by Dave Senf
November 2016
Minnesota’s job rebound from the Great Recession has been uneven across regions just as job decline varied regionally during the recession. Minnesota projection employment peaked in 2007, fell for three straight years, and began to rebound in 2011 on an annual average basis (see Figure 1). Projection employment, unlike the better known CES and QCEW employment numbers, combines wage and salary jobs in Minnesota with self-employed jobs, producing a more comprehensive measure of employment in the state.1 Minnesota’s employment declined 4.8 percent between 2007 and 2010 before increasing 7.5 percent between 2010 and 2015.2 The net result is that Minnesota’s employment in 2015 was 2.4 percent higher than the 2007 pre-recession peak.
Four of the state’s six regions also recorded record-high employment in 2015. Employment, however, was still below the pre-recession peak in Northeast (0.5 percent lower) and Southwest Minnesota (2.3 percent lower) in 2015. The recession arrived earlier in Northeast, Northwest, Southeast, and Southwest Minnesota as these regions experienced job decline first in 2007. Job loss didn’t start, at least on an annual average basis, in Central Minnesota and the Twin Cities region until 2008.
Although job cutbacks were steeper in Central Minnesota and the Twin Cities area, job expansion has been stronger in these regions since the recession. The net result is that employment in 2015 was 1.5 percent higher in Central Minnesota and 3.4 percent higher in the Twin Cities than 2008 pre-recession peaks. Northwest Minnesota and Southeast Minnesota employment was 0.5 and 1.2 percent higher in 2015 than their 2006 pre-recession peaks, respectively.
While employment has expanded in all regions except the Southwest during each of the last five years, slower job growth is anticipated in all regions over the next 10 years. The state is expected to average 13,000 new jobs annually between 2014 and 2024, which is less than a third of the 43,500 annual average job gain between 2011 and 2015. Job growth is expected to slow considerably, perhaps stalling out for a few years in the early 2020s, as labor force growth falls to a crawl. Employment growth during the next decade will still be higher than the previous decade but far short of two decades ago.
Minnesota added 348,000 jobs over the 1994-2004 period which included a recession in 2001. The state added only 97,000 jobs between 2004 and 2014 as the state recovered from the Great Recession. Slow labor force growth will limit job growth to around 130,000 between 2014 and 2024. In percentage terms Minnesota’s employment is projected to expand 4.2 percent between 2014 and 2024 compared to 3.3 percent during the previous decade and 22.7 percent enjoyed two decades ago.
Central Minnesota, with St. Cloud in the middle and five counties adjacent to the Twin Cities Metro area, has been the state’s job growth leader in percent terms for four decades. Roughly 9 percent of the Minnesota employment was located in the Central region in 1990. As of 2015 that percent has increased to 10 percent. The projected 2024 share is 10.4 percent.
The residential development spillover from the Twin Cities along both I-94 and I-35 is gradually returning but at a slower pace than before the recession. As population in the region expands, retail and service-related employment will follow as will employment in other areas like local government including public school employment. Employment growth in Central Minnesota is expected to top all the other regions again, increasing 7.7 percent or about 23,400 jobs between 2014 and 2024 (see Figure 2). The region experienced 5.0 percent growth during the 2004 – 2014 period, adding 14,300 positions.
Southeast Minnesota employment is projected to expand slightly faster than statewide employment, increasing 4.5 percent by 2024 and adding 12,200 jobs. During the previous decade, Southeast Minnesota added a net 6,200 jobs, a 2.4 percent increase. Six of every 10 new jobs are anticipated to be created in the Healthcare and Social Assistance sector. Employment in this sector accounted for 21.9 percent of the 2014 total regional employment compared to the statewide 14.3 percent share.
Healthcare and Social Assistance employment accounted for 47 percent of all job growth during the previous decade as the sector added 9,700 jobs while all other growing sectors added 10,800 jobs. The declining sectors lost 14,400 jobs, leaving the region with a net gain of 6,200 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. This region’s share of state employment will remain stable at 8.9 percent.
The seven-county Twin Cities Metro area is projected to add 79,900 jobs between 2014 and 2024, a 4.4 percent increase. Twin Cities employment growth was 4.5 percent between 2004 and 2014 with 77,900 jobs added. The metro area accounted for 80 percent of Minnesota’s job growth over the last 10 years but is projected to produce around 60 percent over the next 10 years.
