by Dave Senf
March 2015
Minnesota's recovery from the Great Recession, as of January 2015, is now in its fifth year with roughly 202,000 wage and salary jobs having been created since the nadir in September 2009. The increase in wage and salary employment is based on Current Employment Statistics (CES) data which count wage and salary jobs in the state. Local Area Unemployment Statistics (LAUS) numbers, which count Minnesotans either self-employed or in wage and salary jobs, is up 177,000 over the same time period. Job growth since the recovery has averaged between 33,000 and 42,000 annually when measured by LAUS and CES numbers.
The solid employment growth over the last few years was a good start for job growth over the 2012-2022 period.1 But average annual job growth over the next 10 years will be far slower than over the 2011-2014 period. The state is expected to average 20,500 new jobs annually between 2012 and 2022, which is almost half the annual gain achieved over the 2011-2014 period. Job growth is expected to decline gradually and come close to flatlining over the next 10 years as job creation will be constrained by slowing labor force growth. Job growth during the next decade will be brisk compared to the last decade but moderate when compared to the boom decade of the 1990s. Minnesota added 457,000 jobs between 1992 and 2002 but only 34,000 jobs between 2002 and 2012.
Minnesota's economy is projected to add 205,000 jobs between 2012 and 2022, pushing total jobs in Minnesota to over 3.1 million by 2022. Minnesota's job total has rebounded from the recession, but job growth has been uneven across industries. Two of the hardest hit sectors, Manufacturing and Construction, will still be below their pre-recession peak employment in 2022. In percentage terms Minnesota's employment is projected to expand 7 percent between 2012 and 2022 compared to the 1.2 percent increase during the previous decade and the 18.8 percent growth enjoyed two decades ago.
From 1994-2001, the boom years of the 1990s, all six regions added jobs on an annual average basis for eight straight years. After the 2001 recession only Central and Northwest Minnesota managed to add jobs in 2002 and 2003. Job growth returned to all regions between 2004 and 2006 before the first signs of the Great Recession appeared in 2007 with small job declines in Northwest and Southwest Minnesota. All regions felt the full effect of the Great Recession in 2009 as jobs declined across the state. Central, Northeast, and the Twin Cities regions experienced the steepest declines during the recession. The job recovery over the last few years has been strongest in the Twin Cities and Central Minnesota with the other regions experiencing sluggish job growth. Job growth has been relatively stronger in Northeast and Southeast Minnesota when compared to Northwest and Southwest Minnesota. Job growth occurred in 2012 in all regions for the first time since 2007. Final 2013 and 2014 job numbers aren't in yet, but it is likely that all regions have added jobs during each of the last three years.
Central Minnesota, centered by St. Cloud and with five counties adjacent to the Twin Cities Metro area, has been the state's job growth leader over the last four decades. Central Minnesota had the smallest number of wage and salary jobs at the beginning of the 1970s but has passed up every other region except for the Twin Cities seven-county region over the last 40 years. The residential development spillover from the Twin Cities along the I-94 corridor between the St. Cloud and the area up I-35 north of the Twin Cities is expected to resume eventually but not at the boom pace experienced before the Great Recession. Retail and service-related employment will follow population growth. Employment growth in Central Minnesota is expected again to top all the other regions, increasing 9.8 percent or about 29,000 jobs between 2012 and 2022 (see Table 3). The region experienced 5.2 percent growth during the 2002 – 2012 period, adding 14,500 positions.
The seven-county Twin Cities Metro area is projected to add 132,600 jobs between 2012 and 2022, a 7.6 percent increase. The Twin Cities employment growth was 1.1 percent between 2002 and 2012 with 19,300 jobs added. The Twin Cities area accounted for 57 percent of the state's job growth during the last decade and is expected to account for 65 percent over the next 10 years. Service-providing industries will create 90 percent of projected job growth as goods-producing employment growth will be held back by a 3.2 percent drop in Manufacturing jobs. Manufacturing employment in the Twin Cities area, unlike some of the other regions, will be lower in 10 years than now. The construction industry will rebound during the decade, adding 16,300 jobs as home-building activity returns to historical norms, but construction payrolls numbers will still be 12 percent or 9,000 workers short of the 2005 housing boom peak. The Educational Services workforce in the Twin Cities area will expand faster than in any other region as the area continues to make the switch to a knowledge- intensive economy faster than the rest of the state.
