Nebraska, Iowa jobs numbers now back to pre-recession levels

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Posted: Sunday, September 15, 2013 12:00 am

The jobs are back — all 33,000 and then some.

As of this summer, Nebraska has regained all the jobs lost during the Great Recession. So has Iowa, and most of the two states' metropolitan areas, including Omaha and Des Moines. Lincoln passed the milestone 18 months ago and didn't look back.

The growth is thanks to a strong agriculture economy, expansion of government jobs and a large and booming health care sector that barely tapped the brakes during the recession.

The benchmark puts Nebraska and Iowa among the 14 states with employment at or above pre-recession levels, according to an analysis from the Council of State Governments.

Booming energy states like North Dakota, Texas, Alaska and Oklahoma left us in their wake when it came to job creation in recent years, but Nebraska and Iowa still are places where economists say things are looking up.

“I'm pretty optimistic about our regional economic performance going forward,” said Scott Strain, economist for the Greater Omaha Chamber of Commerce. “It'll be that steady, persistent growth over time.”

Slow, steady growth had been the story from 2004 through 2007, with Nebraska adding 51,000 employees in four years, almost a 6 percent gain. Nebraska didn't see serious losses until a year into the 18-month recession that began unbeknown to most in December 2007. Five years ago this month, the crisis was clear as a series of events triggered a global financial meltdown.

Nebraska lost about 1,500 jobs in 2008. Then, in 2009, the losses accelerated and, by January 2010, the state had lost 33,000 jobs in two years. Iowa was down more than 65,000 in 2008-09.

Borsheims, Gallup, Duncan Aviation, First Data, Nebraska Boiler and Ballantyne Strong were among the diverse longtime Nebraska employers that announced layoffs, some for the first time in company history. Many others instituted hiring freezes and furloughs. Hit by lower demand for the products they ship, BNSF Railway and Union Pacific Railroad furloughed nearly 10,000 workers nationwide.

“The loss of our staff members is devastating,” Borsheims President Susan Jacques said at the time. “This is the absolute last thing we wanted to do.”

But Nebraska didn't sink as deep as the nation, and it hasn't taken as long to surface.

The bottom here came in January 2010. Then, an unemployment rate that had been stuck for seven months at 5 percent reversed course.

Nebraska since has seen steady gains of about 750 jobs per month on average, gains that added up to a new state record in May of 968,300 employed people, surpassed again in July, in preliminary figures. Iowa, too, set new records in June and July, reaching 1.53million employed people, in preliminary figures.

The recession, while serious for many families, proved mild and short compared with the one that hit the Midwestern ag economy in the early 1980s, when Nebraska lost 5 percent of its jobs and Iowa shed 10 percent.

“The Omaha area, we've been experiencing, I wouldn't call it robust growth by any stretch, but it's been relatively steady,” said Chris Decker, economist at the University of Nebraska at Omaha. “For the most part, the economy is going to chug along at a slow and steady pace.”

That outlook, shared by three other regional economists, doesn't mean the states' economies are fully recovered.

Several sectors — construction; manufacturing; information; and trade, transportation and utilities — have not reached pre-recession levels, collectively down almost 19,000 jobs. All but information, however, are making steady gains.

Rural areas also haven't seen their share of jobs return. The parts of Nebraska outside its two metropolitan areas are seeing job gains but are still down 1.2 percent of employees since the recession despite big increases in farmland and commodities prices.

Rural economic growth does not always translate into new jobs, at least not in rural areas, because productivity is increasing on farms and in rural manufacturing operations, said Ernie Goss, Creighton University economist.

“The size of the farm is getting larger and larger, and that doesn't produce a lot of jobs, but it does produce a lot of economics,” Goss said.

However, he said, “That does create jobs in the metropolitan areas,” including in financial services and retail sectors. “They spend that money, and they spend it in the Omahas.”

Measures of consumer spending continue to rise here, though wages and earnings have not kept pace with inflation. The national Consumer Price Index rose 9 percent from January 2008 to January 2012. Average wages earned by Nebraskans employed in private business rose 5.6 percent in that time, to $21.09 an hour, while weekly earnings rose 6.9 percent to $707.

“That one hasn't fully come back,” said University of Nebraska-Lincoln economist Eric Thompson. “My $21 now is worth less than my $20 was then.”

The recession did not see Midlanders leaving the workforce in droves. Nebraska today has the nation's highest percentage of people participating in the labor force — those either working or looking for work — at 72.8 percent, and the highest percentage of residents 16 and over who work, at 69.8 percent. Both dipped during the recession and are making their way up again. Iowa also rates among states with high participation rates.

