December 6, 2008
A Placid North Dakota Asks, What
Recession?
By MONICA DAVEY
FARGO, N.D. — As the rest of the nation sinks into a 12th grim month of recession, this
state, at least up until now, has been quietly reveling in a picture so different that it
might well be on another planet.
The number of new cars sold statewide was 27 percent higher this year than last, state
records through November showed. North Dakota’s foreclosure rate was minuscule,
among the lowest in the country. Many homes have still been gaining modestly in value,
and, here in Fargo, construction workers can be found on any given day hammering
away on a new downtown condominium complex, complete with a $540,000 penthouse
(still unsold, but with a steady stream of lookers).
While dozens of states,
including neighboring
ones, have desperately
begun raising fees, firing
workers, shuttering tourist
attractions and even
abolishing holiday displays
to overcome gaping
deficits, lawmakers this
week in Bismarck, the
capital, were
contemplating what to do
with a $1.2 billion budget
surplus.
And as some states’ unemployment rates stretched perilously close to the double digits in
the fall, North Dakota’s was 3.4 percent, among the lowest in the country.
“We feel like we have been living in a bubble,” said Justin Theel, part owner of a
dealership that sells Toyotas, Dodges and Scions in Bismarck. “We see the national news
every day. We know things are tough. But around here, our people have gone to their
jobs every day knowing that they’re going to get a paycheck and that they’ll go back the
next day.”
North Dakota’s cheery circumstance — which economic analysts are quick to warn is
showing clear signs that it, too, may be in jeopardy — can be explained by an odd
collection of factors: a recent surge in oil production that catapulted the state to fifthlargest
producer in the nation; a mostly strong year for farmers (agriculture is the state’s
biggest business); and a conservative, steady, never-fancy culture that has nurtured
Dan Koeck for The New York Times
Welding a seam on a wind tower in Fargo at DMI Industries, where
383 are employed and a $20 million expansion is under way.
fewer sudden booms of wealth like those seen elsewhere (“Our banks don’t do those
goofy loans,” Mr. Theel said) and also fewer tumultuous slumps.
As it happens, one of the state’s biggest worries right now is precisely the reverse of most
other states: North Dakota has about 13,000 unfilled jobs and is struggling to find people
to take them.
“We could use more people with skills for some of these jobs,” Marty Aas, who leads the
Fargo branch of the state’s Job Service North Dakota, said as his offices — where the
unemployed might come for help — sat quiet and nearly empty. State employees
outnumbered the six clients on a recent afternoon. (Mr. Aas insisted that such a slow
afternoon was rare.)
State officials and private companies have begun looking elsewhere to recruit workers,
including traveling in October to Michigan, where tens of thousands of workers have
been laid off, and, this month, holding an “online job fair,” anything to lure people to a
place that is, at least for now, removed from the deep financial dismay — if also just plain
removed.
“Our problem is that everybody thinks that it’s a cold, miserable place to live,” said Bob
Stenehjem, a Republican and the State Senate’s majority leader. “They’re wrong, of
course. But North Dakota is a pretty well-kept secret.”
With 635,867 residents, North Dakota is among the least populous states, and, in the
past few years, more people have moved away, census figures show, than have moved
here.
Katie Hasbargen, a spokeswoman for Microsoft’s Fargo campus, which is in the middle
of a $70 million or so building expansion and is, even now, looking for a few additions to
its work force (of more than 1,500), said false perceptions of the state are the problem
when it comes to recruiting workers. “The movie,” Ms. Hasbargen said, referring to the
1996 Coen brothers’ film that bears this city’s name, “didn’t do us a lot of favors.”
On a recent evening, as the night shift arrived at DMI Industries, where 383 workers (an
all-time high) weld gigantic towers for wind turbines and where a $20 million expansion
is under way, Phillip Christiansen, the general manager, wandered the plant, noting
those who had been recruited from elsewhere — three from Michigan not long ago,
another from Louisiana. “It’s very competitive around here trying to find people,” he
said. “In this environment, it’s a little hard.”
Not that people are complaining much. Downtown, in
the line of gift shops along Broadway, where shop
owners reported sales that were healthy (though always
sensible), residents said they were pleased — if a tad
guilty — about the state’s relative good fortune.
No one was gloating. No wild spending sprees were
apparent. No matter how well things seemed to be
going, many said they were girding, in well-practiced
Midwestern style, for the worst.
“You’re always a little worried,” Mr. Christiansen
admitted. “You get a tickle at the pit of your stomach.”
In truth, economic analysts said North Dakota has already begun showing some of the
painful ripples seen elsewhere. Some manufacturing companies here have lately made
temporary job cuts as orders for products have dropped nationally. Shrinking 401(k)’s —
“201(k)’s,” some here grump — are no bigger here than anywhere else. And, most of all,
drops in oil prices and farm commodity prices are sure to sink local fortunes, experts
said.
An economist at Moody’s Economy.com recently warned that conditions in North
Dakota had “slowed measurably in recent months, and the state is now at risk of being
Dan Koeck for The New York Times
A slow afternoon at the Fargo
branch of Job Service North
Dakota, where the state employees
outnumbered the job seekers.
dragged into recession.” In an interview, Glenn Wingard, the economist, described North
Dakota as “an outlier” up to now in a broad, national slump.
“It’s not going to hold,” Mr. Wingard said, suggesting that the state would now probably
have to suffer through a reversal, or at least, a slowdown, much like other places that
benefited from rising fortunes tied to energy, high oil prices and booming farm
commodity prices.
Still, Ernie Goss, an economist at Creighton University in Omaha, who conducts a
regular survey of economic conditions in nine states through the nation’s middle, found
North Dakota to be the only one expected to experience an expanding economy over the
next three to six months. “This will hit North Dakota,” Dr. Goss said of the recession, “I
just don’t think it’ll ever be as significant.”
Just as state officials in Minnesota — due east of here — this week revealed a staggering
$5.2 billion deficit, Gov. John Hoeven of North Dakota gathered with lawmakers at the
State Capitol to talk, in part, about the $1.2 billion budget surplus — the result, in part, of
increased revenues from oil, and a sum that is all the more astonishing given the size of
the state’s total budget, $7.7 billion over the next two years.
Mr. Hoeven, a Republican whose party controls both chambers of the state legislature
and who was re-elected last month with more than 70 percent of the vote, offered
proposals few other states are likely to hear this year: $400 million in property and
income tax relief, $130 million more for kindergarten through 12th-grade education, 5
percent raises for state workers, $18 million for expansion of a state heritage center, and
so on.
The surplus, several lawmakers asserted, will actually make their jobs and choices far
more complicated.
“Now that there is money,” said State Senator David O’Connell, a Democrat and the
party’s minority leader, “I could go to three meetings a day with people who will say they
want more money or want a one-time spending package or something.”
Mr. Stenehjem, who likewise complained that “when you have $1.2 billion sitting
around, there’s about 50 billion ideas of what to spend it on,” quickly noted that there
were worse budget problems to have.
“Don’t get me wrong,” he said. “I would rather deal with this.
“Prudence is important at this point,” Mr. Stenehjem, a lifelong North Dakotan, went on.
“North Dakota never gets as good as the rest of the country or as bad as the rest of the
country, and that’s fine with us.”
Copyright 2008 The New York Times Company
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