Southeast Minnesota employment is projected to grow slightly slower than statewide employment, expanding 6.4 percent by 2022 and adding 17,000 jobs. During the previous decade, Southeast Minnesota added 3,600 jobs, an increase of 1.4 percent. Roughly 80 percent of job growth in the region will be in the Healthcare and Social Assistance sector. Employment in this sector accounted for 22.3 percent of 2012 employment which is significantly higher than the statewide 14.1 share. Healthcare and Social Assistance employment accounted for all job growth during the previous decade as the sector added 12,100 jobs while all other sectors lost a combined 8,500 jobs. Spillover growth from the Twin Cities metro area into Goodhue and Rice counties combined with strong health-care related job expansion in Rochester will drive the region's employment growth.
Northwest Minnesota's 24-year streak of job growth came to an end in 2007 as the recession arrived early to the region with home-building related Manufacturing sliding as the home-building bubble began to deflate. Job growth was flat in 2008 before declining from 2009 through 2011. Employment growth in Northwest Minnesota is projected to increase 5.9 percent over the 10-year period with 15,000 new jobs created. Regional jobs increased 0.6 percent between 2002 and 2012 with 1,600 jobs added. The Health Care and Social Assistance, Retail Trade, and Construction sectors will add the most jobs in Northwest Minnesota over the next 10 years. Manufacturing jobs will grow faster here than anywhere else in the state, climbing 3.6 percent by 2022 compared to the expected 1.3 percent decline statewide. Manufacturing job growth, however, will not be strong enough to top pre-recession peak job totals.
Northeast Minnesota has the smallest employment base of all regions with an economy that in the past was heavily dependent on tourism, taconite mining, and timber-related activity. The most important sector these days is the Healthcare and Social Assistance sector with employment in this sector accounting for 18.9 percent of total employment in 2012. This sector is expected to add 4,900 jobs over the next 10 years, accounting for 82 percent of all regional job growth. Northeast jobs are expected to increase by 3.8 percent over the next decade, the second lowest regional growth rate. The 6,000 jobs expected to be added in the region is a huge improvement over the 1,500 jobs lost between 2002 and 2012, a 0.9 percent decline. The Northeast in 2012 was not only below the 2007 employment level but also below the 2002 employment level. Northeast Minnesota accounted for 5.5 percent of the state's employment base in 2002, 5.4 percent in 2012, and is expected to account for 5.2 percent in 2022. Northeast Minnesota along with Southwest Minnesota has the oldest workforce which translates into having the lowest regional labor force growth over the next 10 years. The result is slow job growth.
Southwest Minnesota is projected to have the slowest job growth in the state, growing by less than half the state rate. Over the next 10 years the region is projected to add 5,700 jobs, a 2.7 percent increase. During the previous 10 years the region lost 1.8 percent of its employment base or 3,700 jobs. Southwest Minnesota has three strikes against it when it comes to future job growth. The region's job rebound since the recession has been the weakest. Regional unemployment has historically been below the statewide rate which reduces potential job growth from falling unemployment. Finally, the region's workforce is one of the oldest, suggesting that unless immigration picks up sustainably, labor force growth will be more limited than in the other regions.
The distribution of projected regional occupational employment growth across the 10 major occupational groups is shown in Table 1. Service occupations, which include about 100 occupations ranging from bailiffs, firefighters, and police officers to janitors, bartenders, child care workers, and nursing assistants, are projected to add the most jobs in all regions except Southeast Minnesota. Professional and related occupations will add the most jobs in Southeast Minnesota from robust health-care related job growth in Rochester. Over the next 10 years Minnesota households will spend a larger share of their income on services than in the past. Higher spending on personal care, restaurants, casinos, and healthcare, especially by Minnesota's expanding senior citizen population, translates into higher demand for personal care aides, home health aides, food preparation workers, hairdressers, gaming supervisors, and amusement attendants.