Job growth in the Twin Cities rebounded much faster than in the rest of the state after the recession. Manufacturing employment in the Twin Cities area, like all regions except Central Minnesota, will be lower in 2024 than in 2014 as the area’s manufacturers are expected to shed 10,300 jobs. Two thirds of new jobs are expected to be created in one of four sectors: Health Care and Social Assistance; Professional, Scientific, and Technical Services; Finance and Insurance; and Educational Services. Over the next 10 years the Twin Cities will continue to transfer to a knowledge-intensive economy faster than the rest of the state.
Northwest Minnesota’s job growth from 2004-2014 ranked fourth among regions with 2,600 jobs added, a 1.0 percent increase. Jobs are expected to grow by 3.6 percent between 2014 and 2024 as the region’s employment base expands by 9,200 jobs. Self-employment, Manufacturing, Retail Trade, and Construction were the sectors that lost the most jobs during the previous decade. Manufacturing jobs are projected to continue to decline over the next 10 years but Self-employment, Retail Trade, and Construction jobs are expected to add positions, helping to expand job opportunities in the region.
Manufacturing employment is anticipated to decline by 4.8 percent, slightly more than the projected 4.6 statewide decline. The Health Care and Social Assistance, Retail Trade, and Construction sectors will add the most jobs in Northwest Minnesota over the next 10 years. Health Care and Social Assistance jobs will account for roughly 44 percent of all job growth. The region will hold on to it 8.6 percent share of statewide employment.
Northeast Minnesota has the smallest employment base of all regions, accounting for 5.3 percent of the state’s job total. Job growth in the region over the next decade is expected to lag behind state job growth, dropping the region’s share of state employment to 5.2 percent by 2024. The region is projected to add 3,200 jobs by 2024, a 2.0 percent increase. Between 2004 and 2014 the region lost 0.3 percent or 425 jobs.
The expected job growth over the next 10 years will add enough jobs for the region to top its 2006 peak employment level. Northeast Minnesota and Southwest Minnesota have the oldest workforces which means that these two regions will have the slowest regional labor force growth over the next 10 years. Lower labor force growth will limit job growth. As with all regions, job growth will be led by the Health Care and Social Assistance sector which in this region will account for more than 60 percent of all jobs added over the next 10 years.
Southwest Minnesota is projected to have the slowest job growth in the state, growing four times slower than statewide job growth. Over the next 10 years the region is projected to add 2,100 jobs, a 1 percent increase. Southwest employment between 2004 and 2014 slipped 1. 3 percent as employment declined by 2,600 jobs. Job growth in the Southwest has been weaker than any other region since the recession, averaging 0.4 percent annually over the last four years compared to the 1.5 statewide average. The Southwest’s share of state employment is projected to inch down to 6.7 percent by 2024 from 6.9 percent in 2014.
Southwest Minnesota has three strikes against it when it comes to future job growth. First, slow job growth over recent years has meant slow income growth which just reinforces the slow job growth. Second, 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 region’s labor force has slipped by an average of 0.3 percent annually over the last four years compared to the 0.5 percent annual average increase across the state. Third, labor force growth will be limited further by the region’s historically low unemployment rate. Job growth in other regions can in part be supported by unemployed workers moving into jobs. There just aren’t that many unemployed workers in Southwest Minnesota to boost job growth even if the demand for labor is there.
