Tag: Minneapolis Unemployment Rate

Minneapolis: How is the city’s economic system performing?

By Matt Johnson

Over the past couple of blogs, we have illustrated the power of the (3) systems’ axioms (we will review the axioms very shortly) and we have introduced the idea systems’ boundaries. But in our quest to understand what a system is and how we can use system’s knowledge to find real-world applications, we must endeavor to keep testing the validity of our ideas while we add new notions to them.

In today’s blog, we will test the idea of an economic system against our (3) axioms with respect to Minneapolis. We will do this by introducing the notion of systems’ behavior via data and graphical representation. And in doing so, we will ask three questions to facilitate this discovery. First, does Minneapolis satisfy the (3) systems’ axioms? Second, does an economic system satisfy the (3) systems’ axioms? And third, what is systems’ behavior?

In our previous blog, we illustrated that Chicago satisfied the (3) systems’ axioms:

  1. A system consists of a set of elements.
  2. Elements in a system interact.
  3. A system has a function, or purpose.

That is, Chicago consists of a set of elements in the form of approximately 2.7 million residents. Chicago’s residents also interact with each other in various ways on a daily, hourly, minute, and second basis. And one of Chicago’s functions is the ability to increase utility and stability while decreasing crime and instability.

Thus, homicides are concentrated in specific neighborhoods and so it follows that the economic, political, and social systems will behave much differently in the Austin neighborhood, which has experienced 43 homicides this year, than they do in the Edison Park neighborhood, which experienced no homicides this year, for example.

Using the template that we used for Chicago, we can illustrate that Minneapolis will also satisfy the (3) systems’ axioms. This is because we know from U.S. Census data that Minneapolis had 413,651 residents as of July 1, 2016, which is our set of elements.

Graph 1

We also know that residents interact with each other in various ways. And finally, we can think of a half-dozen possible functions that Minneapolis might have. For example, we can think of three economic variables that will tell us if utility is increasing or decreasing in Minneapolis: labor force, wages, and unemployment. We know that these three variables can be systems’ functions. Thus, our (3) systems’ axioms are satisfied once again.

Now we can show if an economy is an economic system in a few different ways, but in this case we will use a similar approach to that of our city examples.

Indeed, not all of the 413,651 residents participate in the marketplace. In reality it is those residents who are 16 years of age and older. And frankly, that’s all that is needed – a set of market participants. It could be 50 percent of the population. Those 50 percent, or 200,000 and some, are a set of elements.

In addition, these participants interact with each other various ways. Some of the participants are employees; some participants are even unemployed; and some participants are business owners. No matter the capacity of these participants, they are still interacting in the marketplace in one form or another. The point here is that they are interacting.

Graph 2

And finally, does the economic system have a function? If Adam Smith and his books The Theory of Moral Sentiments and The Wealth of Nations are to be a guide, than economic utility (stability and vitality) is to be the main function of an economic system.

Indeed, this notion of economic system is more abstract, but the (3) systems’ axioms are still satisfied.

Now if economic utility is our function and we want to illustrate that function for everyone to see, how do we do it? Simple. We’ll do it graphically via data.

As we stated before, the functions of the Minneapolis system are labor force, wages, and unemployment. We also stated the function of the economic system is utility. Adding in the title of this blog How is the city’s economic system performing? we can now address the systems’ functions and question in one sitting through the notion of systems’ behavior.

Systems’ behavior – how a system’s performance changes over time – will tell us how a system is performing. In other words, if the economic system of Minneapolis is performing well, then we ought to expect to see an increase in the labor force, an increase in wages, and a decrease in unemployment over time.

Graph 3

However, if the economic system of Minneapolis is not performing well, then we ought to expect to see a decrease in the labor force, a decrease in wages, and an increase unemployment over time. For sure there are other economic variables we could consider, but for now, and for brevity, we will concentrate on these three variables.

If we take a look at Graph 1, it will tell us how the labor force of Minneapolis has been behaving over the past decade. So what are we observing? What is the graphical data telling us about the labor force in the economic system of Minneapolis?

Well, we are seeing a steady, albeit stochastic (probabilistic), increase over time, correct? Aren’t we observing an increase of about 20,000 participants in the labor force since January of 2007? If our observations are correct, we are seeing an economic system that is performing well in regards to the labor force over time.

