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NW Spotlight: Educational Services in Northwest Minnesota

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By Erik White
April 2021

What makes Northwest Minnesota unique? The land of two Paul Bunyan statues or the headwaters of the Mississippi River might be the answer for some, but I will argue that it's how important the Educational Services industry is in the region. Home to multiple universities and colleges, numerous technical trade schools, and even three of the four tribal colleges in the state, post-secondary education institutions populate the region. Local government-controlled Elementary and Secondary Schools make up most of the employment in this billion-dollar wage providing industry which was greatly impacted by COVID-19 but looks to rebound from employment losses and delivery disruption.

Location of Education

One technique to determine a region's economic specialty is that of location quotients. An analytical statistic that measures a region's industrial specialization relative to a larger geographic unit, a location quotient can show how concentrated an industry is. When we look at Educational Services across the state, Northwest Minnesota stands head and shoulders above the rest of the regions with a location quotient of 1.24. A score greater than 1.00 indicates an industry that is more concentrated in the region than it is for the state, therefore the region specializes in it. The location quotient for Educational Services in Northwest Minnesota is considerably greater than any other region.

Table 1. Location Quotients for Educational Services, 2020

Northwest Minnesota 1.24
Central Minnesota 1.07
Northeast Minnesota 1.06
Seven County Mpls-St Paul, MN 0.97
Southeast Minnesota 0.99
Southwest Minnesota 1.11
Source: DEED's Quarterly Census of Employment and Wages (QCEW)

Another comparison of location quotient shows how the Educational Services industry ranks in concentration of employment by industries in Northwest Minnesota. With a score of 1.24, Educational Services is the fifth most concentrated industry in Northwest Minnesota. While it shouldn't come as a surprise that Agriculture, Forestry, Fishing, and Hunting is the most concentrated sector when compared to statewide employment within that sector, Public Administration, Accommodation and Food Services, and Retail Trade also had greater location quotients than Educational Services. Meanwhile, 10 of 20 industry sectors recorded location quotients greater than 1.00, indicating a specialized sector in the region.

Table 2. Location Quotients for Northwest Minnesota Industries, 2020

Total, All Industries 1.00
Agriculture, Forestry, Fishing, and Hunting 2.97
Public Administration 1.56
Accommodation and Food Services 1.29
Retail Trade 1.25
Educational Services 1.24
Utilities 1.21
Manufacturing 1.16
Construction 1.13
Wholesale Trade 1.13
Health Care and Social Assistance 1.01
Other Services (except Public Administration) 0.97
Arts, Entertainment, and Recreation 0.96
Transportation and Warehousing 0.74
Information 0.67
Real Estate and Rental and Leasing 0.57
Finance and Insurance 0.52
Mining 0.51
Administrative and Support and Waste Management and Remediation Services 0.40
Professional, Scientific, and Technical Services 0.38
Management of Companies and Enterprises 0.10
Source: DEED's Quarterly Census of Employment and Wages (QCEW)

Measuring Education

The Quarterly Census of Employment and Wages data tool breaks down the Educational Services by level of ownership. The majority of employment In education occurs through local governments in Northwest Minnesota as there are 272 establishments that employ 15,741 people or 75% of all employment in the sector. Next are 17 state-owned Educational Services establishments in the region with 3,067 jobs. Average annual wages, however, are $64,324 for this ownership group as many, if not all, establishments are post-secondary education institutions, and wages are typically higher for professors than they are for teachers. Private Educational Services employs 2,240 people in the region, but average annual wages are over $12,000 less than the total for all Educational Services (Table 2).

Table 3. Northwest Minnesota Educational Services Industry Statistics

          2019-2020 Change 2015-2020 Change
Ownership Number of Employees Number of Establishments Total Wages Avg. Annual Wage Number Percent Number Percent
Total, All Ownerships 21,048 384 $1,000,151,769 $47,840 1,635 7.2% 405 1.9%
Total Government 18,808 289 $921,659,481 $49,296 1,241 6.2% 523 2.7%
State Government 3,067 17 $196,811,951 $64,324 65 2.1% 276 8.3%
Local Government 15,741 272 $724,847,530 $46,332 1,175 6.9% 246 1.5%
Private 2,240 95 $78,492,288 $35,360 394 5.0% 118 5.6%
Source: DEED's Quarterly Census of Employment and Wages (QCEW)

