Sep 19, 2023 - Business

Report: Minnesota is in a 168,000-worker hole

Illustration of a pattern of "we're hiring" signs, in different colors.

Illustration: Brendan Lynch/Axios

As Minnesota's baby boomers continue to ride off into the sunset, there won't be nearly enough workers to replace them when they retire, according to a new report.

Why it matters: The study conducted by labor market analytics firm Lightcast paints a dire picture of the state's economy over the next decade as the current worker shortage turns into "an outright labor shortage crisis," the authors wrote.

By the numbers: The state needs another 168,000 people in the labor force to fully recover from the massive shakeup caused by the pandemic, according to the report, which was sponsored by the Minnesota Business Partnership (MBP) and senior living provider Presbyterian Homes & Services.

State of play: The driving force behind the looming shortage is the retirement of baby boomers. All of them will be 65 or older by 2030.

  • Boomers were 46% of Minnesota's workforce in 2001, according to the report. That number fell to 17% in 2022, as more than 200,000 left the workforce.

Meanwhile, their departures won't be completely backfilled due to declining birth rates and net out-migration.

  • A state needs a birth rate of 2.1 per woman to "replace" its population, according to the report. Minnesota's birth rate has been falling since 2009, hitting 1.75 in 2021.
  • The report found that labor participation rates have fallen in the state, especially for people in their early 20s.
  • It added that with total net migration of -17,365 between 2020 and 2022, Minnesota is in the top 10 states with the highest domestic outflows in the country.

What they're saying: The authors said more international migration is needed, as the rate has fallen since 2015. Businesses must also change the way they recruit and retain workers and adjust their hiring requirements to focus more on skills vs. degrees.

  • "One of our big problems — but also our opportunity — is that some of the job skills and the workforce aren't aligned," MBP CEO Kurt Zellers told Axios.

The other side: Minnesota AFL-CIO president Bernie Burnham said the report focuses on what employers need, not on what workers need.

  • "New worker-centered statewide policies like paid family and medical leave are likely to attract new workers to Minnesota, but employers will need to step up to offer the pay and benefits working people need to support and sustain their families," Burnham said in an emailed statement.

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