It’s about jobs

MPR’s Laura McCallum is doing another “issues” piece in the governor’s race (we’ve done education, and taxes.) tomorrow .

Laura has sent along three pieces of audio with each major-party candidate which I’ve stuck in the “issues by audio” section of each candidate page – Hatch, Hutchinson, and Pawlenty.

Laura also got some analysis from Steve Hine, research director of the Minnesota Department of Employment and Economic Development. He’s one of the great treasures of Minnesota government (of which there are quite a few, by the way). Hine, however, will not be in her piece since DEED would offer up only a “political appointee” to do the talking on tape.

So here’s what he provided to Laura ahead of time. Her questions are in bold.

1. Mike Hatch has talked about the “fast food economy”, saying the top fastest growing sectors of the economy are jobs in fast food, restaurants, government and temporary work. Is that accurate?

We break out employment growth at various levels of detail, ranging from the super-sector level like Leisure & Hospitality to more detailed industries like Snack & Nonalcoholic Beverage Bars. Fast Food and Full-Service Restaurants are at a middling (in technical terms, a 4-digit NAICS) level of detail, which appears to be what Mike Hatch is referring to. Given this, I have ranked the growth in those 4-digit industries that we estimate monthly over two time periods – Aug ’02 to Aug ’06 and Aug ’05 to Aug ’06 (I use Aug as these are the most recent data available and because seasonality requires we compare like months over time). See “4-digit Industries.doc” which shows that over each of these time periods, limited-service eating (aka fast food), full-service restaurants and employment services (two-thirds of which is in temporary help services) are the three top job producers in terms of the absolute number of jobs added. Government doesn’t appear because that’s a super-sector and so wouldn’t provide an apples-to-apples comparison (more like a watermelon-to-apple comparison). You’ll notice that although these areas added the most jobs, they aren’t the fastest growing in terms of percentage increase in jobs – that goes to medical equipment manufacturing, although these others aren’t far behind.

Gov. Pawlenty said in the second quarter of 2006, Minnesota saw more rapid job growth than at any point in 22 years. Is that correct? And if you looked at other three-month periods, not just quarters, would that still be the case?

During the 2nd quarter of ’06 (April to June), the state added 32,900 jobs – this was the seventh-highest three-month job gain posted since 1950 (and probably ever since the economy was much smaller before 1950). The most recent three-month span where more jobs were added was Feb – April 1984 when 34,900 jobs were added, and the most recent actual quarter was Jan – March 1984 when 34,800 jobs were added. So it is the case that April to June produced more jobs in absolute terms that any other three-month span in 22 years. However, if you interpret “more rapid job growth” to mean the growth rate in percentage terms, April to June’s rate of 1.20% fell short of three three-month periods during the ’90s, the most recent being May – July 1997 when the rate of growth was 1.26% on a job gain of 31,200.

Pawlenty also said on a rolling 12-month average, from July 2005 to July of this year, Minnesota saw the largest job growth in the history of the state. How many jobs were created during that time-frame? Is it true that was the largest growth for a July to July period? What are the standard time-frames that labor market experts look at, and how has the state done when you look at those time-frames? How does the July-to-July job growth compare to the boom years of the 90s?

From July ’05 to July ’06, the state added 76,000 jobs for a 2.81% growth rate. Other July-to-July time spans that exceeded this job gain include ’83-’84 (101,800 jobs, 5.89% growth), ’77-’78 (88,700, 5.50%), ’76-’77 (82,300, 5.38%), ’78-’79 (80,100, 4.71%), and ’72-’73 (79,300, 5.82%). There are no “standard” time frames, although shorter time frames can be misleading when unusual and temporary occurrences (e.g. a strike) can have a large but short-lived impact. We often focus, therefore on over-the-year growth. By that standard, the July to July numbers are the best we have seen in some time. The last time we exceeded these figures was May ’97 to May ’98 when we added 79,100 jobs for a 3.18% rate. Other over-the-year growth rates during the ’90s that exceeded this past July’s included April-to-April ’98 (86,600, 3.50%), Jan-to-Jan ’98 (76,600, 3.11%), and Sept-to-Sept ’94 (80,300, 3.56%). The largest job gain on record was Aug-to-Aug ’84 at 113,500 or 6.58%, although Jan-to-Jan ’51 had the highest growth rate at 7.54% on 58,400 jobs gained. Extending the analysis of job growth to a two-year time span, the July 2004 to July 2006 gain of 97,300 (3.62%) was surpassed consistently (that is, every month) from March ’91-to-March ’93 through March ’99-to-March ’01, a time span that coincides with the official “boom years” of the ’90s. This two-year growth peaked during the April ’97 to April ’99 span at 144,600 (5.84%) during the ’90s expansion.

  • Allan Malkis

    Wow! A very conprehensive report, great for a numbers geek like me.

    I guess what I take out of this is that there’s some hyperbole on both sides. Hatch is right about the number of jobs, which is what most folks probably think of, but wrong about growth rates, which is what stats freaks think about.

    Pawlenty is exaggerating the current growth in both his claims, and this is less defensible because there aren’t any numbers that really support this.

    For the record, yes I am a DFL’er.

  • Bill Prendergast

    If I understand Mr. Hines’ answers correctly (like most economists, his style is very dense), what he is saying is this:

    1) Hatch’s remarks are right, to the extent that fast food, full-service restaurants and employment services (two-thirds of which is in temporary help services) are the three top job producers in terms of the absolute number of jobs added, and 2) Hatch’s remarks leave out the fact that there is at least one “area” of good job growth which is not related to fast food, restaurants, and temp employment—medical equipment manufacturing.

    So if you’ve got a background in medical equipment manufacturing and you’re looking for work, you’re sitting pretty this year. If you don’t have that kind of background and you’re looking for work, your best bets are fast food, working in a restaurant, or working for a temp agency.

    That’s the kind of economy Pawlenty and Minnesota Republicans are bragging about. That, plus the gas prices.

    I don’t understand why the jobs created by government aren’t included in Mr. Hines’ analysis (he calls government a super-sector), but I take it for granted that he has good reasons for calling it a “watermelons-to-apples” comparison. That is too bad for the Pawlenty argument, because Pawlenty regularly creates high-paying government jobs for political cronies who have been loyal to him—including those in the analysis would improve his record on job creation.