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
| Table 1. Projected Regional Employment Growth by Major Occupational Group, 2014-2024 | |||||||
|---|---|---|---|---|---|---|---|
| Group | Central Minnesota | Northeast Minnesota | Northwest Minnesota | Southeast Minnesota | Southwest Minnesota | Twin Cities Minnesota | Minnesota |
| Total | 23,338 | 3,218 | 9,248 | 12,168 | 2,114 | 79,931 | 130,000 |
| Management, business and financial | 1,082 | 241 | 166 | 537 | -662 | 13,139 | 14,703 |
| Professional and related | 4,560 | 1,183 | 1,838 | 4,490 | 353 | 28,363 | 40,890 |
| Service | 8,872 | 2,492 | 4,036 | 4,289 | 1,966 | 34,116 | 55,646 |
| Sales and Related | 1,962 | 195 | 1,694 | 1,062 | -9 | 5,366 | 10,788 |
| Office and Administrative Support | 1,361 | -712 | -198 | -50 | -875 | -3,280 | -4,040 |
| Farming, Fishing, and Forestry | -222 | -146 | -118 | -18 | 54 | -392 | -848 |
| Construction and Extraction | 2,088 | 138 | 1,171 | 577 | 471 | 4,303 | 8,722 |
| Installation, Maintenance, and Repair | 1,215 | 221 | 644 | 500 | 607 | 1,336 | 4,559 |
| Production | 448 | -260 | -573 | 53 | -114 | -3,969 | -4,587 |
| Transportation and Material Moving | 1,972 | -134 | 588 | 728 | 323 | 949 | 4,167 |
Minnesota households will spend a larger share of their income on services in the future, boosting job growth in service occupations. Higher spending on personal care, restaurants, and healthcare, especially by Minnesota's expanding senior citizen population, translates into higher demand for personal care aides, home health aides, food preparation workers, and hairdressers.
Professional and Related occupations will add the most jobs in all regions except Southwest Minnesota. Professional occupations include most information technology jobs, educational occupations, healthcare practitioner, and technical jobs. Professional and Related occupations are spread across 250 occupations. Installation, Maintenance, and Repair occupations are anticipated to add the second most positions in Southwest Minnesota.
All major occupational groups except three will experience growing job numbers over the next 10 years in Minnesota. The three occupational groups expected to see job losses are Production, Office and Administrative Support, and Farming, Fishing, and Forestry. Jobs in these occupational group will not, however, be declining in all regions. Office and Administrative Support jobs are expected to increase in Central Minnesota but fall in all other regions. Farming, Fishing, and Forestry positions are projected to decline in all regions except the Southwest region. Production occupations will tail off in all regions except Central and Southeast Minnesota.
In three regions (Northeast, Southeast, and Twin Cities) Service occupations are projected to grow the fastest. The Construction and Extraction group is expected to add jobs the fastest in the Central and Northwest regions. The fastest expanding occupational group in Southwest Minnesota will be Installation, Maintenance, and Repair. Construction occupations were hit hard by the housing bust but are anticipated to continue to rebound across all regions as home-building activity gradually returns to its historical norm. Construction jobs are not, however, expected to top the boom-year highs of the mid-2000s in any region.
Manufacturing in Minnesota accounted for 14.5 percent of all jobs in 1990, 13.6 percent in 2000, 10.4 percent in 2014, and is projected to account for 9.5 percent in 2024. While Minnesota manufacturers have expanded payrolls since the recession, jobs loss is expected by 2024. The decline in the Manufacturing sector translates into declining production jobs across four regions over the next decade. Production jobs are expected to increase slightly in Central and Southeast Minnesota.
Production occupations, such as cutting, punching, and press machine setters, operators, and tenders, accounted for 7.4 percent of all employment in Minnesota in 2014 with Southwest Minnesota having the highest percentage, 10.1 percent, and Northeast Minnesota having the lowest, 5.1 percent.
Job openings generated by employment growth will account for less than one of every five job openings over the next decade as the majority of future job openings will be net replacement openings. Net replacement openings are created when workers retire or leave the workforce for other reasons, creating openings for new or re-entrants into the workforce. In addition to the 130,000 new jobs projected to be created between 2014 and 2024 in Minnesota, 697,000 net replacement openings are projected. A large share of the net replacement openings will arise as the baby boomers retire. Baby boomer retirement is expected to peak in the early 2020s.
Net replacement job openings will account for a larger share of all job openings in regions with slower employment growth and older workforces. Net replacement openings will account for 96 percent of all openings in Southwest Minnesota and 92 percent in Northeast Minnesota compared to the 84 percent statewide. The net replacement share of job openings drops to 75 percent in Central Minnesota where employment growth is expect to be the strongest.
