51 posts categorized "Labor"

Ad hoc survey: Ninth District businesses plan to ramp up hiring, increase starting pay

The Ninth District economy is in growth mode and employment is expected to increase, based on a recent poll of 140 business contacts from around the district (see methodology below).

Businesses are expecting to expand, with 46 percent of respondents planning to increase employment at their firms and 58 percent of these firms citing anticipated high sales growth as the most important factor behind increased employment. Only 3 percent plan to decrease employment. In the same survey a year ago, 41 percent planned to increase employment and 9 percent planned to cut jobs (see chart).

Other important factors cited for new hiring were overworked staff, the need for additional skills and improved financial condition of firms. The vast majority of respondents plan to use current employee referrals, word of mouth and advertising to get new employees. Forty-eight percent plan to use a recruiting firm, which is up from 22 percent of respondents in last year’s poll. Twenty-seven percent of respondents also plan to raise starting pay compared with only 8 percent last year.

Feb ad hoc survey Ch1+meth -- 2-13-15

Methodology: On Dec. 1, 2014, the Minneapolis Fed emailed a web-based survey to about 600 Beige Book contacts from around the Ninth District. By Feb. 12, 140 contacts had filled out the survey. The respondents come from a variety of industries (see table).

The aches and pains of working-age disability

Since the 1980s, working-age disability has been rising, and particularly over the past decade. Many disorders can qualify a person for one of two major federal disability programs: Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI).

However, recipients are increasingly qualifying for these programs because of either mental disorders or conditions related to the musculoskeletal system or connective tissues, which covers a variety of muscle, back and joint disorders like arthritis, back pain, tendonitis and herniated discs.

In Ninth District states, the most common disability diagnosis (at 42 percent) for SSDI recipients is a mental disorder, such as anxiety, post-traumatic stress disorder, depression or bipolar disorder (see Chart 1). While recipient growth in this category exceeded 50 percent from 2003 to 2013, it has leveled off in recent years.

The fastest growing diagnosis involves conditions related to the musculoskeletal system and connective tissue. This category covered about one in four SSDI recipients in 2013; total recipients have doubled over the past decade. Growth in these two major diagnosis categories has also been faster in the Ninth District than in the nation over the past decade (see Chart 2).

For much more on disability trends in the Ninth District, see the January cover of the fedgazette.

Dulguun Batbold, research analyst, contributed data to this article.

Disability diagnosis CH1-2 -- 2-10-15


A look at rising veteran disability

The incidence of working-age, civilian disability, as measured by enrollments in the largest federal disability programs, has been rising for the better part of three decades (see discussion in the January fedgazette). But one other federal disability program has been witnessing even faster growth of late: veteran disability.

Veterans’ disability compensation, as it’s called, is paid to veterans who incur a disability during active military service or are diagnosed with a post-service disability that is presumed to be related to military service. After seeing little growth in the 1990s, the number of veterans qualifying for disability compensation rose by 62 percent from 2000 to 2013, according to the U.S. Department of Veterans Affairs (see Chart 1). During this time, the population of eligible veterans also shrank by 17 percent, according to the Congressional Budget Office.

Though historical data on veteran disability by state are not publicly available, recent data suggest that the same growth trend is occurring in Ninth District states. From 2011 to 2013, every district state saw growth of at least 7 percent in veteran disability; Minnesota’s 12 percent growth topped the national average (see Chart 2).

Veterans disability Ch1-2

Across district states, 187,000 veterans received disability benefits in 2013. That translates to a small but notable portion of the district labor force—ranging from about 2 percent (Wisconsin) to almost 4 percent (Montana), with most district states above the national average (see Chart 3).

Veterans disability Ch3

While veterans receiving disability compensation are spread throughout a given state, they tend to be more concentrated around military bases, such as Camp Ripley in central Minnesota, Ellsworth Air Force Base in Rapid City, S.D., and Malmstrom Air Force Base near Great Falls, Mont. (see map).

Dulguun Batbold, research analyst, contributed data to this article.

