Briefings highlight workforce strengths, areas of possible concern

Minnesota’s workforce remains relatively stable, but lawmakers heard Thursday that several emerging trends may shape the state’s long-term competitiveness.

In a series of informational briefings before the House Workforce, Labor, and Economic Development Finance and Policy Committee, speakers offered a snapshot of current conditions and outlined potential areas lawmakers may want to monitor in the years ahead.

Labor market
The Department of Employment and Economic Development reported that in some areas, the Minnesota workforce system maintains high rankings and made gains. For example, it is one of the top states with regard to workforce participation and is 18th in the total number of jobs compared to 20th in population.   

Overall, the Minnesota job market is in the “sweet spot,” said Angelina Nguyen, director of the department’s Labor Market Information Office, with an unemployment rate of 4.1%. Economists say the natural unemployment rate is between 3.5% and 4.5% which correlates to about one person seeking a job for each opening.

And while Minnesota had one of the strongest post-pandemic job markets, there are several indicators it is softening. Minnesota posted one of the largest year-over-year unemployment increases in the nation and the state now ranks 25th for unemployment — the highest rate in the Upper Midwest.

Economic growth
A Minnesota Chamber Foundation briefing noted Minnesota’s GDP per capita, historically above the U.S. average, has drawn much closer to national levels in recent years. Productivity gains are the largest drivers of growth, but workforce development matters, said Lauryn Schothorst, the chambers’ director of workplace management and workforce development policy.

[MORE: View the PowerPoint presentation]

With labor force participation already among the nation’s highest, Schothorst suggested that long-term growth may depend on increasing the working-age population, most likely through immigration, given lower birth rates currently.

The chamber report listed affordability, housing costs and child care availability as factors contributing to out-migration and that Minnesota suffers compared to neighboring states in affordability.

Presenters offered several policy areas that could merit examination:

• skills development in grades K-12;
• access to housing and child care;
• the impact of marginal tax rates, especially benefit cliffs that can disincentivize workforce development; and
• internships, apprenticeships and partnerships with employers.