Southeast Minnesota is a health care and agricultural powerhouse. The region is home to the renowned Mayo Clinic and some of the world's most recognized food companies and brands.
Advanced manufacturing is especially strong here, with machinery, chemicals, and electronics among the top products.
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Over the past two decades, Southeast Minnesota's employment has experienced significant changes, with varying growth patterns between small, medium and large businesses. While the region's private sector employment has grown faster than the state's overall, this growth has not been evenly distributed across businesses of different sizes. Using data from the U.S. Census Bureau's Quarterly Workforce Indicators (QWI), this article explores how small and large establishments have developed over time and examines three key factors of wages, turnover and workforce demographics that help explain these differences and their implications for the region's economy.
Employment changes by establishment size in Southeast Minnesota from 2003 to 2023 reveal which business sizes drove the region's growth. Perhaps not surprisingly, the largest employment gains occurred in establishments with 500 or more employees, which added nearly 23,000 jobs and grew by 23.1%, significantly outpacing the statewide growth rate of 14.8%. These large employers now account for over half of all private employment in the region. Growth for these large employers was fairly consistent throughout the 20-year period, with notable acceleration during 2011-2013 and a significant surge during the 2020-2021 pandemic recovery period.
Table 1. Private Sector Employment Growth by Establishment Size in Southeast Minnesota, 2003-2023 |
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|---|---|---|---|---|---|
| Size of Establishment | 2003 | 2023 | Numeric Difference | Percent Difference | MN Percent Difference |
| 0-19 Employees | 37,591 | 38,733 | +1,142 | +3.0% | +4.9% |
| 20-49 Employees | 19,888 | 22,097 | +2,209 | +11.1% | +19.0% |
| 50-249 Employees | 28,870 | 31,964 | +3,094 | +10.7% | +17.2% |
| 250-499 Employees | 7,779 | 9,786 | +2,007 | +25.8% | +28.2% |
| 500+ Employees | 99,400 | 122,359 | +22,959 | +23.1% | +14.8% |
| Total | 193,528 | 224,939 | +31,411 | +16.2% | +14.5% |
|
Source: Quarterly Workforce Indicators |
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In contrast, the smallest businesses (0-19 employees) showed modest growth at just 3.0%, gaining about 1,150 jobs, experiencing fluctuations including declines during the 2008-2009 recession and the 2020 pandemic before showing resilience with strong growth in 2021 and 2022. Businesses with 20-49 employees grew by 11.1% in Southeast, adding 2,200 jobs, well below the state's 19.0% growth rate. Those with 50-249 employees increased by 10.7%, adding almost 3,100 jobs, also trailing Minnesota's 17.2% rate. The 250-499 employee category grew robustly at 25.8%, adding 2,000 jobs, close to but still under the state average of 28.2% growth (see Table 1).
Employment data for Southeast Minnesota highlights a significant contrast: while large businesses with 500+ employees grew by 23.1% and added nearly 23,000 jobs over the past two decades, all other business size categories combined (0-499 employees) grew by only 9.0%, adding approximately 8,450 jobs. Understanding this dramatic difference in growth patterns requires examining three interconnected factors: wages, turnover and worker age.
The Wage Gap
According to QWI data, large establishments pay substantially more than their smaller counterparts. By 2023, workers at the region's largest employers (500+ employees) earned an average of $6,743 monthly, significantly outpacing all smaller business categories. Even the highest-paying smaller category (250-499 employees) averaged just $4,491 monthly, over $2,250 less than large employers.
This wage gap has widened over time. Since 2003, large employers increased wages by 91.6% (from $3,519), while businesses with 0-499 employees saw more modest wage growth. The smallest businesses (0-19 employees) increased wages by 65.4% (from $2,033 to $3,362). This growing wage disparity creates competitive challenges for smaller employers in attracting and retaining talent in the regional labor market.
Stability Through Lower Turnover
The region's largest employers maintained remarkably low employee turnover, with a turnover rate of just 6.2% in 2023 compared to much higher rates across all smaller business categories. This stability advantage persisted consistently over the entire two-decade period, with 500+ employee businesses averaging just 6.6% turnover between 2003-2023.