| Table 1: Distribution of Regional Employment Growth by Major Occupational Group, 2012 - 2022 | |||||||
|---|---|---|---|---|---|---|---|
| Occupation | Central Minnesota | Northeast Minnesota | Northwest Minnesota | Southeast Minnesota | Southwest Minnesota | Twin Cities Minnesota | Minnesota |
| Management, Business and Financial | 5.4 | 7.5 | 6.3 | 4.3 | -4.7 | 13.7 | 10.5 |
| Professional and Related | 20.0 | 32.6 | 20.3 | 36.3 | 14.4 | 27.2 | 26.1 |
| Service | 35.2 | 47.7 | 34.8 | 28.5 | 56.4 | 33.7 | 34.8 |
| Sales and Related | 7.8 | 1.8 | 9.5 | 3.9 | 4.3 | 5.8 | 6.2 |
| Office and Administrative Support | 8.6 | -5.9 | 3.2 | 6.6 | -4.5 | 4.3 | 4.5 |
| Farming, Fishing, and Forestry | 0.1 | 0.1 | 0.7 | 0.2 | -0.7 | -0.2 | 0.0 |
| Construction and Extraction | 8.1 | 12.3 | 10.9 | 8.0 | 12.4 | 8.6 | 8.9 |
| Installation, Maintenance, and Repair | 3.8 | 4.5 | 4.2 | 3.6 | 8.7 | 2.3 | 3.1 |
| Production | 4.2 | -2.4 | 5.5 | 4.1 | 6.9 | 1.7 | 2.4 |
| Transportation and Material Moving | 6.9 | 1.8 | 4.5 | 4.5 | 6.9 | 2.6 | 3.6 |
| Source: Labor Market Information Office, Minnesota Department of Employment and Economic Development | |||||||
Professional and related jobs are expected to add the second-largest block of new jobs in all the other regions. Professional occupations include most information technology jobs, educational occupations, healthcare practitioner, and technical jobs. Professional and related occupations are spread across 250 occupations.
More than 50 percent of projected job growth is expected to be in either service or professional occupations in all regions. The Northeast and Southwest regions will have the highest percent of new jobs in either service or professional occupations. Occupations in these two major occupational groups currently account for 38 to 48 percent of total regional employment, with the Southwest region on the low end and the Northeast region on the high end. Service and professional jobs accounted for 43 percent of all jobs statewide in 2012. Almost 61 percent of job growth is predicted to be in service or professional jobs over the next 10 years, pushing their share of state jobs to 43 percent by 2022.
All major occupational groups will experience growing job numbers over the next 10 years in Minnesota except for the Farming, Fishing, and Forestry group. Jobs in this occupational group will, however, expand slightly in four regions. The fastest growing occupational group in all regions will be construction and extraction jobs. Construction occupations were hit hard by the housing bust as but are anticipated to continue to rebound as the home-building market slowly recovers to historical averages. This occupational group will increase two to three times faster than overall regional job growth in all six regions. Despite the expected robust growth construction occupations will not recover to the boom-year highs of the mid-2000s in any region.
Production occupations, such as machinists, team assemblers, welders, or job printer, accounted for 7.6 percent of all employment in Minnesota in 2012 with Southwest Minnesota having the highest percentage, 10.6 percent, and Northeast Minnesota having the lowest, 4.9 percent. All regions except Northeast Minnesota are predicted to add production jobs during the next 10 years, but production job growth will lag behind overall job growth in all regions. The share of regional employment in Manufacturing will slip in all regions over the next 10 years. Production jobs in all regions will not rebound to pre-recession levels.
Job openings generated by employment growth are only one piece of the future jobs puzzle. Perhaps the more important puzzle piece is future net replacement openings. Net replacement openings are generated by the need to replace workers who retire or leave the workforce for other reasons and hence their jobs are available to new or re-entrants into the workforce. In addition to the 205,000 new jobs projected to be created in Minnesota as the state's economy expands between 2012 and 2022, another 673,500 net replacement openings are projected. The baby boom retirement wave will account for a large share of net replacement needs.
There will be three times as many net replacement openings compared to openings created through expanding payroll numbers. Table 2 displays the regional distribution of projected net replacement openings across major occupational groups through 2022. Net replacement openings measure the number of jobs that are likely to be filled by young adults entering the workforce for the first time or older workers who are reentering the workforce.
