State Jobs News Quite Good; But Not So Across the Range

Mesabi Daily News

Bill Hanna

The headlines for state economic news the last week or so shouted out good jobs news.

But it would appear someone didn't get the memo for the headline writer to include the Iron Range and northeastern Minnesota in the good-news frenzy.

Even though mining, the region's biggest industry based on salaries, is running at near-full capacity, the employment and jobless numbers don't add up anywhere near as well for the Iron Range as the statewide averages.

Example: For the first seven months of 2013 through July, a comparison of the statewide unemployment rate with that of the Iron Range shows the area's jobless rate is 64 percent higher than the overall Minnesota level.

And a report put out last week by the U.S. Commerce Department showed more negative data for the region.

While Minnesota metros – the Twin Cities (3.9 percent), St. Cloud (4 percent), Mankato (4.1 percent) and Rochester (3.6 percent) – rank in the top quarter of 381 U.S. metropolitan areas Gross Domestic Product growth from 2011-2012, the Duluth area shows a -2.8 percent.

Iron Range Resources & Rehabilitation Board Commissioner Tony Sertich said it is not as bad for the region as the numbers would indicate at first look.

"The biggest factor in the jobless rate and lack of job growth is the logging and timber industry. Logging, timber, manufacturing and mining are grouped together. That's where the hit is in those numbers," Sertich said.

And state Sen. David Tomassoni, DFL-Chisholm, who is also a member of the IRRR Board, said, "It's always a mystery to me why we are lagging in employment when our mining industry is doing so well," he said.

The wood products industry has been devastated, with 1,305 jobs in the region lost between 2000 and 2010 and employment in that sector is still dropping, according to Jan Saxhaug, Department of Employment and Economic Development regional analyst of Northeastern Minnesota in Grand Rapids.

Mining jobs in the seven-county Arrowhead area, however, have also not recovered yet from 2000 levels. Mining employment was 5,599 in the region going into the previous decade. It was then trimmed by 2,506 from 2000 to 2010, Saxhaug said. The bounce back from 2010 to 2012 – 1,491 – does not yet cover that deficit.

"But that includes LTV," Sertich said, referencing the 2000-01 closing of that taconite plant near Hoyt Lakes and the subsequent loss of 1,400 jobs. "It takes time to get that back. But with Magnetation and copper/nickel we will regain that footing."

He was referring to Magnetation, which is turning taconite tailings into product and jobs, and nonferrous projects PolyMet, in the footprint of LTV and currently in an advanced permit stage, and Twin Metals near Ely and Babbitt, which is not yet that far advanced.

While Minnesota is logging relatively low unemployment, the Iron Range continues to have persistent, significantly higher percentages of jobless people. Here are those percentages so far in 2013:

· Minnesota: January, 6.6; February, 6; March, 5.8; April, 5.4; May, 4.9; June, 5.2; July, 5.1. Average: 5.5.

· Virginia: January, 8.8; February, 8.5; March, 7.8; April, 7.3; May, 7; June, 7.9; July, 7.7. Average: 7.9.

· Hibbing: January, 7.7; February, 7.1; March, 7.4; April, 6.8; May, 7.7; June, 8.6; July, 8.9. Average: 7.7.

· Grand Rapids: January, 11.8; February, 10.8; March, 11.1; April, 10.4; May, 9.1; June, 8.6; July, 8.6. Average: 10.

The data is like a nagging migraine headache for the region – one that tags along for the ride in a mining boom/bust area, such as the Range, where there is not enough economic diversity.

"It's been going on for a while, all the way back to the Depression days and before that," Sen. Tomassoni said.

The IRRRB was created in 1941 to try to break the boom/bust cycle. Its mission was first and foremost economic development on the Range.

A production tax paid in lieu of property tax dollars goes into several funds. Some of the money aids school districts and a growing amount of funds go to public works in

The economic development dollars are generated to help attract new businesses or expand others already on the Range.

There have been several IRRRB success stories of new businesses in the past several years, mostly call centers that do provide significant employment on the Range. But the higher jobless rates persist.

So why has the IRRRB economic development engine, which no other area of the state and no other mining region of the country have, not attracted more new business and created more jobs?

"Economic development is not an exact science. We have hits and misses. We're always trying to do more," Tomassoni said.

"It's always important to look at diversification and we will continue to do so," Sertich said. "Is the agency doing enough? We can always do more. We're never satisfied. We're doing the work of economic development every day. But basically, I think we are on a par with other rural parts of the state"

Yet when it comes to manufacturing, the Iron Range took a huge hit between 2000 and 2010, losing 4,500 jobs. Since then, the Range gained back only 670 of those jobs, Saxhaug said.

He added, however, that the Range is "actually a little better off than the state as a whole" as far as a manufacturing rebound.

And Sertich said, "The manufacturing sector is doing quite well."

But not as well as northwestern Minnesota, where a job fair will be held in Roseau next Thursday to try to find workers for many openings.

"Jobs are plentiful, largely because there is a boom in manufacturing locally," said Kathy Carney, workforce development field operations manager at DEED. "The labor market is so tight that companies have been hard-pressed to find new workers."

According to DEED, manufacturing accounts for one in every four private sector jobs in northwest Minnesota. In addition, manufacturing employment is projected to grow by 17 percent, or 4,240 jobs, between 2010 and 2020.

But Sertich said it's not fair to compare areas as far as job growth. "It's like comparing apples and oranges."