skip to content
Primary navigation

Addressing a Tighter Labor Market

by Tim O'Neill
June 2016

PDF of article

The booming Twin Cities economy means the region must find a way to bring more minorities and people with disabilities into the workforce.

The seven-county Twin Cities metro surpassed 3 million people for the first time last year, according to U.S. Census Bureau figures. The region witnessed an increase of nearly 26,300 people between July 1, 2014, and July 1, 2015, accounting for over 80 percent of the state’s population growth in the past year. Fifty-five percent of the state’s population now lives in the Twin Cities.

Hennepin County, with an increase of over 11,000 people, and Ramsey County, with an increase of 4,500 people, added more people than any other Minnesota county in 2015. Dakota, Anoka and Washington counties each added about 2,500 people, rounding out the state’s top five counties in terms of population growth in 2015.

Scott and Carver counties ranked ninth and 11th, respectively, for number of people added last year. Scott and Carver also were the state’s second- and third-fastest-growing counties, respectively.

With population growing in the Twin Cities metro, it follows that the region’s labor force would grow, too. Ignoring a small setback during the Great Recession between 2008 and 2010, the Twin Cities labor force has expanded steadily since the turn of the century, increasing by more than 93,650 people. In the last five years, the growth has only accelerated.

Between 2000 and 2010, the region’s labor force grew by 30,000 workers, an increase of 1.9 percent. However, over the second half of that period, which included the recession, the labor force grew by just 8,339 people or 0.5 percent.

More recently, between 2010 and 2015, the labor force exploded by 63,565 workers, up 4 percent (see Figure 1).


Figure 1: Available Labor Force, 2000-2015


Many of these new labor force entrants have quickly found jobs, while unemployment has plummeted. In fact, the Twin Cities’ annual unemployment rate in 2015 was the lowest the region has seen since 2000. At 3.3 percent, the current unemployment rate represents about 55,400 people looking for work. Though this sounds like a lot of extra workers, it is less than half of the nearly 120,000 unemployed people in the region during the height of the recession in 2009. This has led to a very tight labor market for Twin Cities employers, who also absorb tens of thousands of workers who commute from surrounding regions like Central and Southeast.

Prime Time

While DEED’s Local Area Unemployment Statistics (LAUS) data are the source for these monthly and annual labor force updates, the recently released 2010 to 2014 American Community Survey (ACS) five-year estimates offer unique insight into labor force demographics that are not available in LAUS. Breaking the data down by demographic characteristics reveals a much more complex picture of employment and unemployment in the region.

The Twin Cities has the highest labor force participation rate of the six regions in the state at 72.3 percent, which is also higher than the state’s 70.1 percent rate. This includes higher participation rates in all but the youngest and oldest age groups. While 16 to 19 year olds have much lower labor force participation rates coupled with much higher unemployment rates, these figures improve significantly for those between the ages of 20 and 24, and again for those between the ages of 25 and 44. At the other end of the spectrum, participation rates plummet for people ages 65 years and older, even as unemployment among this group is very low (see Table 1).

Just over 1.1 million workers in the Twin Cities are between the ages of 25 and 54, accounting for 67 percent of the total regional workforce. This group is often considered to be in its “prime working years” since more than 88 percent participate in the labor force.

Although younger on average than workers elsewhere in the state, the Twin Cities labor force is aging. The number of workers ages 55 to 64 expanded by 23.9 percent over the past five years. Those 65 to 74 jumped by 27.5 percent, while those 75 and over grew by 7 percent. No other age cohort expanded by more than 2 percent during that period.

Greater Diversity

Though still skewed by the recession, the ACS data also provide insights on employment by race and ethnicity. The Twin Cities is the most racially diverse region in the state, home to over three-fourths of the state’s minority workers, including over 85 percent of black and Asian workers.

Making up 82.2 percent of the region’s labor force, the white alone population had the lowest unemployment rate by race. Unemployment rates were nearly three times higher for blacks and American Indians, and over twice as high for those reporting “some other race” or “two or more races.”

Hispanics and Asians also had higher unemployment rates than whites, at 9.2 percent and 7.5 percent, respectively. Minority workers in the Twin Cities had high labor force participation rates, indicating a willingness to work despite barriers to finding a job (see Table 1).


