Minnesota’s Vanishing Workforce:

The US is grappling with the Demographic Drought: aging populations and shrinking talent pools. Minnesota is no different. The state’s 12,000 lakes will be no match for the impending Demographic Drought brought about by declining fertility rates, an aging population, rising retirements, and falling net migration. But there is hope.

Join labor economists Rachel Sederberg, Ph.D. and Elizabeth Crofoot, authors of the report: Minnesota’s Vanishing Workforce. They'll dissect how this phenomenon affects the US and Minnesota specifically.

Uncover crucial insights about Minnesota's situation and consider how findings like these could impact both you and your state.

Time Stamps:

Intro - 0:26

Demographic Drought: A Global, Nationals, and Local Challenge - 4:16

Decline fertility rates, aging population, and falling immigration are affecting labor markets everywhere. - 6:09

What are Minnesota’s demographic headwinds, how are they affecting the labor market, and what can Minnesotans do to ease them? - 8:20

How can Minnesota fully recover from the pandemic? - 10:31

Minnesota’s vanishing workforce is the result of key historic trends. - 14:54

Where are we now and what’s our current labor crises like? - 21:05

Where are we headed? - 29:55

How to move forward. - 33:11

Final thoughts. - 44:21

Transcript:

Alyssa Petersen:

Hello, everyone. Welcome to our public webinar hosted by Lightcast. We're super excited to have you here, and we're not going to waste any time, because we have such good content so we're going to just jump right in. For those of you just logging on and getting settled, we're going to run through some quick housekeeping items, a quick intro, and then we're going to pass to our speakers today.

So again, welcome. Thank you all for joining. My name is Alyssa Petersen. I'm a director of client services here at Lightcast and really excited to introduce our speakers today and then host some Q&A at the end. For those of you who are joining and maybe are brand new to Lightcast or not quite sure what you're doing here, welcome. We are formerly Emsi Burning Glass, now Lightcast, and we have over two decades of experience finding solutions and delivering the competitive edge our clients demand. Lightcast products provide the world's most detailed information about occupations, skills in-demand, career pathways, and more, providing labor market insight to employers, educational institutions, and government agencies to help them succeed. So that's what we're about in a nutshell. The flow of today, what you're going to expect is about 30 minutes of content from our speakers with Q&A at the end. As we're going through the presentation, please drop your questions into the question field and we'll grab those on the back end.

We're also going to drop the report and some other really helpful resources in the chat. So feel free to grab those and open those up while the presentation is going and if you have very specific questions at the end relating to your business or your role, feel free to reach out to us in that way as well and we'll get the right people connected with you to help answer those really specific questions. So without further ado, today we're covering our latest research, which is Minnesota's Vanishing Workforce.

We have two of the authors speaking to you today. So please welcome two of our senior economists, Dr. Rachel Sederberg and Elizabeth Crofoot. 

Rachel Sederberg: 

Thanks so much. We're thrilled to be here. To give you a little more context on who we are, we can introduce ourselves a little bit further. I'm Rachel Sederberg. I'm a senior economist and research manager here at Lightcast. I'm a trained labor economist and have been with the company about three years after a short career in academia. And my colleague Elizabeth Crofoot is also on the line.

Elizabeth Crofoot: 

Hi everyone. So thrilled to be here today. I'm a senior economist and principal research analyst here at Lightcast.

I started my career as an economist at the Bureau of Labor Statistics, and I have 20 years of experience analyzing U.S. and global labor market data and have spent most of my career researching labor and talent shortages and working with companies to address those challenges. So a lot of the things that we'll be discussing today. So thrilled to be here. Thanks so much.

Rachel Sederberg: 

All right. So what we're going to talk about today is we're going to talk about demographic droughts, right? Globally, nationally and locally. We're seeing labor shortages and labor crises all over the place. So we want to dive in here and really get down into some data.

We're going to use the state of Minnesota as a case study. We're going to dig into data specific to the state and then bring that back into a more national focus. And then we're going to take a moment at the end of the presentation to think about how to move forward, creatively through businesses, policymakers, educators - everyone involved in the labor market and adjacent parts of the economy. How we can mitigate the Demographic Drought that we're experiencing, and that spoiler alert: it isn’t going anywhere, anytime soon.

So with that, I'll pass it to Elizabeth to discuss a little bit more. 

Elizabeth Crofoot: 

Great. Thanks. You can go ahead and move to the next slide. I really wanted to start with this particular quote. So I'll just read it out for everyone. “Ask the leader of any business, regardless of industry or size, to name the biggest challenge facing their business today, and they're likely to cite difficulty finding enough workers.”

