What's The Secret To Minnesota's Success On Jobs?

The labor market has recovered strongly in Minnesota, where the unemployment rate is just 4.8 percent.

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Some states have had an easier time than others climbing out of the jobs hole. One of them is Minnesota. Its unemployment rate is 4.8 percent, well below the national average. NPR's Sonari Glinton went to Minnesota to find out why.

SONARI GLINTON, BYLINE: One of the places that's seen growth in Minnesota is St. Cloud. Now, it's about 65 miles northwest of downtown Minneapolis. That's where I met up with Brian Schoenborn. He's a lawyer and he helped develop a part of the downtown area called Fifth Avenue Live.

BRIAN SCHOENBORN: We'll go into what's called the Davidson Opera House. So, this was the original theater in St. Cloud. It's been renovated into co-working space. And so there's a company on the first floor called Live Edit that's just moving in right now. You'll see it as you go here through the left side. You can see here this is the original advertising for Battle Ax tobacco. So, it's an old tobacco company from the late 1800s.

GLINTON: Schoenborn has lived in St. Cloud all his life - actually, his ancestors were among the first European settlers in the area. He says the city never got that big rainmaking company or supersized factory.

SCHOENBORN: This is not a one-horse town. It's very diverse. There are some common themes, some common threads, like healthcare, like education. We don't have this one major business that dominates our community. And as a result, you either rise or fall based on that. We have a much more broad-based economic recovery happening here in central Minnesota.

GLINTON: One of the things that sets St. Cloud apart and Minnesota as whole is healthcare and education. St. Cloud has St. Cloud State University and other colleges, plus a major hospital. Minnesota is a major center for education with a highly skilled populace, plus it's a center for healthcare - especially with the Mayo Clinic in the southern part of the state expanding. Then there is this other factor, the oil boom in neighboring North Dakota. For instance, Schoenborn needed some repair work done on his house and he called his contractor, Randy.

SCHOENBORN: And talked to his wife. And his wife said, well, Randy's in North Dakota. You'll have to call him in about four months because he's just gone. And so, as a result, the people who are left here are busier because the normal people that you'd rely on are already out in North Dakota helping. And so they're relying on a lot of labor and business assistance from the state of Minnesota.

LUKE GREINER: If I were to identify a single industry that is holding back as far as employment goes, I would probably identify manufacturing.

GLINTON: Luke Greiner is with the Minnesota Department of Employment and Economic Development. He researches the jobs picture in the region. Greiner says, as much growth as there's been in healthcare and education in the region, and the spillover from energy, the economy is still struggling to fill in the holes left by manufacturing.

GREINER: Unfortunately, in industries such as manufacturing that employs so many people and is so important, can kind of hold back the overall employment picture.

GLINTON: Another thing that may have hurt the employment picture is the terrible winter that ravaged Minnesota and the country. But King Banaian, an economist at St. Cloud State University, says when the weather slow growth it creates this pent-up demand that gets unleashed, especially here in Minnesota. It's called the catch-up effect.

KING BANAIAN: And that catch-up effect, when it happens, typically is fairly quick. So, if you have a really bad quarter, like we just had in the first quarter with a very cold January and February, you'll see a turnaround. And in that second quarter is that demand that got delayed in the first quarter comes back to you in the second.

GLINTON: Banaian says Minnesota and the U.S. are in a period of economic calm.

BANAIAN: The zombies are overseas and maybe things like what happens if China does go into a deep recession and stops wanting U.S. crops? What happens if there is a conflagration in Europe? I think the threats to the Minnesota economy as well as the U.S. economy are external right now.

GLINTON: Banaian he says we shouldn't be waiting around for the economic zombies to attack - not yet. Sonari Glinton, NPR News.

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