In contrast, businesses with 0-499 employees all experienced significantly higher turnover. The smallest businesses (0-19 employees) faced the highest rates at 11.0% in 2023, after averaging 11.3% over two decades. Mid-sized businesses performed somewhat better but still lagged behind large employers: 20-49 employee businesses had 10.3% turnover in 2023 and a 10.2% average since 2003, 50-249 employee businesses had 9.3% turnover and a 9.2% average and 250-499 employee businesses had 9.1% turnover, just above the 8.8% average over the past 20 years.
This consistent turnover advantage gives large employers significant benefits: lower recruitment and training costs, less institutional knowledge leaving the organization and higher productivity. The stable workforce has provided large employers with a solid foundation for their substantial expansion over the past two decades.
Strategic Age Demographics
The workforce age distribution further strengthens large employers' position. Businesses with 500+ employees strategically concentrate their hiring on prime working-age adults, with 63.8% of their workforce between ages 25-54 (21.3% ages 25-34, 22.7% ages 35-44 and 19.8% ages 45-54). This focused approach differs markedly from smaller businesses.
In comparison, businesses with 0-499 employees employ a broader age range. Smaller businesses have significantly higher percentages of both younger and older workers. At the youngest end, businesses with 0-19 employees have 18.7% of workers under age 25 (compared to 12.7% in large businesses) and 20-49 employee businesses have 21.4% in this age group. At the other end of the spectrum, smaller businesses employ considerably more older workers, with 10.6% of workers in 0-19 employee businesses aged 65 or older, compared to just 5.3% in large businesses.
This strategic concentration on experienced, mid-career professionals gives large employers advantages in productivity and workforce stability. With fewer young workers, they face reduced training needs for entry-level employees. With fewer older workers, they likely experience fewer retirement transitions and associated knowledge transfer challenges.
Large employers in Southeast Minnesota have benefited from a powerful combination of higher wages, stable employment and strategic hiring, capturing a significant share of job growth. With 500+ employee businesses adding nearly 23,000 jobs while all other business categories combined added 8,450 jobs, the data reveals a regional economy increasingly divided along size lines. However, this trend doesn't necessarily indicate a problem for all smaller businesses. Establishments with 0-499 employees continue to play crucial roles in the region's economy, fostering entrepreneurship, local investment and community-driven innovation. As employment patterns evolve, both large employers and businesses of all smaller size categories will remain vital to Southeast Minnesota's economy.
For more information on employment trends in Southeast Minnesota, contact Amanda Blaschko at amanda.blaschko@state.mn.us.
3/31/2025 10:52:56 AM
Amanda Blaschko
Over the past two decades, Southeast Minnesota's employment has experienced significant changes, with varying growth patterns between small, medium and large businesses. While the region's private sector employment has grown faster than the state's overall, this growth has not been evenly distributed across businesses of different sizes. Using data from the U.S. Census Bureau's Quarterly Workforce Indicators (QWI), this article explores how small and large establishments have developed over time and examines three key factors of wages, turnover and workforce demographics that help explain these differences and their implications for the region's economy.
Employment changes by establishment size in Southeast Minnesota from 2003 to 2023 reveal which business sizes drove the region's growth. Perhaps not surprisingly, the largest employment gains occurred in establishments with 500 or more employees, which added nearly 23,000 jobs and grew by 23.1%, significantly outpacing the statewide growth rate of 14.8%. These large employers now account for over half of all private employment in the region. Growth for these large employers was fairly consistent throughout the 20-year period, with notable acceleration during 2011-2013 and a significant surge during the 2020-2021 pandemic recovery period.
Table 1. Private Sector Employment Growth by Establishment Size in Southeast Minnesota, 2003-2023 |
|||||
|---|---|---|---|---|---|
| Size of Establishment | 2003 | 2023 | Numeric Difference | Percent Difference | MN Percent Difference |
| 0-19 Employees | 37,591 | 38,733 | +1,142 | +3.0% | +4.9% |
| 20-49 Employees | 19,888 | 22,097 | +2,209 | +11.1% | +19.0% |
| 50-249 Employees | 28,870 | 31,964 | +3,094 | +10.7% | +17.2% |
| 250-499 Employees | 7,779 | 9,786 | +2,007 | +25.8% | +28.2% |
| 500+ Employees | 99,400 | 122,359 | +22,959 | +23.1% | +14.8% |
| Total | 193,528 | 224,939 | +31,411 | +16.2% | +14.5% |
|
Source: Quarterly Workforce Indicators |
|||||
In contrast, the smallest businesses (0-19 employees) showed modest growth at just 3.0%, gaining about 1,150 jobs, experiencing fluctuations including declines during the 2008-2009 recession and the 2020 pandemic before showing resilience with strong growth in 2021 and 2022. Businesses with 20-49 employees grew by 11.1% in Southeast, adding 2,200 jobs, well below the state's 19.0% growth rate. Those with 50-249 employees increased by 10.7%, adding almost 3,100 jobs, also trailing Minnesota's 17.2% rate. The 250-499 employee category grew robustly at 25.8%, adding 2,000 jobs, close to but still under the state average of 28.2% growth (see Table 1).