What do we see when we observe the wages of Minneapolis in Graph 2? Doesn’t it appear that the average weekly wages for Minneapolis have increased by about $300.00 since the 1st Quarter of 2007? If so, then we are observing an economic system that is performing well in regards to wages over time.

And finally, what do we see when we observe the unemployment rate of Minneapolis in Graph 3? We see the unemployment rate decreasing from more than 8 percent in early 2009 to a little more than 3 percent in late 2016. Again, and just like the first two variables, we are observing an economic system that is performing well in regards to unemployment over time.

So with respect to the systems’ functions of the Minneapolis system, the systems’ behaviors via our graphical representations of the labor force, wages, and unemployment are telling us that the economic system in Minneapolis has been increasing in utility for the residents of the city, in general, for some time now.

Thus, we have shown that Minneapolis is a system, the city has an economic system, and that the economic system is performing well based off our established parameters.

Let us now, as we have done before, attempt to disprove our notions (systems axioms, boundaries, and behaviors) and work in the tradition of natural philosophy until the next blog.

 

Matt Johnson is a blogger/writer for The Systems Scientist and the Urban Dynamics blog. He has also contributed to the Iowa State Daily and Our Black News. Matt has a Bachelor of Science in Systems Science, with focuses in applied mathematics and economic systems, from Iowa State University. 

You can connect with him directly in the comments section, and follow him on Facebook

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Photo Credit: Wikimedia Commons

 

 

 

 

 

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Patterns of the 5th Ward: Unemployment

By Matt Johnson

Patterns provide us with some insight into the behaviors of systems. With one pattern, say unemployment, it’s a simple behavior and it shows us a piece of the picture. With multiple patterns, say unemployment, foreclosures, and education levels, we can see multiple behaviors which provide us a different perspective from each individual pattern. Added together, they show us a more complex behavior of the system. Hence with each article, the data provides us with a much fuller description of discrepancies between areas within the 5th Ward, and between the 5th Ward and the rest of Minneapolis, at least with how the city looked in 2013.

Matt Johnson, The Systems Scientist
Matt Johnson, The Systems Scientist

As Table 1 shows us, there was an obvious and disturbing contrast between the zip codes and their respective unemployment percentages. But we must note one thing first before we continue.

Although the 55401 and 55405 are only partially in the 5th Ward, whereas the 55411 resides completely in the 5th Ward, the data in this table can still provide us with some inference and intuition between the respective zip codes. In other words, the 55401 and 55405 zip codes reside in multiple wards.

As the data illustrates, there was a clear distinction between the three zip codes. Whereas the 55401 and the 55405 expressed an unemployment percentage comparable to the General Minneapolis System (GMS) in 2013, which started off at 5.2 percent early in 2013 and decreased to 4.3 percent late in the year as Table 2 illustrates, the 55411 system experienced an unemployment reality three to four times higher than its neighbor zip codes. Clearly from these two pieces of data and the simple systems’ behaviors that represent them, a person in the 5th Ward, depending on where they lived, more than likely experienced a much different reality compared to other residents of the 5th Ward. Why might this be?

Table 1
Table 1

History indicates a much different experience for “black” Americans than it does for “white” Americans. Whereas, “white” Americans have benefitted from a plethora of economic, political, social, and ecological resources, “black” Americans have been much less fortunate. And many times, this has had to do with redlining policies at the local and federal level, which segregated “blacks” into certain, undesired neighborhoods. In many ways, Minneapolis is still reflective of this past.

To illustrate this point, the 55401 and 55405 zip codes were majority “white” in 2013; whereas, the 55411 zip code was predominantly “black” in 2013 This fact was illustrated in Patterns of the 5th Ward: “Race”. There were important questions posed in this previous article.

One question posed, will a depressed part of town have a higher percentage of American citizens who are “black” and unemployed? We have enough information now to show that not only does the 55411 have a majority “black” population contrasted to the majority “white” populations of the 55401 and 55405, but the unemployment rate was three to four times higher in the 55411 than it was in the 55401 and 55405 in 2013.

Table 2
Table 2

In some instances, the unemployment rate was as high as 40 percent in some of the neighborhoods within the 55411 zip code where the population was majority “black” in 2013 according to city-data.com. Thus, we have answered a key question from the first article of this series. And now we also have data to back up our hypothesis.