Another way QCEW can categorize the Educational Services industry is through North American Industry Classification System or NAICS code (pronounced so it rhymes with SNAKES). At the 4-digit level, Elementary and Secondary Schools make up the lion share of employment in the 2-digit level Educational Services industry with 15,853 jobs, a similar amount that is categorized as Local Government employment. State government ownership corresponds to the 4-digit (6113) Colleges, Universities, and Professional Schools, and higher average annual wages than the total for all Educational Services. Other Schools and Instruction have 47 firms in the region and offers 676 jobs. However, the $25,896 average annual wage for this subsector is about $22,000 less than it is for the whole industry of Educational Services in the region and more than $41,000 lower than the highest paying subsector, Educational Support Services, which has 367 jobs in the region.

Table 4. Northwest Minnesota Educational Services Industry Statistics

    2020 Annual Average 2019-2020 Change
NAICS Code Industry Title Number of Employees Number of Firms Avg. Annual Wage Number Percent
61 Educational Services 21,048 384 $47,840 1,635 7.2%
6111 Elementary and Secondary Schools 15,853 291 $45,448 994 5.9%
6113 Colleges, Universities, and Professional Schools 2,923 12 $56,888 286 8.9%
6114 Business Schools and Computer and Mgmt Training 14 4 $28,808 1 6.7%
6116 Other Schools and Instruction 676 47 $25,896 271 -8.6%
6117 Educational Support Services 367 13 $67,600 25 6.4%
Source: DEED's Quarterly Census of Employment and Wages (QCEW)

At all levels of ownership in the Educational Services industry the overall trend is that this sector was significantly impacted by the COVID-19 pandemic. Annual average employment in 2020 dropped by 7.2% with the loss of 1,635 jobs from the 2019 annual average estimates. Elementary and Secondary Schools experienced the greatest drop in jobs with nearly 1,000 lost in the region while Other Schools and Instruction lost more than a quarter of its employment with a 271 job decrease over the year. Even Colleges, Universities, and Professional Schools were not immune to job losses with a nearly 9% reduction in employment or a loss of 286 jobs.

Trends and Impacts in Education

Prior to the pandemic, the employment trend for the Northeast Minnesota Educational Services sector was increasing. From 2001 until 2015, employment hovered between 21,000 and 21,500 but increased by 1,230 jobs from 2016 to 2019, a 5.7% increase. Employment plateaued at 22,683 in 2019 before the losses caused by the pandemic in 2020 (Figure 1).

 Northwest Minnesota's Employment in Education Services

The pandemic impacted the day-to-day service of education as schools participated in distance and hybrid models of learning. Unemployment insurance applications show which education occupations were most impacted and how the impacts were not evenly distributed amongst them. Postsecondary Teachers had only 65 UI applications compared to 871 Preschool, Primary, Secondary and Special Education Teachers indicating that post-secondary institutions in the region were better insulated from job losses. However, Other Teachers and Instructors and Other Education, Training and Library Occupations had 1,833 UI applications and indicate that more than just students and teachers in Educational Services were impacted by the effects of COVID-19.

Table 5. Number of Unemployment Insurance Applications since 5/17/2020 in Northwest Minnesota

Occupation UI Applications
Postsecondary Teachers 65
Preschool, Primary, Secondary and Special Education Teachers 871
Other Teachers and Instructors 354
Other Education, Training and Library Occupations 1,479
Source: DEED's Unemployment Insurance Application Data Tool

"Return to normal" has been a common mantra as we combat the impacts of COVID-19, and it might be best applied to the Educational Services industry. Not only is returning students to the classroom a priority, but many of those who support the education endeavor are looking to come back as well. The sooner the better for the well-being of this important industry in Northwest Minnesota.

Education is a powerful tool that can transform individuals and communities, and Northwest Minnesota can take pride in the fact that it specializes in this industry. With great power, however, comes greater responsibility, so it's time to concentrate on seeing that everyone gets to participate in the pursuit of education. The Red Lake Tribal Council made history in 2017 by declaring a resolution that supports a 100% graduation rate for all Red Lake youth. A local initiative has been built around this premise for all students in Beltrami county called "Project Graduate 100%." A return to normal is a good place to start, but at the same time, work remains to connect people to the ample education opportunities in the region that can create meaningful experiences and provide knowledge, skills, and abilities that will help the region's students navigate life.

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