The regional distribution of projected net replacement openings is more evenly spread across all occupations compared to job openings from employment growth. Net replacement openings occur in every occupation, including occupations that are shrinking. Employment growth, on the other hand, is concentrated in the 100 fastest-growing occupations which are expected to account for 80 percent of employment growth openings. Only a handful of occupations are expected to have more employment growth than net replacement openings. Only Service occupation will account for the largest share of net replacement openings in every region (see Table 2).
| Table 2. Projected Regional Net Replacement Openings by Major Occupational Group, 2014-2024 | |||||||
|---|---|---|---|---|---|---|---|
| Group | Central Minnesota | Northeast Minnesota | Northwest Minnesota | Southeast Minnesota | Southwest Minnesota | Twin Cities Minnesota | Minnesota |
| Total | 70,742 | 38,202 | 61,008 | 61,960 | 48,072 | 416,720 | 696,942 |
| Management, business and financial | 6,669 | 3,140 | 6,307 | 6,336 | 5,999 | 55,190 | 83,540 |
| Professional and related | 12,197 | 7,587 | 10,523 | 13,274 | 7,997 | 83,910 | 135,699 |
| Service | 17,787 | 10,514 | 15,782 | 14,690 | 11,113 | 100,050 | 169,927 |
| Sales and Related | 9,034 | 4,718 | 7,495 | 6,994 | 5,772 | 50,720 | 84,838 |
| Office and Administrative Support | 7,839 | 4,689 | 7,168 | 6,855 | 5,155 | 54,760 | 86,489 |
| Farming, Fishing, and Forestry | 733 | 276 | 938 | 527 | 956 | 690 | 4,136 |
| Construction and Extraction | 2,398 | 1,312 | 1,942 | 1,396 | 1,361 | 9,000 | 17,391 |
| Installation, Maintenance, and Repair | 2,759 | 1,905 | 2,336 | 2,087 | 2,081 | 12,860 | 24,057 |
| Production | 6,722 | 1,903 | 4,798 | 5,731 | 4,623 | 25,990 | 49,725 |
| Transportation and Material Moving | 4,604 | 2,158 | 3,719 | 4,070 | 3,015 | 23,550 | 41,140 |
Workers will be needed in the future to fill replacement needs in all occupations, even in declining occupations. The 3 million jobs in Minnesota in 2014 were spread across 810 occupations of which 225 or 28 percent are projected to shed jobs over the next 10 years. Roughly 477,000 workers were employed in these shrinking occupations in 2014. About 33,000 positions in these shrinking occupations are projected to disappear over the next 10 years. Even with the job cutbacks the demand for new workers with the right skills for these occupations will still exist as 100,000 net replacement openings are anticipated across the declining occupations over the 10-year span. For example, printing press operator jobs are expected to decline from 5,650 in 2014 to 4,970 but there will still be demand for printing press operators as 850 net replacement openings will need to be filled over the next 10 years.
Table 3 shows each region's 2014 employment base, 2024 projected employment, projected job growth, and projected net replacement openings over the next 10 years. 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 23 net replacement job openings in Southwest Minnesota for every job opening created by employment growth. The fastest growing region, Central Minnesota, will have the lowest replacement ratio with three net replacement openings per new job opening.
| Table 3. Minnesota Projected Regional Employment Growth and Net Replacement Openings, 2014-2024 | ||||
|---|---|---|---|---|
| Location | 2014 Employment | 2024 Employment | 2014 - 2024 Employment Growth | 2014 - 2024 Replacement Openings |
| Minnesota | 3,007,000 | 3,137,000 | 130,000 | 696,942 |
| Central Minnesota | 302,055 | 325,393 | 23,338 | 70,742 |
| Northeast Minnesota | 159,860 | 163,078 | 3,218 | 38,202 |
| Northwest Minnesota | 259,813 | 269,061 | 9,248 | 61,008 |
| Southeast Minnesota | 267,404 | 279,572 | 12,168 | 61,960 |
| Southwest Minnesota | 208,555 | 210,669 | 2,114 | 48,072 |
| Twin Cities Metro | 1,809,309 | 1,889,240 | 79,931 | 416,720 |
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.
1 Employment estimates 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) and Current Employment Statistics (CES) employment data for wage and salary employment estimates. Local Area Unemployment Statistics (LAUS) and American Community Survey (ACS) self-employed data is used to estimate self-employment. Minnesota's 2014 annual average projection employment was estimated at 3,007,000. By comparison, the 2014 annual average job total for QCEW, CES, LAUS, and ACS were respectively 2,730,000, 2,815,000, 2,859,000, and 2,865,000.
2 Unless otherwise stated the employment used in this article refers to projection employment.
