Measuring progress. Inspiring action.

May 2019

Minnesota’s workforce shortage

Images of male and female workers.Justin Hollis and Erin Olson

Historically, Minnesota’s labor force participation rate has hovered around 80 percent, one of the highest in the nation. Unfortunately, even high participation in the labor force won’t protect Minnesota from experiencing significant talent shortages over the next five years.

 

Minnesota’s talent shortage

Employment projections indicate that, by 2022, Minnesota will need nearly 3.2 million workers to keep pace with historic rates of economic growth statewide. With just 2.9 million people over the age of 16 expected to be in the labor force and working, our state is expected to fall about 239,000 workers short.

 

Chart of projected workforce shortage with workers ages 16 to 64 from 2010 to 2018, and projected shortage by 2022

Early warning signs

We are already seeing evidence of a jobseeker’s market. Since the end of 2016, the number of job vacancies across Minnesota has exceeded the number of jobseekers. Currently there are 53,000 more open positions than individuals who are available and actively looking for work.

 

Chart of job vacancies and jobseekers in Minnesota from 2009 to 2018

 

Sustained job growth

In the coming decade, employers in a variety of industries may have difficulty filling open positions. Service-providing industries will experience the majority of employment growth between 2016 and 2026. Job opportunities are expected to emerge in sectors providing services by and for Minnesota’s future populations, including our growing older adult population and our increasingly diverse youth populations. For example, the health care industry expects to add 78,400 additional jobs by 2026. Employers in education expect 12,100 additional jobs. Construction may see net growth of 10,300 jobs by 2026.

 

List of six top industries with number and percent change  from 2016, projected over the next ten years

Chipping away at the workforce shortage

With more jobs than working-age adults available to fill them, solving Minnesota’s workforce shortage is going to require an “all hands on deck” approach. Facing a workforce shortage of 239,000 workers in the next few years, there are investments we can make to reduce that gap by almost one-third. Estimates from RealTime Talent show us how we can reduce the workforce shortage by investing in specific groups of workers.

Youth workers

The proportion of adults between the ages of 16 and 24 working have not increased significantly over the past 10 years. Youth labor force participation could drop from 68 percent in 2017 to 64 percent by 2022. Factors contributing to the decline include different choices about time use and the balance between school and work, stagnating entry-level wages, and an increasing variety of non-traditional earnings opportunities. Holding youth employment steady could help reduce the gap by an additional 26,000 workers.

Older adult workers

Even as job growth occurs in sectors structured to serve an aging population, job opportunities for older workers will continue to grow as Minnesotans live longer and want or must continue to work beyond traditional retirement age. Rising shares of older adults are working, with about 19% of older Minnesotans working today. Were it not for the 84,000 working Minnesotans over 64, the state would face a shortage of about 23,000 workers today. By enacting policy that would gradually extend the retirement age by 1 year, estimates indicate as many as 1,000 additional workers over age 64 could be available to help fill the gap.

 

Chart of projected workforce shortage with workers ages 16 to 64, and workers age 65 and older from 2010 to 2018, and projected shortage by 2022

Workers of color

Minnesota has some of the most dramatic disparities in employment by race and ethnicity in the nation. If we eliminate these disparities in employment by 2022, Minnesota could have as many as many as 57,000 additional workers beyond what has been forecasted adding their productive contributions to the economy.

Migration

Even these investments in "homegrowing" our workforce will leave a gap needing to be addressed through in-migration, immigration, technology, and growth in automation.

Quote-In the coming decades, greter numbers of migrants, both domestic and international will be necessary to meet our state's workforce needs.

A moderate increase in net domestic migration could result in as many as 11,000 additional workers. By maintaining the current annual increase in international migration, as many as 6,000 additional workers could be available to address the state’s workforce shortage.

What can you do?

Employers struggling to fill jobs should expect to continue interviewing pools of applicants, both younger and older than in the past, and of increasing racial, ethnic, and cultural diversity. Flexible work arrangements, opportunities for advancement, and other characteristics of "good" jobs (e.g., competitive pay, benefits, consistent scheduling) are smart investments and seen by jobseekers as competitive advantages in a tight labor market. By exercising cultural competence, critically examining legacy hiring practices, and embracing inclusive recruiting, hiring, and advancement, employers can further develop the ability to attract and retain the diverse, skilled workforce Minnesota needs to remain economically competitive and ensure our shared quality of life.

About the authors

Justin HollisJustin Hollis Research Scientist, Minnesota Compass

Justin specializes in policy research, program evaluation, and promoting the use of community indicators and performance measures by governmental and nonprofit organizations to better engage community and other key stakeholders in assessing the position and progress of communities’ quality of life.

Before joining Wilder Research, Justin worked for Ramsey County supporting strategic planning and implementation, policy research and analysis, and performance management. Justin informed elected officials on the key characteristics of community indicators-performance measurement integration and initiated the county’s integration process starting with separate efforts ultimately oriented toward fully integrated community indicators-performance measurement within the community.

He holds a master’s degree in economics from the University of New Mexico, and a bachelor’s degree in economics from the University of St. Thomas.

 

Erin Olson

Erin Olson

Research Strategist, RealTime Talent

Erin fosters data-informed decision-making within Minnesota’s workforce, education, and economic development systems by bringing fresh data and private-sector partners to the table. She uses new, real-time job and candidate data sources alongside traditional labor market information to deepen understanding of regional labor market needs and industry-specific areas for action.

A Minnesota native, Erin worked previously in refugee resettlement, affordable housing management, and with a number of Twin Cities neighborhood associations and councils. Her research career spans economic development, housing health and affordability, transportation, and workforce analysis, including work with the University of Minnesota’s Center for Transportation Studies, Center for Urban and Regional Affairs, and Center for Integrative Leadership. Internationally, she worked with Vedor, LDA and the Mozambican Ministry of Tourism and Culture, performing a census of western Niassa Province to evaluate local opportunities for economic development and growth. She brings fresh and intersectional approaches to addressing talent recruitment, development, and retention challenges in Minnesota.

She holds two master’s degrees in urban and regional planning and public health from the University of Minnesota, where she focused on community economic development, housing, and population studies. She also holds a bachelor’s degree in anthropology.

 

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