| Table 2: Projected Net Replacement Openings by Major Occupational Group, 2012 - 2022 | |||||||
|---|---|---|---|---|---|---|---|
| Occupation | Central Minnesota | Northeast Minnesota | Northwest Minnesota | Southeast Minnesota | Southwest Minnesota | Twin Cities Minnesota | Minnesota |
| Management, Business and Financial | 8.4 | 7.5 | 9.7 | 9.2 | 10.7 | 12.2 | 10.9 |
| Professional and Related | 16.6 | 19.9 | 17.8 | 20.7 | 16.0 | 20.1 | 19.3 |
| Service | 25.9 | 29.9 | 27.1 | 25.0 | 23.5 | 23.6 | 24.6 |
| Sales and Related | 13.2 | 12.0 | 12.2 | 11.5 | 12.3 | 13.0 | 12.7 |
| Office and Administrative Support | 12.2 | 12.1 | 11.6 | 12.1 | 11.9 | 14.6 | 13.6 |
| Farming, Fishing, and Forestry | 1.4 | 0.4 | 1.6 | 1.1 | 2.3 | 0.2 | 0.7 |
| Construction and Extraction | 3.3 | 3.5 | 3.2 | 2.2 | 2.8 | 2.1 | 2.4 |
| Installation, Maintenance, and Repair | 3.8 | 4.8 | 3.9 | 3.6 | 4.3 | 3.0 | 3.4 |
| Production | 8.7 | 4.6 | 6.9 | 8.3 | 9.8 | 5.7 | 6.6 |
| Transportation and Material Moving | 6.5 | 5.3 | 5.9 | 6.2 | 6.4 | 5.4 | 5.7 |
| Source: Labor Market Information Office, Minnesota Department of Employment and Economic Development | |||||||
The distribution of projected occupational-replacement openings in each region is more evenly spread across all occupations when compared to the distribution of employment growth openings, since replacement openings are based on each region's 2012 employment base. Each region's occupational mix in 2012 is more dispersed than projected job growth. Job growth is projected to be concentrated in a select number of industries that have particular occupational needs, whereas retirements and exits from the labor force for other reasons will be happening across all industries and occupations.
Workers will be needed in the future to fill replacement needs in all occupations, even in declining occupations. The 2.9 million jobs in Minnesota in 2012 were spread across 808 occupations of which 159 or 20 percent are projected to shed jobs over the next 10 years. About 408,000 workers were employed in these shrinking occupations in 2012. Roughly 23,000 positions in these shrinking occupations will disappear over the next 10 years. Despite the loss of 23,000 positions demand for new workers with the right skills for these occupations will still exist since 104,000 net replacement openings are anticipated across the declining occupations over the 10-year span. For example, data entry keyer jobs are expected to shrink by 1,100 jobs by 2022, yet there will still be demand for data entry keyers since there will be 570 net replacement openings that need to be filled over the next 10 years.
Table 3 shows each region's 2022 employment base, 2012 – 2022 projected job growth, and 2012 – 2022 projected net replacement openings. Job openings in slower growing regions such as Southwest Minnesota are more likely to arise from replacement needs than from employment growth. There will be eight net replacement job openings in Southwest Minnesota for every job opening created by employment growth. The replacement ratio is lowest in Central Minnesota, two net replacement openings per new job opening, since employment growth in that region of the state is expected to be strong.
Long-term projections are updated every two years to keep up with constantly changing economic trends. Detailed industry and occupational employment projections, along with detailed net replacement openings projections, for Minnesota and for the state's six planning regions are available online at: mn.gov/deed/eo
| Table 3: Minnesota Projected Regional Employment Growth and Net Replacement Openings, 2012 - 2022 | |||
|---|---|---|---|
| - | 2012 Employment | 2012-2022 Employment Growth | 2012-2022 Replacement Openings |
| Central Minnesota | 294,407 | 28,848 | 68,960 |
| Northeast Minnesota | 157,408 | 5,963 | 37,450 |
| Northwest Minnesota | 254,122 | 14,999 | 59,060 |
| Southeast Minnesota | 262,725 | 16,909 | 60,750 |
| Southwest Minnesota | 207,849 | 5,685 | 48,000 |
| Twin Cities Metro | 1,738,875 | 132,608 | 399,000 |
| Minnesota | 2,915,401 | 204,999 | 673,520 |
| Source: Labor Market Information Office, Minnesota Department of Employment and Economic Development | |||
1 Employment totals for projection purposes include full and part-time wage and salary jobs and self-employment jobs. Annual average projection employment by industry is estimated by the Minnesota Department of Employment and Economic Development using Quarterly Census of Employment and Wages (QCEW) employment data, Current Employment Statistics (CES) employment data, and Local Area Unemployment Statistics (LAUS) self-employment data. Minnesota's 2012 annual average projection employment was estimated at 2,915,000. By comparison, the 2012 annual average job total for QCEW, CES, and LAUS were respectively 2,645,000, 2,731,000, and 2,802,000.
