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Visiting Labor Market Expert Predicts Worker Shortage

May 27, 2016
By Kristine Goodrich

NORTH MANKATO — A looming worker shortage “has been a long time brewing,” the director of the state’s Labor Market Information Office told Mankato area business leaders Tuesday.

“A shortage of workers is going to be the norm,” Steve Hine warned at the Greater Mankato Growth’s May public affairs luncheon at South Central College.

Recent recessions have delayed the impact, but the number of new people entering the workforce is on the decline, image of tradespeoplethe expert from the Minnesota Department of Employment and Economic Development said.

Since the last recession, the number of new jobs has been growing steadily. The number of people looking for work meanwhile also is growing, but at a significantly slower pace than decades past. And that pace is projected to further decline in coming years, Hine said.

An aging population and a leveling off of women entering the workforce are the most significant factors in the slowed increase, according to Hine.

From the late 1970s through the turn of the century, the Minnesota labor force expanded an average of 40,000 a year. From 2001 to 2015, the average annual growth was 13,000.

In south central Minnesota the labor force expanded by an average of over 1,400 per year between 1991 and 2001; from 2002 to 2015, the annual average was less than 200.

Predictions from the state demographer’s office, which Hine called “pretty optimistic,” predicts the workforce over the next five years will expand around 4,100 annually. The growth will come from workers age 65 and older. The number of new younger workers will decline by approximately 3,000 each of the next five years.

Soon the number of workers needed to replace retirees and fill newly created jobs will outpace the number of new workers, Hine predicted.

“Between now and 2025 we’re going to lose workers overall,” he said.

The net workforce in south central Minnesota is projected to decline by approximately 300 over the next decade. He shared his own “less optimistic” projection suggesting the net regional loss could be upwards of 2,000.

With a low employment rate, Minnesota will be especially hard-hit by the labor shortage, Hine said. The unemployment rate for Blue Earth and Nicollet counties percent hovers around 3 percent, compared to 3.8 percent statewide and 5 percent nationally, he said.

“We’re down to levels that there isn’t much room to grow (the labor force) by tapping into what was once was a very large pool of available workers.”

Immigrant workers and measures to improve worker mobility and remove obstacles for people who want to work are all necessities to counter the likely shortage, Hine said.

The labor market expert said immigrants are becoming increasingly needed to fill openings.

The housing market and health care are major factors in prospective workers’ ability to move for a job, Hine reported. A strong housing market in which homeowners aren’t underwater and can afford to move is important, he said, as is health insurance that is transferable for people who have a pre-existing condition.

The labor market expert also recommended eliminating “impediments” for people who are presently choosing not to work or cannot work. He listed low wages, high cost of child care and lack of transportation as examples.

Greater Mankato Growth Executive Vice President Trudie Gustafson said the organization has newly formed a committee to study the workforce shortage issue and opportunities to help local businesses. The committee will begin meeting next month.

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