Veterans disability -- Map 2-4-15

 

Beige Book recap: Modest growth in Ninth District

Over the past two months, the Ninth District economy has seen modest growth, according to the latest Beige Book information released by the Federal Reserve Bank of Minneapolis. Increased activity was noted in consumer spending, professional services, manufacturing and non-energy mining. Activity was level in tourism and mixed in commercial construction, commercial real estate and agriculture. Energy, residential real estate and residential construction were down. Labor markets continued to tighten since the previous report. While overall wage increases remained modest, there were examples of steeper increases in some regions and industries.

Consumer spending and tourism: Consumer spending increased moderately. Mall and retail representatives across district states reported solid traffic and sales. Overall tourism was about level with a year ago, according to a variety of sources. Construction and real estate: Construction activity was mixed in the district’s larger cities. In Sioux Falls, S.D., the value of November commercial permits increased from a year ago, but fell in Billings, Mont.

Residential construction: Activity was mostly lower. In the Minneapolis-St. Paul area, the value of December residential permits decreased 9 percent from a year earlier and also dropped in the Bismarck, N.D. area (November data). Residential activity was stronger in Billings and Sioux Falls, however. Home sales were generally lower from a year earlier (in November). In the Sioux Falls area, home sales were down 12 percent, inventory increased 1 percent and the median sales price increased 6 percent relative to a year earlier. Sales were also down in northwestern Wisconsin, and the median sales price was 6 percent lower. Minnesota home sales were down 13 percent, inventories of homes for sale increased 5 percent and the median sales price rose 3 percent. Home sales in the Bismarck area were about level with last year.

Manufacturing: Activity increased slightly. A manufacturing index increased in December from the previous month in Minnesota and South Dakota, but fell slightly in North Dakota. However, the index pointed to continued expansion in all three states. Through October, manufactured exports in district states were up 1 percent compared with the same period a year earlier.

Energy and mining: The energy sector slowed slightly in response to lower output prices. Oil and gas exploration activity decreased in late December compared with a month earlier in Montana and North Dakota. Mining activity increased slightly. District iron ore mines were operating at or near capacity, with November production slightly higher than a year earlier.

Agriculture: Conditions remained mixed, with livestock and dairy producers faring better than crop farmers. A Minneapolis Fed third-quarter survey found that a majority of farm incomes had fallen from a year earlier and that capital spending also decreased. The fourth quarter outlook was also weaker, according to the survey. Prices received by farmers in December decreased from a year earlier for corn, soybeans, wheat, hay and milk; prices increased for cattle, hogs, eggs and poultry.

Employment and wages: Labor markets continued to tighten since the previous report. Overall wage increases remained modest, but there were examples of steeper increases in some regions and industries. Some construction firms in the Minneapolis-St. Paul area noted that labor costs have increased recently. In addition, some managers at Minneapolis-St. Paul area restaurants indicated that they were increasing wages to attract employees.

See the full Beige Book report for more details on the national and Ninth District performance.

Sure it’s cold, but we’re upwardly mobile

If you live in a Ninth District state, which do you prefer, moving out or moving up? Probably the former if you don’t like the cold, but likely the latter in most other cases. And while Ninth District states have cold winters, so too do they offer better upward income mobility than the nation overall, according to data from a team of researchers from Harvard and UC-Berkeley.

The research project, dubbed Equality of Opportunity, collected income data on millions of parents in the last half of the 1990s. It then tracked how kids from low-income families in this sample fared in 2011 and 2012, when they were in their early 30s. (For more information on the study’s methodology, go here.)

The study split the country into more than 700 commuting zones, which are rough approximations of local economies (urban and rural). It then ranked commuting zones for absolute upward mobility—roughly, the average national income rank of a child from low-income parents in the commuting zone.

The data show that Ninth District states stand out for high absolute upward mobility. The distribution of scores for commuting zones in every district state (including the combined region of northwestern Wisconsin and the Upper Peninsula of Michigan) skewed higher than scores for all other commuting zones not in the Ninth District (see charts below).

For more data and discussion on this topic, see the October fedgazette for in-depth articles on both high income mobility and low income mobility in the Ninth District.

  Absolute income distribution 9th states -- 11-13-14

Surveys: District manufacturing, state economies seeing fluctuation

Amid the news of falling oil prices and a slowing global economy in contrast to a comparatively strong U.S. economy, two monthly surveys by Creighton University offer a somewhat muddled picture of economic growth in three Ninth District states.

