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Mankato: an MSA on the Rise

by Brent Pearson
February 2013

The Mankato-North Mankato Metropolitan Statistical Area (MSA) consists of Blue Earth and Nicollet counties and is a relatively new MSA with a diverse industry mix. It has all the challenges and opportunities of a young MSA with a history of low unemployment and access to a diverse and highly flexible labor force.

With Growth Comes Great(er) Reliability

Relatively speaking, the Mankato-North Mankato MSA is in its infancy. It was officially declared an MSA by the Office of Management and Budget in 2008. This opened the doors for federal funding almost immediately, but it took some time to compile data. Even with advances in real-time analytics and metrics, when we look at almost any set of measurable data (demographic or labor market analytics are two examples) we are looking into the past - where we were, versus where we are. Intrinsic value in a dataset is measured by how much information we can glean from a large sample. Building a large database of useful information takes time. The larger the sample, the more valid the information.

With more information gathered, the Bureau of Labor Statistics (BLS) can produce more labor market information products. This leads to more variety in the information disseminated. Occupational Employment Statistics, for example, are measured first at the MSA level and then aggregated to national levels. The first survey results available for Mankato-North Mankato were published in 2010.

Additionally, the Mankato-North Mankato MSA has a smaller mass of employment than some of the smallest metros. It simply does not have the sample to support the publication of the same number of industries as larger communities. This limits the industry details that can be published. A smaller population means that there are fewer businesses to survey. If there are fewer businesses to survey, there are fewer possible responses. When there are fewer possible responses, there is less empirical evidence from which to glean information.

But even with these limitations, the amount of useful data with which we can paint the economic canvas of the Mankato-North Mankato MSA affords us the opportunity to create a masterpiece using broader strokes. With that in mind, let's take a look at the Mankato-North Mankato MSA.

Size Comparison - 2011 Average Employment

As one of 366 MSAs in the United States, the Mankato-North Mankato MSA with estimated population of 97,204 ranks as the 348th most populous. Additionally, the Mankato-North Mankato MSA had only 55 percent of the total labor force of the next closest comparably-sized MSA in Minnesota, Rochester, and a labor force 30 times smaller than that of the Minneapolis-St. Paul MSA (Table 1).

Table 1
Minnesota Controlled MSA Population and Labor Force
MSA Population (2011 ACS Estimate) Labor Force (2011 Annual Average)
Minneapolis-St. Paul-Bloomington, MN-WI 3,318,486 1,848,656
Duluth, MN-WI 279,761 147,808
St. Cloud, MN 190,014 109,101
Rochester, MN 187,612 106,958
Mankato-North Mankato, MN 97,204 59,105
Source: U.S. Census American Community Survey, Minnesota Department of Employment and Economic Development

But with this smaller size the Mankato-North Mankato MSA also reaps many of the benefits of smaller micropolitan areas - most notably in cost of living. With average housing costs at 80.7 percent of the average for all MSAs, according to the Council for Community and Economic Research's Cost of Living Index, residents enjoy the comforts of big-city living at a fraction of the cost of the larger MSAs.

The Council for Community and Economic Research publishes a quarterly Cost of Living Index that measures relative prices for consumer goods and services among numerous communities across the nation. The average for all participating places equals 100, and each participant's index is measured as a percentage of the average for all participating communities. The composite index is the sum of all six indices and is multiplied by the weight of those six indices to produce a number that measures the total comparable cost among the six indices - groceries, housing, utilities, transportation, health care, and miscellaneous goods and services. The Mankato-North Mankato MSA had a composite index of 97.1 percent (2.9 percent below the national baseline) despite high costs in transportation (a 110.3 index, highest among all MSAs in Minnesota) and in health care (108.9). Other notable indices include utilities (106.3), and grocery items (103.6). While making progress, Mankato-North Mankato still lags behind other MSAs in competitive transportation infrastructure, utility costs, and grocery costs.

As the Mankato-North Mankato MSA grows, so does its demand for more public transportation. With its MSA status, Mankato-North Mankato can now access more federal funds to improve its infrastructure. As the region grows, greater innovations and investment opportunities in utilities and perhaps more grocers locating to the region could drive down the overall price of things like grocery items and electricity.

The Mankato-North Mankato MSA already has two key assets that could potentially drive economic growth going forward: Industry diversification and access to low-cost student workers with diverse skill sets and flexible work schedules.

Industry Mix

The Mankato-North Mankato MSA is ripe with retail trade and accommodation and food services (Table 2). There are strong ties to manufacturing, particularly in print manufacturing and fabricated metal production, health care and social assistance, and educational services.