In the next article Patterns of the 5th Ward: Foreclosures, what will we expect to find? Will we expect to find a similar relationship and systems’ behavior where the number of foreclosures in the 55411 zip code is much higher than the number of foreclosures in the 55401 or 55405? In other words, should we expect to find higher foreclosure numbers in parts of the 5th Ward, which are predominantly “black,” or should we expect to find higher foreclosure numbers in the parts of the 5th Ward, which are predominantly “white?”

For further exploration of this subject, read the first part of this series Patterns of the 5th Ward: “Race” and Minneapolis, Yesterday, Today, and the Continuous Disparity of History.

**Remember, there is nothing more American than discourse. You are always welcome to post your comments, thoughts, and questions below. Feedback is always appreciated!

 

By the Numbers: Minneapolis’ Unemployment Rate

Photo Courtesy of www.newgeography.com - Downtown Minneapolis
Photo Courtesy of http://www.newgeography.com – Downtown Minneapolis from 35 W

Minneapolis, along with the rest of the United States, just recently weathered the great recession. At the height of the great recession, its unemployment rate was about 10 percent. Today, it is less than four percent and about two percentage points less than the national average according to the Department of Numbers.

So how does Minneapolis compare to the rest of the cities in the United States? Another way to find the answer to this question is rephrase the question. How does the metropolitan area that includes Minneapolis compare to the rest of the metropolitan areas in the United States? And why is this important?

First, one of the prerequisites to a healthy city is to consider and address its unemployment rate and number of unemployed. For example, and in the case of Minneapolis, the unemployment rate in June 2015 was 3.6 percent. In addition,

the total number of unemployed decreased from 72,222 workers in May to 69,581 workers in June.

And according to the United States Census Bureau, Minneapolis had a population of more than 400 thousand in 2014 which was an increase of approximately 7 thousand residents. Subsequently, Minneapolis residency has been growing since 2010. Although the number of unemployed has been bouncing between a minimum of approximately 66 thousand and a maximum of approximately 72 thousand, the unemployment percentage and number of unemployed has been fairly stable and restricted in its respective ranges, while still trending downward over the long term.

A second reason for why this is important is because it illustrates the relationship between the small and large businesses in the area, their willingness and need to fill labor and management positions by employing local citizens (workers), and in return the qualifications of skills and credentials of the local work force to be able to fill those positions. Hence, this relationship between the firms (businesses) and labor (workers) in the market place perpetuates a thriving and healthy economy which in turn perpetuates revenues for the businesses and utility for the workers.

Photo Courtesy of the Department of Numbers - Minneapolis Unemployment Rate
Photo Courtesy of the Department of Numbers – Minneapolis Unemployment Rate

Of course not all residents of Minnapolis are employable or are employed for various reasons. However, for those who are, the vast majority of them are employed as illustrated by the unemployment rate, or rather the employment rate of more than 96 percent. Now back to the original question, how does the Twin Cities compare to the other metropolitan areas here in the United States?

Well actually, the Twin Cities is doing quite well. According to the Bureau of Labor and Statistics, it ranks second in the nation, out of 51 metropolitan areas of 1 million or more residents, and only behind the Austin-Roundrock metropolitan area. Not too bad considering the city was sitting at an unemployment rate of about 10 percent and an unemployment population of about 150 thousand a little more than 5 years ago. So by deducation, Minneapolis is doing pretty well in its unemployment compared to the other American cities here in the United States. But despite this success, Minneapolis and its surrounding areas still have some discrepancies in the economic environment (market place).

First, the unemployment rate for “black” Minnesota citizens is approximately 4 times higher than “white” Minnesota citizens according to an article in the City Pages published back in March of this year. Second, there are two assumptions that this author is prepared to make. First, there is a correlation between crime and unemployment (clearly this is not a stretch). And second, if one takes the time to decompose the economic numbers in greater depth, one should find that a part of the unemployment discrepancy between “whites” and “blacks” in the case of Minneapolis is access to educational opportunities, which in turn provides access to those professions that pay higher wages such as science, engineering, and finance. But these are considerations for future articles.

The main point here is that Minneapolis is doing pretty well according to the numbers. It may not be perfect, but the opportunities are there. And if the right policies are implemented by the Minneapolis city council with consideration for how those policies will affect the respective economic environments of Minneapolis along with its respective groups of citizens, then Minneapolis will have no where to go but up.