Table 1

Twin Cities Metro Employment Characteristics, 2014

Twin Cities Metro

Minnesota

In Labor Force

Labor Force Participation Rate

Unemployment Rate

Labor Force Participation Rate

Unemployment Rate

Total Labor Force

1,659,285

72.3%

6.8%

70.1%

6.5%

Employment Characteristics by Age Group

16 to 19 years

72,733

47.4%

21.3%

51.1%

18.7%

20 to 24 years

155,177

82.1%

11.1%

81.8%

10.2%

25 to 44 years

732,608

88.5%

5.7%

88.1%

5.8%

45 to 54 years

379,354

87.3%

5.4%

87.3%

5.0%

55 to 64 years

257,416

72.8%

5.6%

71.8%

4.9%

65 to 74 years

52,556

28.2%

4.2%

26.6%

4.1%

75 years and over

8,720

5.8%

3.5%

5.9%

3.5%

Employment Characteristics by Race and Hispanic Origin

White Alone

1,364,166

72.7%

5.5%

70.2%

5.6%

Black or African American

120,969

69.5%

16.2%

68.0%

16.4%

American Indian

8,052

60.9%

15.7%

59.4%

17.4%

Asian or Other Pacific Islanders

146,467

70.4%

7.5%

70.6%

7.2%

Some Other Race

29,734

77.5%

10.7%

76.2%

11.0%

Two or More Races

32,344

71.6%

13.5%

69.5%

13.2%

Hispanic or Latino

86,816

77.0%

9.2%

75.0%

10.1%

Employment Characteristics by Disability

With Any Disability

70,444

50.8%

15.6%

51.0%

14.0%

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


Workers with disabilities were another group facing obstacles in the metro job market, with an unemployment rate above 15 percent and a labor force participation rate around 50 percent.

Addressing these unemployment disparities has become a necessity in the Twin Cities, especially as minority populations have witnessed the fastest population growth in recent years, a trend that is expected to continue. Bringing the unemployment rate for minority workers in line with the white rate would fill over 23,000 jobs in the region, while cutting the unemployment rate for workers with disabilities in half would contribute over 5,500 jobs.

Looking Forward

Applying current labor force participation rates to the Minnesota State Demographic Center’s population projections for the Twin Cities creates labor force projections for the next decade. While this method does not account for future labor force fluctuations or changing commuting patterns, it does provide an approximate idea of what to expect with the region’s future labor force.

With the drastic shift toward an older population, Twin Cities labor force growth is projected to slow over the next decade. As Figure 1 shows, the region’s labor force expanded by nearly 72,000 workers between 2005 and 2015, or an average of 0.5 percent growth per year. Over the next decade, the region’s labor force is anticipated to expand by roughly 20,000 people. This equates to an average growth rate of just 0.1 percent per year (see Table 2).


Table 2

Twin Cities Metro Labor Force Projections, 2015-2025

2015 Labor Force

2025 Labor Force Projection

2015-2025 Change

Numeric

Percent

16 to 19 years

77,806

76,427

-1,379

-1.8%

20 to 24 years

152,537

159,874

+7,337

+4.8%

25 to 44 years

689,008

670,693

-18,315

-2.7%

45 to 54 years

371,909

330,943

-40,966

-11.0%

55 to 64 years

277,603

303,780

+26,176

+9.4%

65 to 74 years

63,304

104,666

+41,362

+65.3%

75 years and over

9,500

15,670

+6,169

+64.9%

Total Labor Force

1,641,667

1,662,053

+20,386

+1.2%

Source: Minnesota State Demographic Center


Despite the recent milestone of surpassing 3 million people for the first time, the Twin Cities will still feel the effects of an aging population and slower anticipated labor force growth.

Zooming in, numerous industry sectors may begin to feel these changes more quickly and severely than others. Transportation and warehousing, for instance, has a workforce where nearly three in 10 workers are 55 years of age or older.

Manufacturing, educational services, public administration and agriculture have older workforces as well, with more than a quarter of workers age 55 and over (see Table 3).


Table 3

Twin Cities Metro Workforce by Industry, Second Quarter 2015

Total Workers

Jobs Held by Workers 55 Years and Over

Number

Number

Percent

Total, All Industries

1,696,389

362,605

21.4%

Health Care and Social Assistance

250,805

53,521

21.3%

Manufacturing

169,375

42,922

25.3%

Educational Services

150,718

40,983

27.2%

Retail Trade

153,156

29,956

19.6%

Professional and Technical Services

120,970

23,592

19.5%

Finance and Insurance

106,715

21,352

20.0%

Wholesale Trade

91,053

21,188

23.3%

Admin. Support and Waste Mgmt.

98,544

19,441

19.7%

Public Administration

66,267

17,608

26.6%

Management of Companies

82,557

16,827

20.4%

Accommodation and Food Services

130,673

15,802

12.1%

Transportation and Warehousing

42,289

12,372

29.3%

Construction

67,809

12,134

17.9%

Other Services

57,133

12,011

21.0%

Real Estate, Rental and Leasing

32,813

7,863

24.0%

Information

40,233

7,762

19.3%

Arts, Entertainment and Recreation

27,282

5,060

18.5%

Agriculture

2,824

781

27.7%

Source: DEED Quarterly Workforce Indicators (QWI) program


With low unemployment, slowing labor force growth and an aging workforce, employers across the Twin Cities – particularly within these industries – will need to be creative in retaining current workers and recruiting new ones. Removing barriers to employment for workers of other races and/or with disabilities will become more important than ever.

back to top