The labor shortage in Minnesota is expected to remain a crisis.

Labor shortage is the biggest challenge for Minnesota employers according to a 2023 report

Labor shortage is the biggest challenge across all types of Minnesota businesses according to a report called “Understanding Minnesota’s Demographic Drought and the Strategies to Mitigate it” from Lightcast, Sullivan Cotter, Minnesota Business Partnership and Presbyterian Homes and Services and employers with health care are facing one of the biggest challenges. To set the state on the right path for the future a collaborative effort was made by several key organizations to provide recommendations for policy makers to respond to these labor shortage challenges.

The report, “Understanding Minnesota’s Demographic Drought and the Strategies to Mitigate it” states that Minnesota’s workforce has not recovered.  Several key statistics are provided which explain why Minnesota finds itself in this crisis.  Solutions suggested are very high level and include:

  • Get more people into the workforce and keep them there.

Several ideas are provided for how to attract and retain needed workers.

  • Increase domestic and international migration.

A clarification of state policies that are restricting migration and immigration in key industries is provided.

  • Increase the skills of the workforce.

Ideas in this section talk about upskilling and competency-based hiring as well as increasing on-the-job training.

  • Improve alignment between job requirements and available talent.

Partnerships between employers and educators are recommended to design curricula and training for in-demand skills as well as sponsored internships.

  • Embrace technology and innovation.

Better using technology and innovation will help improve labor productivity.  This requires public policy support for innovation and technology.

Issues that created this labor shortage in Minnesota, according to this report, are declining workforce participation of prime age men, older workers and youth, the rapid aging of the population, the high retirement rates for Baby Boomers, declining fertility rates, low net migration, and slow population growth.

The report provides several reasons for misalignment between labor supply and demand which have created the labor crisis in Minnesota.  These reasons include acute labor shortages due to struggles for MN to attract and retain workers, the MN labor market has historically been tighter than the broader US market, employment in MN is still below pre-pandemic levels and finally, key sectors (including healthcare) are feeling more pain than others.  One example provided is that labor shortages in healthcare are driven by lower immigration rates than the national average.  In fact, in MN, there is now more demand for lower-skilled roles than potential persons to fill them.

Solutions suggested are to encourage educators to engage employers to develop apprenticeship and internship programs including for adult learners and overlooked talent pools which would help transition more people into employment.  Also, the government can work on programs that help marginal groups enter the workforce and stay there.  Another simple tactic is to invest in English-as-a-second language which would expand MN’s labor pool.  Increasing net domestic and international migration is another way the report suggests combatting MN’s labor shortage.  A focus on collaboratively improving the skills for the workforce will help labor productivity and growth.

The conclusion of the report is that addressing the labor shortage will require coordinated solutions between educators, government, and employers.

Source: Understanding Minnesota’s Demographic Drought and the Strategies to Mitigate it from Lightcast, Sullivan Cotter, Minnesota Business Partnership and Presbyterian Homes and Services, 2023.

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