Kashkari: To Remain Competitive, Minnesota Needs More People
At a Nov. 17 luncheon at the Renaissance Hotel in Minneapolis, Doug Loon, head of the Minnesota Chamber of Commerce, interviews Neel Kashkari, head of the Minneapolis Fed. Grant Erickson

Kashkari: To Remain Competitive, Minnesota Needs More People

At a Minnesota Chamber of Commerce luncheon last week, the head of the Minneapolis Fed drove home the economic importance of population growth.

If Minnesota wants to remain competitive regionally and nationally, we’re going to need more people to move here.

That was one of the takeaways from a recent Minnesota Chamber of Commerce luncheon discussion with Neel Kashkari, president and CEO of the Federal Reserve Bank of Minneapolis.

Citing a slew of changes brought on by Covid-19, Kashkari noted that Minnesota’s workforce has significantly contracted over the last few years. He pointed to a wave of retirements accelerated by the pandemic, alongside continued child care constraints keeping more workers on the sidelines. Covid-19 also has claimed the lives of more than 1 million Americans. It’s a “human tragedy,” of course, but also a permanent loss of workers, Kashkari said.

“As I travel in our region, the no. 1 issue I see in businesses large and small is the difficulty in finding workers,” Kashkari said in a Nov. 17 question-and-answer session with Minnesota Chamber president and CEO Doug Loon at the Renaissance Hotel in Minneapolis. “That’s consistent everywhere I go.”

As head of Ninth District of the Federal Reserve, Kashkari monitors economic conditions in Minnesota, the Dakotas, Montana, northwestern Wisconsin, and Michigan’s Upper Peninsula.

Kashkari’s answer to the region’s workforce problems? In part, immigration.

“Immigration has been a vital source of workers in our economy, both low-skill workers and high-skill workers,” Kashkari said. “That has really dried up in the pandemic, and we’ve got to address that if we really want our economy to be competitive going forward.”

The Minnesota Chamber has long touted the importance of immigrant labor in the state. In March of 2021, the organization’s research arm released a report on the topic, noting that immigrants comprise 8.5 percent of Minnesota’s population.

Minnesota could also benefit from residents in other states moving here.

“Minnesota could be a great place for people who say, ‘You know what, I don’t want to live in New York City anymore. I don’t want to live in California anymore. It’s too expensive,’” Kasharki said. He touted the Upper Midwest’s lower cost of living and quality of schooling.

“This is potentially a competitive tool to enhance net migration into Minnesota and into this region,” said Kashkari, a one-time Republican candidate for governor of California. During his tenure at the Minneapolis Fed, Kashkari has become much more outspoken on social issues than prior leaders at the institution.

Toward the end of the discussion, Kashkari briefly addressed a topic still lingering on many consumers’ minds: Interest rates. The Fed raised interest rates to almost 4 percent this month. Kashkari is currently an alternate voting member on the Federal Open Market Committee, an arm of the Fed that determines interest rates.

“Once we’re certain that inflation has hit the ceiling, then we can take some time and let some catching up take place,” Kashkari said. “Let’s see the full effects of our policy. But I would need to be convinced that inflation has at least stopped climbing—that we’re not falling further behind the curve—before I would advocate stopping progression of future rate hikes.”