The Rural Mainstreet Index asks community bank presidents and CEOs in rural areas of a 10-state region (including Minnesota and the Dakotas) about current economic conditions and six-month outlook in roughly 200 small communities.

Since mid-2013, the overall index has stayed mostly in expansion territory (an index score of 50 or more). But the index has dipped into contraction on a couple of occasions—particularly for South Dakota—and the general slope of sentiment is slightly downward (see Chart 1).

The good news: Respondents have been upbeat on new hires, with particularly strong scores in Minnesota and North Dakota. The less good news: Sentiment toward farmland prices has tumbled, especially in Minnesota and South Dakota, most likely stemming from low crop prices over this period. Aside from a single-month blip, North Dakota’s farmland index has stay strongly in expansion territory, most likely the result of the state’s very strong economy, with farmland prices possibly being buoyed by demand from nonfarmers.

Mid-America Ch1 -- 10-31-14

A second survey by Creighton, the Mid-America Business Conditions Index, compiles monthly data from manufacturing, purchasing and supply executives in the same 10-state region (and also including Minnesota and the Dakotas). Overall, respondents in these Ninth District states have reported solid expansion, with the overall index slightly upward over the past year (see Chart 2). After a big uptick in employment sentiment, index scores dropped over the summer, but respondents in Minnesota and North Dakota continued to see healthy expansion in the latest surveys. In both manufacturing indexes (overall and employment), South Dakota has seen its scores dip of late, and they appear to be trending downward.

Mid-America Ch2 -- 10-31-14

A summer of steady growth in the Ninth District

The Ninth District economy continued to show signs of steady growth through the summer months, characterized by job growth, decreases in unemployment rates and gains in home building.

As of August, nonfarm employment in district states was up 1.8 percent relative to a year ago, posting a net increase of about 122,000 jobs. North Dakota reported the strongest employment growth among district states, accounting for about one in every six jobs added in the Ninth District over the past 12 months despite the state’s workforce comprising only 7 percent of the district total. Employment growth in other district states was largely in line with the national trend (up 1.8 percent), except in South Dakota, where nonfarm employment growth was 0.7 percent.

The district unemployment rate dropped to 4.7 percent over the same period, down 0.8 percentage points from a year ago. The spread in unemployment rates among district states has narrowed over the past 12 months. Regions with relatively high unemployment rates, such as the Upper Peninsula of Michigan, Wisconsin and Montana, posted larger year-over-year declines than Minnesota and the Dakotas, where unemployment rates started out much lower last year.

Manufacturing wage growth in the district slowed to 1.4 percent during the three-month period ending in August, compared with a growth rate of 2.5 percent during the same period a year earlier. With the exception of North Dakota and Wisconsin, growth in manufacturing wages in district states was below the national average of 1.6 percent. Montana’s manufacturing workers reported the lowest year-over-year growth rate in hourly earnings among district states, which barely reversed the flat or declining trend in manufacturing wages in the state for much of 2013 and early 2014.

During second quarter 2014, personal income growth (adjusted for inflation) across district states was positive, posting a 2.2 percent overall increase relative to a year ago for the district. Except for North Dakota, all district states posted lower personal income growth rates relative to the national average of 2.4 percent, while South Dakota’s state ranking in growth was near the bottom.

New housing authorizations for the three-month period ending in August were up 8.2 percent in district states; however, rates varied widely among district states. Montana and South Dakota posted year-over-year declines of over 20 percent in new housing authorizations, while North Dakota showed a 42 percent increase over the same period. Housing authorizations in Minnesota and Wisconsin were up 5 percent and 10 percent, respectively, closer to the national average of 7.7 percent.

Home prices continued to show increases in several district cities. During the second quarter of 2014, home prices were 7.4 percent higher than a year ago in Bismarck, N.D., 6.7 percent higher in Minneapolis-St. Paul, 3.2 percent higher in Fargo, N.D., and 2.6 percent higher in Sioux Falls, S.D. Nationally, home prices increased by 4.4 percent during the same period.

For current and historical data on the economic indicators referenced here, see the “Monthly Summary” spreadsheet, along with other Ninth District data that are updated regularly.

