about things and what people are telling pollsters. The most striking poll number I have seen is that 3 out of 4 Americans don’t believe the next generation will be better off than their parents.
Let’s hope that’s just pessimism talking, and not true.
Americans have never felt that way in such large numbers, despite the fact that all the pundits, politicians, and economists are telling us that things are getting better all the time.
Over the past decade or more real personal income in Minnesota (and the rest of the country) has remained essentially flat—meaning that in a very real sense people are right that things aren’t getting better, despite what they are being told.
The Minnesota economy is doing better than the US economy as a whole—that is undeniable, but that has generally been true for decades. So it could be worse.
But like the US economy as a whole, it has lately been stuck in neutral, and may be starting to backslide with actual job losses.
Mark Dayton risks looking out of touch if he touts the Minnesota economy too much. Hardly anyone thinks things are “booming” right now, unless you count the people striking out for the Bakken oil fields. Most of us, in fact, feel like we are just hanging on, thankful for the job we have, and worried that it might not be there this time next year.
David Strom is a Senior Policy Fellow at the Center of the American Experiment.