In a recent setback, the unemployment rate, the most often-sited measure of jobs recovery, rose in Nebraska in July for the third straight month, to 4.2 percent. State labor officials said one reason is the growing number of people looking for work, a positive sign. Iowa's rate rose to 4.8 percent. Both states added jobs.

Nebraska may not ever return to its record low unemployment of 2.2 percent in 1998. Thompson said Nebraska's level of “full employment,” a figure that varies depending on characteristics of a local workforce, may settle into the middle 3 percent range.

Nebraska Labor Commissioner Cathy Lang also expects to see the rate fall from July's climb.

“We're thinking that is not a trend,” she said, referring to the increase.

But if it does remain around 4percent, that might actually help entice employers to Nebraska; a very low unemployment rate can make it hard to fill jobs.

“There is a point at which it can be too low,” Lang said.

Lang is not worried about the rise. “It's not like employers have quit hiring. There are jobs in our economy.”

Thousands of them, and listings seem concentrated in the fields that weathered the recession best: health, technology and financial services. Nebraska has added 10,000 health care jobs since the start of the recession, the most of any field.

“We are currently looking for CNAs (certified nursing assistants) — that seems to be a never-ending position,” said Angie Gathye, in charge of hiring for Brookestone Meadows, a rehabilitation and long-term care facility in the Elkhorn area.

The center opened six years ago and its staff has gradually grown to 275 employees, with 20 current openings, Gathye said. Demand for Brookestone's services has grown in part because of Nebraska's aging population, and the center is looking for people who “really have the heart to work with our patients and residents,” she said.

Growth in assets and demand for services, along with the opening of new branches, has led to hiring at SAC Federal Credit Union, in another growing sector, financial activities, which has gained 2,700 jobs in Nebraska since the recession.

Senior Vice President Cynthia Buettner said SAC has added more than 20 employees this year on top of 26 added in 2012, with more vacancies to fill.

While some banking institutions nationally have laid off workers this year as mortgage refinancing activity slowed, Buettner said that's not the case at SAC because of an increase in mortgage origination loans.

“We're actually ahead of pace of last year” on jobs, she said.

Some of SAC's positions have demanded more IT skills, another growing area for jobs. The growth of online and mobile banking has created a market for new skills in addition to traditional IT roles, Buettner said.

“We have the conversation internally about, are we becoming a technology company?”

A recession and its recovery are often felt first at a temporary staffing firm, and the picture at C&A Industries, a national staffing firm based in Omaha, shows how much things have turned around.

C&A cut 50 headquarters positions in 2009 because of the recession, but since 2011 has been hiring aggressively with the expectation of adding 175 people to its Omaha staff by the end of 2014, bringing the total to approximately 600, CEO Scot Thompson said.

Most growth has come in the medical and information technology fields, he said.

The recession has been officially over for four years now, and looking back, Thompson at UNL said, “It wasn't a Great Recession here; it was a serious recession.”

Still, like the rest of the country, it has taken us a long time to get the lost employment back, Thompson said.

With new indexes to track the local economy that did not exist in 2008, Thompson predicts modest economic growth for Nebraska in the coming months.

“We still have a little room for improvement.”

What has recovered?

State domestic product

The most comprehensive measure of economic activity shows Nebraska's economy kept growing during the recession, however slowly.

Growth in Nebraska's contribution to the gross domestic product slowed during the recession but never fell year over year, as the national GDP did in 2009.

Nebraska's domestic product grew to $99.6 billion in 2012, up 16.9 percent from 2008, adjusted for inflation.

Iowa's domestic product slipped just a hair between 2007 and 2008 but has since grown to $152 billion, up 13.8 percent.

Ag commodity prices

Corn and beef prices have risen dramatically since the recession, up more than 50 percent since 2007, according to UNL's indexed tracking of a six-month rolling average.

Commodity prices are an important indicator of the state's economy, with crop and livestock production accounting for 5 percent to 10 percent of economic activity, according to UNL. All agricultural activity makes up about a quarter of economic activity.

Vehicle sales

Vehicle sales have rebounded in a big way in Nebraska since the recession, with a record more-than-$5 billion spent in 2012 at new-car dealerships. Sales were hovering in the mid-$3 billion range in the middle of the decade for the state before dropping to $3.28 billion in 2009, even with the stimulus of the “cash for clunkers” program that year, according to the National Automobile Dealers Association.

Iowa sales also have rebounded, to $7.6 billion in 2012 from $5.6 billion in 2009.

The figures include sales of new and used cars and parts and services, all at new-car dealerships.

Taxable sales

Beyond cars, total consumer spending has taken off.

Net taxable sales for Nebraska were $26 billion in 2012, a steady climb from 2009's dip to $22.9 billion.

