More laid-off workers use up unemployment

Some interpret stat as indicator

of recession

Associated Press

ST. PAUL — More and more Minnesotans who have been laid off from work are using up their unemployment benefits before finding another job. Some economic experts say that could signal a recession.

Typically, laid-off workers receive up to 26 weeks of unemployment insurance payments.


The National Employment Law Project, an organization lobbying Congress for extended benefits, estimates 52,400 Minnesotans will use up their benefits this year without finding work, compared with 47,000 people in 2007.

"This really means there are not that many opportunities out there," said Andrew Stettner, deputy director of the National Employment Law Project.

The state Department of Employment and Economic Development says the increase in the exhaustion rate, which measures the percentage of workers who run out of the benefit without finding work, began in June 2006. In the past, an increase in the exhaustion rate began 12 to 14 months before a recession.

"If the pattern and the timing of the last two recessions were to apply today, we’re already about eight months beyond where an official recession had been declared previously," said Steve Hine, the state’s labor market research director.

Recessions are declared at the national level. But Tom Stinson, the state’s chief economist, has said Minnesota already is in a recession, which can be loosely defined as two consecutive quarters of a decline in economic activity.

Minnesota’s labor market began seeing problems in early 2006, when the market began softening before the rest of the nation. During the past two years, job growth has been about half of the nation’s pace of 1.9 percent.

After the 2001 recession, the state’s exhaustion rate climbed gradually for two years to more than 40 percent in spring 2003. That year, 68,000 people exhausted their benefits. Though the recession ended in 2001, there was no job growth in the state until 2004.

"The fact that our exhaustion rate barely fell below 30 percent during the most recent expansion compared to below 25 percent during the 1990s expansion is another indication of the relative weakness that our job markets have experienced," Hine said.

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