Who's Making Money Now ...
Hard times everywhere? Hardly! A gimlet-eyed look at the winners and losers of the new economy—plus, salary figures for 100 jobs in Minnesota.
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Two years into the Great Recession and we’ve seen it all: layoffs, bankruptcies, closures, and foreclosures. Business mogul Tom Petters was arrested and jailed for his deft impersonation of Bernie Madoff. Denny Hecker, once the titan of local car sales, went broke, drove his car into a utility pole, and was sued by multiple parties. Riverview Community Bank in Otsego, launched in 2003, supposedly at the behest of God himself, closed its doors. ¶ And yet, even in an economy as bad as this one, there have been bright spots: A recent rise in the GDP has lifted the hearts of manufacturers; a drop in foreclosures has given hope to real-estate agents and mortgage bankers; and the release of Sarah Palin’s Going Rogue has buoyed the spirits of booksellers, Republicans, and comedians everywhere. Here are a few local people and industries making out like bandits—and the kin and companies envying their success.
Divorce filings are down significantly, according to recent polling by the American Academy of Matrimonial Lawyers. But that’s not because couples are riding out the crisis with a surfeit of coziness and good will. It’s because people can’t afford to get divorced. “I know filings are down in Minnesota,” says Susan Lach, a family-law attorney with Messerli & Kramer and a past president of the Academy’s Minnesota chapter. She estimates that her business has declined by 10 to 15 percent. “People can’t sell their houses, so there is no money,” says Lach. “They don’t want to be valuating and dividing assets we all hope are temporarily depressed.” This, no doubt, makes for some grim looks across the dinner table.
Worry about money is driving more women to postpone pregnancy, says Kathi Di Nicola, spokesperson for Planned Parenthood. “There is definitely a theme, from Duluth to Minneapolis to Rochester.” She notes that the number of women in Minnesota buying IUDs increased by 54 percent from 2008 to 2009.
When the going gets tough, the tough get buzzed. Across the board, liquor makers have held their own. But no purveyors of fermented libations have done quite so well, at least in Minnesota, as brewers of craft beer. One estimate puts local sales up 74.5 percent in 2008, reflecting pent-up demand served at last by newcomers such as Flat Earth in St. Paul, Surly in Brooklyn Center, and Lift Bridge in Stillwater. Brad Glynn, co-owner and head brewer for Lift Bridge, says his shop is producing more than 100 barrels a month, up from 60 at the beginning of 2009. “I personally think consumers are being more picky right now,” says Glynn. “A six pack of craft beer is an affordable luxury.”
Loser: Big Brewers
Sales of middle-tier mainstream beers have been flat and in some cases declining. Bud Light, Miller Lite, and Coors Light all have taken hits, as customers opt for cheaper brands. “People are spending less for more quantity,” says Mike Sheedy, beer buyer for Big Top Liquors in St. Paul. “They’re going for the 30-pack of Ice that’s four bucks cheaper.”
*Economic Snapshot figures indicate changes from November 2008 to November 2009
Goodbye, lobster fork. Hello, can opener. Austin-based Hormel Foods has seen a spike in profits lately, partly due to “double-digit” sales increases of Spam and Hormel Chili. Frugality is one reason for the bump; the desire for tried-and-true comforts is another. “We need a sense of familiarity and belonging, so we go back to the basics,” says Rohini Ahluwalia, a professor of marketing at the U’s Carlson School of Management. “These are the brands that our parents used. We associate them with growing up and that gives us security. It’s a coping strategy.” Spam, it seems, is Mom in a can.
Declining restaurant sales and frugal shoppers loading up on chicken thighs have created hard times for prime cuts. To keep red-meat sales moving, Minnesota-based Cargill has recast some of its sub-prime beef: “Flap meat” has become “Cordelico Sirloin.”
Tapping our inner tightwads, the national savings rate climbed to almost 5 percent in 2009, compared with nearly zero during the housing boom. “People are worried they are going to lose their jobs, so they want to make sure they’ll have food on the table and can pay their mortgages,” says Kathy Schneider Vinge, a longtime financial planner with Ameriprise in Edina. “I have clients say they’re going to put off buying a car. I tell them to have six months of reserves on hand.” Vinge, who encouraged saving even before the bottom fell out, believes the trend will continue. “People who lived through the Great Depression, they never forgot it,” she says. “Now you have people who lived through the recession of 2008 and 2009, and they are probably never going to forget it.”
Those eating and drinking out are veering toward happy hours and cheaper menu items. And while local customers remain as generous as ever with tip percentages, according to Unite Here Minnesota, which represents unionized hotel and restaurant employees, smaller tabs overall have meant diminished leavings for servers.
Class is back in session. Enrollment is up by nearly 7 percent in the 32 Minnesota State Colleges and Universities (MNSCU); 13 schools experienced double-digit growth, according to MNSCU spokesperson Melinda Voss. While there’s typically a jump in enrollment when the economy falters, this year’s surge was particularly significant. While some new students were pushed back into the classroom as a result of layoffs, Voss argues that the long-term results will benefit everyone. “We need to have more Minnesotans who have some kind of post-secondary education,” she says. “More jobs are demanding education beyond high school.”
Loser: Classroom Teachers
Forget apples for the teacher this year—an envelope full of cash will do. “[The enrollment jump] is coming at a time when our budgets have been cut,” Voss acknowledges. “It does require our faculty to work harder than ever to serve students.”