I’ve already written at length about the recent report by the Minnesota Office of the Legislative Auditor. That document details serious management and governance problems at the Iron Range Resources and Rehabilitation Board (IRRRB).
Today I’d like to talk about an aspect of that report that paints a broader picture of what ails the Iron Range. Specifically, I’ll analyze a highly useful graph included in the report.
For years I’ve been talking about how the Iron Range is still perceived as a mining-dominated economy when in actuality most people who live here actually work in health care, service, and retail jobs. I based this on two factors: A) some crude back-of-the-envelope math involving state employment figures for our three regional centers of Grand Rapids, Hibbing and Virginia, and B) the experiences of my peers and my large extended family on the Iron Range.
Mining jobs are among the region’s very best. Yet mining employment is not as widespread as when more than half the able-bodied men in the region worked for the Oliver or Hanna mining companies two generations ago.
One of the first problems in determining the true Iron Range economy is in defining “the Iron Range.” This question is as much cultural as it is geographical. Some view the borders as tightly fixed around towns located along a southwest to northeast line from Coleraine to Babbitt.
However, the Iron Range is legally defined in the map seen at the top of this post. This Taconite Assistance Area is how the IRRRB determines eligibility for economic development spending and how the state calculates tax relief for people in communities affected by mining. The economic problems of the Iron Range are relevant throughout this region.
What the Office of the Legislative Auditor did in their report was break down the data in this specific, weirdly-shaped area to paint a simple, concise picture of the proportion of employment by industry.
This is the graph I’ve been seeking for a long time.
The most obvious difference between the Iron Range employment spectrum and that of the whole state is the presence of mining jobs. Boom. Right there in the middle.
But by viewing this in graphic form, we see several key points in the employment proportions.
- Mining is a significant part of our local economy, but barely registers within the state at large.
- Indeed, as I’ve suspected, half the Iron Range employment is in retail, service or health care fields. This is a higher percentage than the state as a whole.
- Health care is a bigger portion of the Range economy than that of the state at large. I would suggest this has to do with the older demographics of our region, and the fact that the region has maintained several large health care facilities despite population losses.
- “Other” is hard to define. Could be good stuff, cheap stuff. Who knows? But for argument’s sake, let’s call it “the ether of a diverse economy.” Obviously, the rest of the state has more of it than we do. Even if you add mining to our “Other” (which is fair) it’s still smaller than the state’s proportion. (UPDATE: See note at bottom for updated explanation of “Other.”
- The Iron Range has a smaller manufacturing base than the state overall.
- The Iron Range has a bigger share of government jobs than the state as a whole. There are many potential political theories for this. I’d tend to argue that this is because we have a smaller population but a large land mass. We are also a region of many small towns, without a centralized hub of government. That leads to duplication.
- The only sector that seems to hold the same proportions in both the Iron Range and the state is education.
This is your Iron Range employment economy. Not how it might be if something happens. Not how it was. This is, quite simply, how it is. We are tilted toward jobs that either don’t pay very much or that are found in highly volatile industries. A bad economy and a major cut to government jobs (which often go together) would knock us down hard, even harder than we got knocked down this last year.
In saying all this out loud, it seems hard to believe anyone who actually lives here year-round would be surprised by these findings.
Business North recently published a story about economist Toby Madden, who spoke Tuesday at the Regional Economic Indicators Forum in Duluth. Madden warns that the cautiously optimistic news out of the mining industry this month belies an important truth: there will be fewer mining jobs over time.
As economists traditionally have argued, tariffs will not spare the mining and steel industries from cheap foreign imports in the long run, Madden predicted.
“We might get that short term juice from those tariffs and say ‘Alright. We’re saved.’ But down the road, five years from now, we’ll see that mining is a smaller sliver of the overall economy. Things are changing, and not just in iron ore, steel and mining. Things are changing at a rapid pace,” he said. “Be prepared for the mining industry to be a smaller portion of the economy.”
At the core of this trend are three points, Madden said. The workforce isn’t growing because birth rates are stagnant. That also feeds into the fact that the federal government will begin to run out of money for social programs and benefits. Finally, interest rates are due to rise, which will slow the kind of madcap growth that our economy has favored in recent decades.
“Be ready for change. Stay on top of all the trends,” Madden advised. “Businesses should diversify. If you’re heavily dependent on mining, you might want to broaden your range a bit.”
That’s what I’ve been saying.
You can support or oppose mining. I argue that the people who live in Northern Minnesota have virtually no control over what happens in the mining industry. Your opinion on mining is just one tiny, secondary data point in a complex corporate equation. Demand, pricing and cost are far more important parts of that equation.
What matters most to the long range health of the Range is whether or not we succeed in balancing our economy. With or without mining, an imbalanced economy will disappoint and repel the next generation of the Iron Range.
UPDATE: One of the biggest sources of speculation in the very spirited comments section on this post was the nature of the “Other” designation of this OLA graphic.
Jody Hauer, project manager of the IRRRB report for the OLA, read the post and contacted me with more information. Hauer writes:
Many of your commenters were speculating on what the “other” category contains. The attached data show these 13 other sectors, which include construction, finance and insurance, and transportation and warehousing sectors. Each of these industry sectors represents 5 percent or less of total employment in the Taconite Assistance Area. Together, these 13 sectors account for 27 percent of employment in the Taconite Assistance Area for 2014.
For the report, “Other” includes Manufacturing, Construction, Finance and Insurance, Other Services (not public administration), Administrative and Support and Waste Management, Transportation and Warehousing, Arts, Entertainment and Recreation, Wholesale trade, Professional, Scientific and Technical Services, Utilities, Information, Real Estate, Agriculture, Forestry, Fishing and Hunting, and Management of Companies and Enterprises.
These same categories are found in the state as a whole. The biggest difference I saw? “Professional, Scientific and Technical Services” is at the top of the state’s “Other” list, but near the bottom for the Range.
Also “Other” is 27 percent of the Range employment picture, while about 41 percent of the state’s proportion.