Business survey: Ninth District should continue to grow

Results from a Federal Reserve Bank of Minneapolis ad hoc survey of 603 Ninth District firms (see methodology) reveals that economic activity at firms across industry sectors increased over the past four quarters and should continue over the next four quarters (see table).

Looking back: Firms across industries reported increased sales revenue, profits, productivity and employment. The availability of labor decreased, especially in the construction sector, where the majority of respondents reported a lack of available labor. Respondents from most sectors reported increases in selling prices and input costs. Wage and benefit increases were moderate. They also noted an uptick in availability of financing.

Looking forward: Respondents are more optimistic for the next four quarters, as a higher proportion of respondents reported expectations for increased sales revenue, profits, productivity and employment. The availability of labor is expected to continue to decrease. Respondents expect to raise prices and pay more for inputs. However, wage and benefit increases are expected to be moderate.

State economic outlook: Respondents expect their state economies to grow as well. Employment, consumer spending and profits are all expected to increase. However, the vast majority of respondents across industries expect inflation to increase.

August ad hoc table -- 8-21-14

Ad hoc survey methodology: On Monday, August 18, an email was sent to 5,000 contacts (not a random sample) from various sectors around the Ninth District. By 12 noon Wednesday, August 20, 603 responses were received, representing a 12 percent response rate. The largest number of responses came from finance (24 percent), professional services (20 percent), manufacturing (15 percent), real estate (13 percent), construction (8 percent) and nonprofits (7 percent).

Made in (but not owned by) the USA

Investment is typically seen as a sign of economic strength, as people and financial entities put their money where they believe it can be most productive and profitable. Foreign direct investment (FDI) tracks the amount of money international firms invest in the United States, and a recent report on the matter by the Brookings Institution shows that it’s growing in the Ninth District, but not as fast as it is elsewhere in the country.

In 2013, for example, companies invested $1.46 trillion in locations outside their home country, and the United States is the single largest destination of that capital, receiving $193 billion, according to the report. This investment manifests itself in many forms: spreading technology, facilitating the exchange of knowledge and inducing new trade.

It also employs millions of people, which the Brookings report investigated more closely. Among Ninth District states, the trends are somewhat diverging. In five Ninth District states (cumulative), total employment at foreign-owned establishments (FOEs) grew by about 50 percent from 1991 to 2011, and the share of total private employment at FOEs increased as well (see Chart 1). The growth in this share of employment tended to be modest—about one-half of a percentage point—with the exception of North Dakota, whose share of FOE employment tripled over this period, most likely as a result of foreign firms investing resources in (and hiring workers for) the Bakken oil patch.

However, across the board, district states have a lower share of FOE employment than the national average and (with the exception of North Dakota) saw less growth in the share of FOE employment. As a result, most distrct states fell in ranking among their peers in FOE’s share of total private employment (see table embedded in Chart 1).

One caveat to FDI trends: Much of this investment is the result of acquisitions or mergers of U.S. companies by international firms. So a considerable amount of the resulting “growth” in FOE employment is a methodological quirk—namely, a shift in the nationality of the parent company. This was particularly the case in North Dakota. Among district states, only Wisconsin was close to the national average in the share of FOE employment growth coming from new openings (see Chart 2).

FDI Ch1-2

Personal income buys more in district states

Income earned in one part of the country goes further than in another based on differences in the cost of living. A job in New York City, or in the oilfield city of Williston, N.D., will have to pay more to purchase a similar value of housing, goods and services than a job in Missoula, Mont.

Last week the Bureau of Economic Analysis released data that adjust personal income across states and metropolitan areas to account for cost of living differences. Data on regional price parities (see chart) show state price levels relative to the U.S. average. South Dakota’s value of 88.2 means that the state’s price level is 11.8 percent lower than the U.S. average. Minnesota has the highest value among district states, but is still 2.5 percent lower than the national average. The data series also adjusts for U.S. inflation from 2008 to 2012.

Price parity -- 5--14

Since district states have lower price levels than the nation, once per capita income is adjusted for regional price differences, district states move up across the board in per capita income rankings (see table below). In 2012, North Dakota moved from the fifth to the second highest per capita income level after adjusting for price differences, behind the District of Columbia. Meanwhile, South Dakota jumped from 18th to sixth after a price level adjustment.

Price parity table