Employment data for Southeast Minnesota highlights a significant contrast: while large businesses with 500+ employees grew by 23.1% and added nearly 23,000 jobs over the past two decades, all other business size categories combined (0-499 employees) grew by only 9.0%, adding approximately 8,450 jobs. Understanding this dramatic difference in growth patterns requires examining three interconnected factors: wages, turnover and worker age.
The Wage Gap
According to QWI data, large establishments pay substantially more than their smaller counterparts. By 2023, workers at the region's largest employers (500+ employees) earned an average of $6,743 monthly, significantly outpacing all smaller business categories. Even the highest-paying smaller category (250-499 employees) averaged just $4,491 monthly, over $2,250 less than large employers.
This wage gap has widened over time. Since 2003, large employers increased wages by 91.6% (from $3,519), while businesses with 0-499 employees saw more modest wage growth. The smallest businesses (0-19 employees) increased wages by 65.4% (from $2,033 to $3,362). This growing wage disparity creates competitive challenges for smaller employers in attracting and retaining talent in the regional labor market.
Stability Through Lower Turnover
The region's largest employers maintained remarkably low employee turnover, with a turnover rate of just 6.2% in 2023 compared to much higher rates across all smaller business categories. This stability advantage persisted consistently over the entire two-decade period, with 500+ employee businesses averaging just 6.6% turnover between 2003-2023.
In contrast, businesses with 0-499 employees all experienced significantly higher turnover. The smallest businesses (0-19 employees) faced the highest rates at 11.0% in 2023, after averaging 11.3% over two decades. Mid-sized businesses performed somewhat better but still lagged behind large employers: 20-49 employee businesses had 10.3% turnover in 2023 and a 10.2% average since 2003, 50-249 employee businesses had 9.3% turnover and a 9.2% average and 250-499 employee businesses had 9.1% turnover, just above the 8.8% average over the past 20 years.
This consistent turnover advantage gives large employers significant benefits: lower recruitment and training costs, less institutional knowledge leaving the organization and higher productivity. The stable workforce has provided large employers with a solid foundation for their substantial expansion over the past two decades.
Strategic Age Demographics
The workforce age distribution further strengthens large employers' position. Businesses with 500+ employees strategically concentrate their hiring on prime working-age adults, with 63.8% of their workforce between ages 25-54 (21.3% ages 25-34, 22.7% ages 35-44 and 19.8% ages 45-54). This focused approach differs markedly from smaller businesses.
In comparison, businesses with 0-499 employees employ a broader age range. Smaller businesses have significantly higher percentages of both younger and older workers. At the youngest end, businesses with 0-19 employees have 18.7% of workers under age 25 (compared to 12.7% in large businesses) and 20-49 employee businesses have 21.4% in this age group. At the other end of the spectrum, smaller businesses employ considerably more older workers, with 10.6% of workers in 0-19 employee businesses aged 65 or older, compared to just 5.3% in large businesses.
This strategic concentration on experienced, mid-career professionals gives large employers advantages in productivity and workforce stability. With fewer young workers, they face reduced training needs for entry-level employees. With fewer older workers, they likely experience fewer retirement transitions and associated knowledge transfer challenges.
Large employers in Southeast Minnesota have benefited from a powerful combination of higher wages, stable employment and strategic hiring, capturing a significant share of job growth. With 500+ employee businesses adding nearly 23,000 jobs while all other business categories combined added 8,450 jobs, the data reveals a regional economy increasingly divided along size lines. However, this trend doesn't necessarily indicate a problem for all smaller businesses. Establishments with 0-499 employees continue to play crucial roles in the region's economy, fostering entrepreneurship, local investment and community-driven innovation. As employment patterns evolve, both large employers and businesses of all smaller size categories will remain vital to Southeast Minnesota's economy.
For more information on employment trends in Southeast Minnesota, contact Amanda Blaschko at amanda.blaschko@state.mn.us.
