State officials have expressed concern in recent years that the rate of job creation in Minnesota has slipped slightly behind the nation as a whole— a sharp reversal of a longstanding trend of higher-than-average job growth in the state.

“By many often-used measures of performance Minnesota has lost much of its edge over the rest of the nation and in some areas has begun to lag the rest of the country,” stated Steve Hine, DEED’s Labor Market Information Director, in a December 2007 report. “As of July 2007, for example, our annual rate of job growth stands at about half the nation’s rate, and, since the official end of the last recession in November 2001, we lag the U.S. in job growth 4.1 percent to 5.5 percent.”

The lag in public sector employment, due to job cuts in cities, counties, and schools, is one major reason for that overall employment weakness. According to state employment data, Minnesota’s private sector has produced about 118,000 jobs since Pawlenty took office in January 2003. That’s a rate of job growth that’s on par with the rest of the nation, according to DEED.

Where the state has lagged significantly is in the public sector, which comprises about 15 percent of the state’s workforce. “Minnesota’s public sector employment was up 0.8 percent over the four years between March 2001 and March 2005 compared to a 3.8 percent gain nationally,” according to DEED labor market analyst Dave Senf.

“Minnesota’s recent employment growth would have been on par with the nation’s, rather than slightly below it, if the state’s public sector employment growth had kept up with the nation’s public employment growth,” concluded Senf.

Indeed, had Minnesota experienced a similar rate of public sector growth, the state would have seen an additional 28,000 jobs added from 2001 through the end of 2007. As it is, the state has seen just 2,000 additional government jobs at all levels since Pawlenty took office.

Public employment at the local level has actually fallen under Pawlenty, from 290,500 workers in early 2003 to 286,400 as of December 2007. Those cuts began almost immediately in the wake of Pawlenty’s $170 million cut in local government aid in 2003.

“I have sympathies for what’s going on at the local government level,” said Sen. Tom Bakk, DFL-Cook. “The relationship between state and local government is broken. We need to restore that fiscal commitment, but I don’t know how we can in this no-tax regime,” Bakk added.

The fall-out in the public sector hasn’t been limited to local governments. The number of federal jobs in the state has also fallen, by about 2,000, since Pawlenty took office. While those job cuts are clearly beyond the control of the governor, they are part of the same philosophy of shrinking government that Pawlenty has long touted.

Ironically, considering Pawlenty’s push for smaller government, the rolls of state employees have actually increased under his watch, by nearly ten percent. That growth is likely to stall, at least temporarily, in the wake of the governor’s announcement this week that he’s imposing a statewide hiring freeze in order to help close the state’s projected budget deficit.

In either case, the growth in state government under Pawlenty hasn’t been able to offset the employment reductions at the local level.

While cutting the size of government has been an oft-stated goal of conservatives like Pawlenty, Rep. Tom Rukavina, DFL-Pike, said the consequences can’t be ignored. “These cuts are not a good thing. Anytime you lay off teachers, you hurt your students,” said Rukavina. “We’ve had major layoffs in MnDOT’s First District [NE Minnesota], where we’ve seen employment fall from about 600 under Perpich to about 400 workers today. It’s not good to not have people on the snowplows. It’s not good to lay off community college instructors who get our kids ready for the competitive global economy.”

The flagging job growth in the public sector has had considerable consequences for the state’s economy. At an average of $40,000 in annual wages or salary, Minnesota would have generated an additional $1.12 billion in wages had those 28,000 missing public sector jobs actually been created. At the same time, at least $140 million in state income and sales tax revenues would have been generated from those wages.

Public sector

wages sag

As lackluster as job growth has been in the public sector in recent years, the growth in wages in that sector have suffered even more. Once adjusted for inflation, employees of local governments have watched their wages all but stagnate, according state data. As a whole, local government employees have seen their wages rise by just one percent. Teachers, one of the largest classes of public employees, haven’t seen their wages increase at all in real terms.

Those lackluster wage gains have contributed to another sign of Minnesota’s slipping rank among other states. “Although our average annual wage of $42,185 is sufficient to rank us 15th amongst the states, our 15.3 percent rate of growth in annual pay between 2001 and 2006 was slower than in all but seven other states,” concluded DEED’s Hine.

Governor Pawlenty’s spokesperson Alex Carey declined to comment for this story.