OPINION | The question for jobs and markets: "For whom?"

Minnesota and the Twin Cities metro area have been dished a steady diet of good, healthy news about job numbers and unemployment this spring. What we don’t know yet is whether statistics will pay the grocery bill.

Ever since Adam Smith wrote the Wealth of Nations back in 1776, people have asked esoteric questions about whether markets work. Akin to that, people have looked at job numbers since the Great Depression to see if total employment would tighten labor markets and raise more equitable prosperity for all.

We missed the mark. The question we should have asked all along is, “For whom do the markets or jobs work?”

Let’s review the positive developments in Minnesota first and then ponder the second question.

On July 1, Tom Webb reported in the St. Paul Pioneer Press that the U.S. Bureau of Labor Statistics (BLS) found the Twin Cities had the nation’s lowest unemployment rate among the nation’s 49 largest metropolitan areas. The metro unemployment rate of 4 percent in May edged out Austin, Tex.; Columbus, Ohio; Oklahoma City, and Boston and San Antonio, which were tied for fourth and fifth lowest unemployment with a 4.7 percent rate.

Among smaller metro areas, oil-booming North Dakota had Bismarck and Fargo-Moorhead leading the nation with 2.2 and 2.5 percent unemployment rates. Other regional centers of Grand Forks-East Grand Forks, Mankato, Rochester and St. Cloud were also among national leaders.

This built on positive May unemployment news for Minnesota that found the statewide rate fell 4.6 percent. The Associated Press noted jobs gains were in the private sector led by construction and manufacturing. The good news there is that these sectors generally pay better than many of the retail, healthcare and service sectors.

More recently, the U.S. Labor Department announced the U.S. economy added 288,000 jobs in June, surpassing analysts’ expectations, and that the national unemployment rate fell 0.2 percent in the month to 6.1 percent – the lowest since September 2008 during the Great Recession. But the New York Times article also noted wages were up just 2 percent from the same period a year earlier, in line with the modest inflation rate and salary increases of the past four years.

More Minnesota employment news will be released Friday. What gnaws on the data so far, however, is the impact the improved jobs market may be having on household incomes and the well being of working people, as the Times article reminded us.

Jim Hightower, the Texas sage, made that point in a June 14 blog in which he said different standards are used to measure the health of the jobs market and the stock market.

“As a worker, you don’t merely want to know that 200,000 new jobs are on the market, but what they’re worth – do they pay living wages, do they come with benefits, are they just part-time and temporary, do they include union rights, what are the working conditions, etc?

“In other words,” Hightower added, “are these real jobs … or scams?” That brings us back to asking “for whom” are these jobs and statistical improvements benefiting.

Partly answering that, the Minnesota Department of Employment and Economic Development (DEED) earlier took a thorough look at who is harmed by unemployment in Minnesota. In the analysis by John Clay, the March statewide unemployment rate had fallen to 4.8 percent but the 12-month moving average unemployment rate was still 11.4 percent for Black or African American workers and 8.1 percent for Hispanic or Latino workers.

This DEED report set the table for understanding where Minnesota’s economy is going and where much work remains before statistical improvements actually lift all Minnesotans regardless of race, age, gender and currently underemployed work status.

Anyone with concerns about the equality of our economic gains should also read Full Employment and the Path to Shared Prosperity in the Summer 2014 edition of Dissent magazine.

“Levels of unemployment are not the gift or curse of the gods; they are the result of conscious economic policy. The decision to tolerate high rates of unemployment is a choice,” wrote authors Dean Baker, co-director of the Center for Economic and Policy Research, and Jared Bernstein, a senior fellow at the Center for Budget and Policy Priorities.

Baker and Bernstein call for efforts to reexamine industrial policy along lines of what works in other countries. Most of their recommendations call for federal action. But they also note some states do have policies, usually called “work sharing,” that help employers cut back working hours rather than lay off workers.

What state efforts might work, what might be counter-productive and lead to even more part-time work and poverty, are issues that needs careful study among labor, conscientious business leaders, public officials and the nonprofit service sectors. The past year’s accomplishments by the Minnesota Legislature in raising the state’s minimum wage and protecting women and families in workplaces were products of collaborative research and mutual efforts.

Ignoring the challenges we face with equality in the economy and job quality is to perpetuate unemployment and poverty. Baker and Bernstein rightly called this a public policy “choice.” Minnesotans might avoid that choice if they first ask the question “for whom” is the status quo helpful or harmful?

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    Lee Egerstrom's picture
    Lee Egerstrom

    Lee Egerstrom is an Economic Development Fellow at Minnesota 2020.