Douglas County has seen a similar climb out of the recession, although the figure slipped in 2012 to $8.17 billion.

Iowa sales also have regained strength, growing to $34.5 billion in 2012, up from $33.1 billion in 2009.

What has more room for improvement?

Building permits

UNL tracks the number of building permits issued for single-family homes in the Omaha and Lincoln metropolitan areas. Permits are an indicator of future construction activity as well as activity in the finance, real estate and home furnishing sectors. The number of permits issued fell by half from May 2007 to May 2012, recovering this year to only about 70 percent of the initial activity.

In the Omaha metro, the total value of all building permits rose in 2011 and 2012, to $768 million, but the value hasn't come close to its 2007 high of $1.3 billion, according to the Omaha Chamber of Commerce.

Birthrate

The economy isn't the only factor in the decision to have a baby, but Nebraska and Iowa, like the rest of the country, saw birthrates decline during the recession after climbing since the late 1990s.

Nebraska's rate was hovering around 15 births per 1,000 residents when it started falling in 2008, reaching a new state low in 2011 of 14 births per 1,000. The rate started to rebound in 2012, ticking up to 14.1, according to the Nebraska Department of Health & Human Services.

Iowa's birthrate also has not recovered. It was 13.7 in 2007 and had fallen to 12.5 by 2011. However, it has started to rebound, to 12.6 in 2012.

Airline trips

The number of airline trips out of Lincoln and Omaha was down almost 12 percent between July 2008 and July 2013, according to UNL data. Passenger counts this year are at their lowest level since 2004; lower numbers were reported before 2004.

UNL tracks the monthly air passenger count, including business and leisure travel on commercial and private planes, out of Eppley Airfield and Lincoln Municipal Airport. Airline trips are considered a flexible expense. Businesses don't book discretionary travel if they are trying to save money, and a decline in sales trips indicates economic activity will fall. Households also cut back on travel if people expect to be earning less money.

Electricity sales

Both state and Omaha economists use commercial and industrial electricity sales as a proxy for business activity, as they indicate intensity of operations.

Electricity sales are highly variable month to month but have slowly increased since 2008, with little movement since 2010.

U.S. Dollar exchange rate

The Nebraska and Iowa economies grow when the U.S. dollar exchange rate falls, because conditions are more favorable for exports, helping the state's agricultural, manufacturing and freight sectors.

The exchange rate has not completely recovered; it is now less favorable than it was before the start of the recession, but more favorable than it was during the recession. The rate improved after the recession, but in the past two years it has gradually been getting less favorable. The states alone can't much influence the rate, but it is used as a proxy measure for the level of exports.

Unemployment insurance

Economists track the number of people who file a first claim for unemployment benefits. While numbers fluctuate from month to month, economists say that when there is a continued increase in claims, it suggests that the economy is starting to contract.

The number filing has improved in recent years but has not fallen to pre-recession levels. Looking at the month of July, claims rose 47 percent between 2007 and 2009 as the recession unfolded. Initial claims have since fallen but in July this year were still 24 percent higher than the same month in 2007, according to a UNL look at Nebraska Department of Labor data.

“We're still a ways away,” said UNL economist Eric Thompson.

Manufacturing and construction

The sectors have regained momentum in the past two to three years but have not returned to pre-recession levels.

The number of hours worked by manufacturing production workers in the state in July was down 5.6 percent from the same month in 2008. The number of manufacturing jobs also has not fully recovered. It's down 4.4 percent from July 2008, a net loss of about 4,500 jobs statewide, according to the BLS. Things were worse in 2010; the sector has recovered about 4,800 jobs in the past three years.

Construction is in a similar situation. Employment in the mining, logging and construction sector in July was down 14.5 percent compared with 2007, a total loss of 7,400 jobs. However, since July two years ago it's gained about 2,600 jobs.

— Barbara Soderlin

The ups and downs of Nebraska jobs

The change in the number of jobs in Nebraska between January 2008 and July 2013.

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Sector Jobs change % change
Total Nebraska 1,800 0.2
Private -2,300 -0.3
Government 4,100 2.5
Mining, logging and construction -6,700 -13.3
Manufacturing -5,900 -5.7
Trade, transportation and utilities -3,800 -1.8
Information -2,500 -13
Financial activities 2,700 3.9
Professional and business services 200 0.19
Education -200 -1.1
Health and social assistance 10,000 8.8
Leisure and hospitality 2,500 3
     
Iowa 6,600 0.4
Omaha 2,300 0.5
Lincoln 3,300 1.9
U.S. -2.1 million -1.5

Percentages calculated based on seasonally adjusted U.S. Bureau of Labor Statistics data.

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