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New Workers and New Challenges

by Chet Bodin and Cameron Macht
June 2016

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With an aging workforce, the region must find new workers in the coming years.

The labor force in Northwest Minnesota has experienced the second-fastest growth rate in the state since 2000, behind only Central Minnesota. The 26-county Northwest region added 26,000 workers over the past 15 years and is now home to a labor force of over 301,600, about 10 percent of the state’s workers (see Figure 1).


Figure 1: Available Labor Force, 2000-2015


The region’s labor market has ebbed and flowed over the past 15 years, with significant growth during recessions – mostly as a result of women with children at home coming into the labor force – followed by relative stability during recoveries.

Northwest added almost 12,700 workers from 2000 to 2003, then held steady until the 2007 recession, when more than 10,000 workers entered the labor force between 2008 and 2010. The labor force then declined slightly from 2010 to 2014, before jumping by over 4,200 in 2015. This growth is notable for its size as well as timing, occurring during an expansion.

At the same time that the size of the labor force and the number of employed workers were growing in the last two years, unemployment in the region was dropping. Northwest is now home to just 14,000 unemployed workers, yielding an unemployment rate of 4.6 percent in 2015. That is the third-lowest rate in the region over the past 25 years, similar to rates last reported in the late 1990s and early 2000s.

Northwest, however, has historically maintained the second-highest unemployment rate of the six planning regions in the state. The region is home to areas of both high and low unemployment, with county unemployment rates ranging from 2.8 percent in Stevens County, the third lowest of the state’s 87 counties in 2015, to 9.2 percent in Clearwater County, the highest.

Lower Labor Force Participation

With just 64.6 percent of the population ages 16 and over in the labor force, Northwest has the second-lowest labor force participation rate of the state’s six regions. While much of this is due to an older population, the region also has lower participation rates than the state in every age group, with the exception of 16 to 19 year olds (see Table 1).


Table 1

Northwest Minnesota Employment Characteristics, 2014

Northwest Minnesota

Minnesota

Employment Characteristics by
Age Group

In Labor Force

Labor Force Participation Rate

Unemployment Rate

Labor Force Participation Rate

Unemployment Rate

Total Labor Force

286,124

64.6%

6.2%

70.1%

6.5%

16 to 19 years

16,854

55.4%

14.3%

51.1%

18.7%

20 to 24 years

28,203

80.0%

10.2%

81.8%

10.2%

25 to 44 years

105,456

87.5%

5.9%

88.1%

5.8%

45 to 54 years

67,117

86.3%

4.7%

87.3%

5.0%

55 to 64 years

53,063

68.5%

4.7%

71.8%

4.9%

65 to 74 years

12,791

23.7%

3.7%

26.6%

4.1%

75 years and over

2,703

5.7%

3.5%

5.9%

3.5%

Source: 2010-2014 American Community Survey, 5-Year Estimates


The largest segment of the region’s labor force is in their prime working years, from 25 to 54, accounting for 60.3 percent of the total. However, that is about 4.5 percent lower than statewide and a 2 percent decline from 2009.

Instead, the workforce trended older because of aging baby boomers. The number of workers 55 and over increased 20 percent from 2009 to 2014, a shift of nearly 11,500 workers. The sheer size of the aging workforce has outweighed the falling labor force participation rates.

Migration patterns of younger and older workers show an encouraging trend in the region.

There were more 30 to 34 year olds in 2014 than in 2009, when the same group was 25 to 29 year olds, creating a net gain for the region. Overall, this “millennial” cohort increased by nearly 3,000 people in Northwest Minnesota (see Figure 2, first two bars), with an increase of 2,600 people in the labor force (Figure 2, second two bars). Since this age group’s labor force participation rate was approximately 87.5 percent in both 2009 and 2014, most of the increase can be attributed to in-migration.


Figure 2: NW Minnesota Population and Labor Force Change, Select Age Cohorts


At the other end of the prime working-age spectrum, Northwest Minnesota saw in-migration of older residents, though not necessarily for work. The region gained more than 1,000 baby boomers from 2009 to 2014, but lost about 5,500 from the available workforce as participation rates dropped.

Obstacles to Overcome

Mirroring overall labor force participation rates in Northwest Minnesota, most race groups also have lower rates than the state, with the exception of American Indians, the largest minority group in the region. Like the state, the region also has huge racial unemployment rate disparities, with the exception of Asians (see Table 2).