Elementary and secondary school employment and social assistance, with emphasis on individual and family service and elder care, are also strong in the Mankato-North Mankato MSA. Including these pillars, the area is diverse in its industry mix and available workforce.

Table 2
Combined Cities of Mankato and North Mankato Employment 2011
Industry Employment
Total, All Industries 40,278
Agriculture, Forestry, Fishing, and Hunting 25
Construction 871
Manufacturing 6,650
Wholesale Trade 1,321
Retail Trade 6,075
Transportation and Warehousing 1,026
Information 1,279
Finance and Insurance 1,125
Real Estate and Rental and Leasing 556
Professional, Scientific, and Technical Services 1,034
Management of Companies and Enterprises 680
Administrative and Support and Waste Management and Remediation Services 1,419
Educational Services 3,177
Health Care and Social Assistance 6,985
Arts, Entertainment, and Recreation 385
Accommodation and Food Services 3,533
Other Services (except Public Administration) 1,331
Public Administration 1,224
Source: Minnesota Department of Employment and Economic Development Quarterly Census of Employment and Wages

Diverse Workforce, Low Unemployment

This industry mix is supplemented by a diverse workforce that keeps unemployment low and fuels both the service and retail sectors. The Mankato-North Mankato MSA has had the lowest annual unemployment rate of any Minnesota controlled MSA every year since 1998 (Table 3). It is important to note that the Mankato-North Mankato MSA has not been an MSA since 1990, so the comparison is not strictly apples to apples. It's more like apples to its distant cousin, pears, but the low unemployment is still worth mentioning.

Table 3
Minnesota Controlled MSA Annual Unemployment (1998-2012)
Year Duluth Mankato-North Mankato Minneapolis-St. Paul-Bloomington Rochester St. Cloud
2012 6.8 4.7 5.5 4.8 5.7
2011 7.4 5.3 6.4 5.4 6.5
2010 8.0 6.1 7.2 6.1 7.4
2009 9.2 6.6 7.9 6.7 8.2
2008 6.2 4.3 5.1 4.5 5.6
2007 5.5 3.8 4.3 4.0 4.7
2006 5.1 3.3 3.8 3.6 4.2
2005 5.3 3.4 3.9 3.7 4.5
2004 5.8 3.8 4.4 4.1 4.7
2003 6.2 3.9 4.7 4.3 4.9
2002 5.8 3.6 4.4 3.9 4.6
2001 5.7 3.0 3.5 3.0 4.0
2000 4.4 2.7 2.7 2.7 3.2
1999 4.1 2.2 2.2 2.2 3.0
1998 4.3 2.0 2.1 2.0 3.2
Source: Minnesota Department of Employment and Economic Development Local Area Unemployment Statistics (LAUS)

It's reasonable to conclude that diversity of industries breeds low unemployment because there are many different employers to which job seekers can match their skills. Consequently, retail and service sector employment, which typically have lower on-the-job training and afford workers greater flexibility of schedules, are more likely to offer easily transferable skills. A great example is cashiering, a job in which a person with the skills to operate a cash register in a retail establishment can also operate a similar cash register in a food service establishment with little retraining.

The region also has a wealth of college students who can benefit from flexible hours and seasonal work environments in retail and service sector employment. The notion that low unemployment in the Mankato-North Mankato MSA is fueled by the workforce tendencies of service sector and retail employment and a diverse workforce with plenty of college students is perhaps best illustrated in the unemployment rate.

Historically, the Mankato-North Mankato MSA unemployment rate is at its lowest at two times during the calendar year: During the holidays and at the start of summer. Many students are returning to service sector employment jobs during summer and winter semester breaks. With the exception of the pre-recession rates of 2008, the unemployment rate has been at its lowest in one of those two seasons every year since 1990 (Chart 1).

Chart 1

But something happened after the recession. Most notably, the holiday hiring season for service-sector employment ramped up a month later in 2009, shifting from October to November. Apparently, retailers and service sector employers began building their holiday workforces later in the season to accommodate the available workforce in the post-recessionary climate.

Mankato, an MSA in Transition

While the Mankato-North Mankato MSA is new to the game, its designation as an MSA has helped us examine in greater detail the DNA of its economic construct. Low-cost housing, a diverse industry mix fueled by manufacturing, retail and food service, elementary education, and social assistance, and access to a low-cost, diverse, and readily available workforce are foundations upon which the Mankato-North Mankato MSA can continue to build a strong economy.

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