So this is a quote, it's the very first sentence in our report, in the foreword, authored by Jeff Harmoning. He's the Chairman of the board and CEO of General Mills, and the chair of the Minnesota Business Partnership, which helped sponsor this report. But it really summarizes the motivation behind this research and also the other Demographic Drought reports in this series.

So I think we can also argue that it's not just regardless of industry or size that we're seeing these labor challenges. If you go to the next slide, Rachel. This Demographic Drought is really a global, national and local challenge. So it's also geographic, regardless of geography, we're seeing these challenges play out in the labor market and with remote work, especially, you know it really promotes this idea of a global or a national labor market. But to play off that a little bit, labor markets are fundamentally local because we are providing goods and services to local communities.

You can't outsource a haircut for example. So that really just drives home how critical it is to understand the local populations within specific communities and those factors that are contributing to local workforce participation and job creation. So that's why we're diving in here today at the state level and specifically for Minnesota.

So go ahead, next slide. All that being said, there are some common themes that really are common throughout all of our reports here in terms of looking at global labor markets, national labor markets, and now state level. So three of those: declining fertility rates, aging populations, and falling immigration are affecting labor markets everywhere.

First of all, we are seeing that developed economies in particular are living below this 2.1 replacement fertility rate. So we need women to have 2.1 births per woman in order to really replace our population levels. And that's globally. However, those fertility rates do vary quite a bit within the U.S. states and across different countries, but overall they are falling very quickly and they are at historic lows. So what this means is that fewer births, fewer people, that means there are fewer working age individuals in the future. So that's really problem number one. 

Number two is around the aging of the population. We are seeing aging happening everywhere, but at a different pace. Again, this is differing rates of aging and retirements across the U. S. states and countries globally. And these rising retirements are really the number one cause of labor market tightness. 

And then third falling immigration is really going to squeeze labor supply again in the U.S. and in other countries. Within the U. S., there's a lot of differences in terms of the way that different states engage immigrants in their workforce and the level and the amount of immigration that they have, so that can also impact local labor supplies. And overall, in certain geographies, we are going to see that populations are going to lose more people that even immigration can replace, so this is something to keep our eye on as we move forward.

Rachel Sederberg: 

All right, so we're going to dive into Minnesota as a case study. Now we want to thank our partners for this project that we have just completed: Sullivan Cotter, Presbyterian Homes and Services, and the Minnesota Business Partnership. We created this report that we're going to talk about today in the lens of a case study.

Now, the motivation for this project was understanding how and why Minnesota is facing headwinds, how it's affecting the labor market, and what can be done to ease those headwinds. The U. S. is facing a really challenging current and future labor market, and we want to see where Minnesota stands, where it's headed, and how everyone involved can help make good decisions today for the future.

Because the changes that have been coming within the labor market are things that have been coming for decades. We know that we have an aging population. We know that we have falling birth rates. We know all of these things are coming, and they've been coming for quite a long time. Then we had COVID hit, and that really just slammed on the gas of an already moving freight train.

We want to know three things in this state-level deep dive. How did we get here? Where are we now? And where are we going? To understand where we're going, we have to understand where we've been. And we had a generation with outsized impact on our economy, on our labor force, on our whole world, right? With the baby boom generation, they are now moving into retirement age. 

We are seeing changing societal priorities. We're seeing changes in immigration. All of these things have culminated to bring us to where we are today. Now, our current labor force crisis is that we're struggling to attract and retain workers in Minnesota and all over the country.

And then where are we headed? What are the factors that are going to keep us going into this Demographic Drought? How can a government, how can employers, how can all members of society work together to build and maintain talent, right? Where are we headed? Minnesota is headed in a certain direction and I'll leave it to Elizabeth to explain more on that.

Elizabeth Crofoot: 

Yeah, so the bottom line here is that Minnesota needs 168,000 more people in the labor force to fully recover from the pandemic. What you see here on this chart is the labor force in Minnesota in millions of people. That light teal line is actual labor force numbers. So you can see that before the pandemic, it was on a certain trajectory and now it is below that point. So the teal line is where we would have been in Minnesota had the pandemic not happened in terms of overall labor force, in terms of number of people. Just to get back to where Minnesota would have been in the absence of the pandemic, we need 168,000 more people.

So that is a huge gap that we need to fill in Minnesota specifically. Next slide.

So a lot of what we try to do in the report is not only highlight the problem, but also what are some policies, some strategies that employers can take to expand these talent pools to fill this gap that we have quantified. For example, raising the labor force participation rate by two percentage points, that's something that we have strategies or recommendations around how to do within the report. But having that bump up in participation can increase the labor force by 90,000 people. And then in addition to that, returning to 2015 peak levels of immigration through 2030 would increase the labor force by 20,000 people.