 

Table 2

Employment Characteristics by Race, Hispanic Origin, and Disability

Northwest Minnesota

Minnesota

In Labor Force

Labor Force Participation Rate

Unemployment Rate

Labor Force Participation Rate

Unemployment Rate

Employment Characteristics by Race and Hispanic Origin

White alone

267,956

64.7%

5.5%

70.2%

5.6%

Black or African American

1,836

62.6%

15.1%

68.0%

16.4%

American Indian

8,852

61.5%

21.6%

59.4%

17.4%

Asian or Other Pacific Islanders

2,157

70.7%

5.8%

70.6%

7.2%

Some Other Race

1,647

68.1%

12.0%

76.2%

11.0%

Two or More Races

3,759

64.7%

12.8%

69.5%

13.2%

Hispanic or Latino origin

5,845

70.4%

13.5%

75.0%

10.1%

Employment Characteristics by Disability Status

With Any Disability

16,367

50.1%

12.0%

51.0%

14.0%

Source: 2010-2014 American Community Survey, 5-Year Estimates

 

The regional unemployment rate for black workers is nearly three times higher than for white workers, and the rate is higher than for workers of “some other race,” two or more races, Hispanic origin or with any disability. American Indians have the highest regional unemployment disparity – 15 percent higher than white workers.

The region’s minority populations offer a grand opportunity to counter labor force contraction resulting from the region’s aging population. Bringing unemployment rates for workers of other races down to those of white residents would add 2,500 employed workers and cut the unemployment rate for workers with disabilities in half would add 1,000 employed workers.

Baby Boom or Bust

Matching available workers with available jobs will become even more important in the future if the region’s current labor force participation rates hold steady. Though not reflective of the recent labor force surge, population projections from the Minnesota State Demographic Center indicate a 1.6 percent workforce decline by 2025 (see Table 3).


Table 3

Northwest Minnesota Labor Force Projections, 2015-2025

2015 Labor Force

2025 Labor Force Projection

2015-2025 Change

Numeric

Percent

16 to 19 years

19,923

19,297

-626

-3.1%

20 to 24 years

28,296

29,795

+1,499

+5.3%

25 to 44 years

106,012

114,631

+8,619

+8.1%

45 to 54 years

64,686

49,947

-14,739

-22.8%

55 to 64 years

55,786

50,580

-5,206

-9.3%

65 to 74 years

14,556

18,940

+4,384

+30.1%

75 years and over

3,205

4,469

+1,263

+39.4%

Total Labor Force

292,464

287,658

-4,807

-1.6%

Source: Minnesota State Demographic Center


In addition, the labor force will continue to age with rapid gains in the number of workers over 65 and huge declines in the number of 45 to 64 year olds. New labor force entrants are expected to make up for some of this difference, but not all. More in-migration might help lead to an 8.1 percent increase in 25 to 44 year olds by 2025. The overall numbers, however, indicate a tighter labor market in the next decade. Regional employers will need to adjust.

Across all industries, the number of jobs held by workers 55 to 64 in the region increased by 50 percent over the past decade, from 28,092 workers in 2005 to 42,028 in 2015. Across the region, workers 55 and over now hold one-quarter of all jobs, up from 17.5 percent 10 years ago.

Certain industries will be more affected by the aging workforce than others. The industry with the highest concentration of workers 55 and over is transportation and warehousing, at nearly 40 percent. Shortages, however, will be most acute in the region’s large education and health care services sectors, which will have the most replacement needs in the next decade. Combined with manufacturing, these three industries account for almost 45 percent of the jobs held by workers 55 and over in the region (see Table 4).


Table 4

Northwest Minnesota Workforce by Industry, Second Quarter 2015

Total Workers

Jobs Held by Workers 55 Years and Over

Number

Number

Percent

Total, All Industries

218,974

55,275

25.2%

Health Care and Social Assistance

38,314

9,894

25.8%

Manufacturing

28,239

6,570

23.3%

Retail Trade

26,925

6,896

25.6%

Educational Services

25,434

8,231

32.4%

Accommodation and Food Services

18,927

2,187

11.6%

Public Administration

14,955

4,216

28.2%

Wholesale Trade

12,505

3,074

24.6%

Construction

9,842

1,885

19.2%

Other Services

6,875

2,005

29.2%

Finance and Insurance

5,746

1,744

30.4%

Transportation and Warehousing

5,389

2,116

39.3%

Admin. Support and Waste Mgmt. Services

4,703

1,012

21.5%

Professional, Scientific, and Technical Services

4,769

1,240

26.0%

Agriculture, Forestry, Fishing and Hunting

4,699

1,094

23.3%

Arts, Entertainment and Recreation

4,402

1,024

23.3%

Information

3,009

759

25.2%

Real Estate, Rental and Leasing

1,580

543

34.4%

Utilities

1,325

414

31.2%

Management of Companies

963

237

24.6%

Mining, Quarrying and Extraction

244

81

33.2%

Source: DEED Quarterly Workforce Indicators (QWI) program

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