Labor Shortage is Hurting Minnesota’s Employment Growth

Labor Shortage is Hurting Minnesota’s Employment Growth

The state has added only 1,900 jobs in first four months of 2018.

Unemployment in Minnesota is at a 17-year low and remains below the national average. The state has consistently posted strong job growth since the recession.

But so far in 2018, the state is not creating many new jobs. For the first four months of the year, the state has only added 1,900 new jobs according to the most recent data from the Minnesota Department of Employment and Economic Development (DEED). That works out to an average of just 475 new jobs per month.

“It’s certainly slowed down,” said Steve Hine, director of DEED’s Labor Market Information Office, of the pace of Minnesota’s job growth.

Hine sees several factors at work, including the state’s tough winter.

“When you live in Minnesota, you’ve got to take a couple of months [of data] in spring with a grain of salt — especially when there’s a blizzard in the middle of April,” said Hine. He contends that may have postponed some hiring in “weather-sensitive” industries such as construction and leisure and hospitality.

But there are more fundamental shifts underway in the job market: the widespread labor shortage means that employers are having trouble finding workers to fill available jobs.

“I think we’re really starting to see the impact of the worker shortage,” Hine told Twin Cities Business. “I think that we’re going to continue to see much lower job gains, perhaps even job losses, if the workforce isn’t able to grow. We could see very low job growth even as we maintain very low unemployment rates.”

DEED reported an unemployment rate of 3.2 percent for April, notably lower than the national unemployment rate of 3.9 percent.

Another factor is immigration, which Hine said helped the state’s job growth during the recovery. Federal changes to reduce immigration could also have the effect of cutting Minnesota’s job growth, said Hine.

Through the end of April, DEED reported year-over-year gains of 11,659 jobs in the state. But last May, the agency found that Minnesota had added 34,715 jobs for the 12 months ending on April 30, 2017, marking a significant cut in the pace of hiring from 2017 to 2018.

“We’re well under half of what we had been averaging throughout the course of the recovery,” said Hine of the year-over-year numbers.

Tracking the state’s job gains and losses can be something of a moving target. When the agency issues a new monthly jobs report, DEED routinely revises jobs data for previous month.

“There’s always a revision,” said Hine. “Hopefully they’re relatively small, but the primary reason for that is some of the employer responses to the survey…just come in late.”

DEED reported that employers shed 3,200 jobs in April. At the same time, the state agency reported a notable change for the March employment numbers that nearly wiped out the previously reported job gains. Instead of adding 2,900 jobs as originally reported, DEED revised that number to just 400 new jobs for March.

But sometimes revisions are good news. The state initially reported adding 2,500 jobs in January but later revised that to a gain of 4,900 jobs. For February, DEED updated its initial report that employers cut 1,300 jobs to a revised number of just 200 jobs lost.

While the year-to-date numbers are still positive, DEED’s statistics show that during the three-month window from February to April the state lost 3,000 jobs.

DEED’s count for the first four months of 2018 is likely to change once the jobs statistics for April are revised.

Minnesota’s Monthly Job Gains/Losses

January 2018 +4,900
February 2018 (-200)
March 2018 +400
April 2018 (-3,200)
Year-to-date 2018 +1,900

Source: Minnesota Department of Employment and Economic Development