So in total that 110,000 people, that's already two-thirds of the gap that we can potentially fill by having businesses and policymakers expand talent pools through targeted recruitment efforts and immigration to really close that gap. However, there's still the other third, right? How do we close that gap entirely?

So there are some other strategies, primarily around increasing productivity. So if you have fewer people that are working in the economy, you necessarily need to have each person producing more. There's really no way around it, right? You either have to have more people or have more productive people, or a combination of both. And that's what we're maintaining here. 

So if Minnesota is able to maintain its two percent productivity growth rate that it had during the pandemic. So that was up from where it was before, so Minnesota became more productive over that time. If they can maintain those levels of productivity, that could go a long way to also closing that additional gap through investments in productivity enhancing skills and technologies by employers and again, by policymakers as well.

Yes, and so this allows us to really quantify what we mean by a two percentage point increase in participation rate. So we can actually slice and dice the labor force in Minnesota by age, by sex, and we can see what that effort actually get us. For example, if we want to pinpoint a certain demographic group, young people, for example, ages 20 to 24, those individuals, we've seen a decline in their participation rate, not only in Minnesota, but in other parts of the country as well.

If we increase their participation rate in Minnesota specifically, they'll increase the labor force by 7,000 people. Another group, for example, those people ages 55 to 64 that have seen increases in retirement, early retirement since the pandemic. If we really put our efforts behind retaining them in the workforce or bringing them back, we can increase the labor force by over 14,000 people.

So again, this gives just a sense of what those efforts actually mean in terms of the number of people and closing that 168,000 person gap in the labor force.

Rachel Sederberg: 

All right, so how did we get here, right? History is essentially catching up with Minnesota, and Minnesota's Vanishing Workforce, and across the country, these are going to ring true largely as well, is the result of key historic trends.

First and foremost, we have declining workforce participation, especially of prime age men, so the men ages 25 to 54. Older workers, those 55 plus, and the very young. We also have the rapid aging of the population and the exodus of a massive group of workers - the baby boomers. Baby boomers started retiring around 2002 and are retiring in droves, and that is not a small thing for our economy.

We also, as we've mentioned, have declining fertility rates, low net migration, and slowing population growth. So if we look at the labor force participation rate since 2000, workforce participation in Minnesota has fallen further and faster than the U.S. average. Now, we see that Millennials first entered the workforce in the late 90s, and as I said, Boomers were just starting to retire out of the workforce in the early 2000s.

And what we're seeing is a fall, right? That is just precipitous from that point onward. While Minnesota is by level doing better than the U. S. average, it's still falling and it's falling faster and farther. So that is a point of concern. Now, if we want to look at things by generation and who's in the labor force, we can look at this graph that shows the silent generation boomers, Gen X, Millennials, and Gen Z. Over time and how they made up those components of the workforce, how they mix together. 

And what we see is that in 2015 Millennials and Gen X became the dominant generations in Minnesota's labor force. We see boomers retiring out and then just in the last few years we see Gen Z coming into the workforce, and I guess if they aren't on TikTok, right? I'll admit I had to delete it off my phone. That's super addictive. 

Minnesota is also living below the 2.1 fertility rate. As Elizabeth stated earlier, everyone's fertility rates across the board have been dropping in broad strokes. Minnesota's fertility rate has been below the 2.1 replacement rate consistently since 2009.

And this has long lasting implications, right? If you're going to get a worker, they have to be born 22 years-ish before, right? So if we're not having children now, that means we're going to have problems years and years down the line. We also see that the U.S. is living well below the replacement rate.

And again, Minnesota is slightly better. But trends are all heading downward, and you might say, “Okay this is just Minnesota, right?” Or maybe there's certain states that are really driving these dropping rates. And I think we want to take a step back and look here at birth rates across the country.

Now, what I want you to note here is that these two maps are in exactly the same color scale. The map on the left is 2011 birth rates. The map on the right is 2021, 10 years difference, right? The map for 2011 has a lot of dark colors. The map for 2021 is far less so, right? It's quite washed out, if you will.

Out of the 50 states and D.C., Minnesota's fertility rate ranked 18th in both maps. But there's really important implications here. We're saying, okay everyone's dropping. So what? The “so what” is that drop from a fertility rate of 1.95 to 1.75, it equates to a loss of about 285,000 people. That's five percent of the state's 2021 population. And you see these patterns all across the country. 

Now, if you're not having children and creating workers from within, we can get them through migration. Minnesota has seen net domestic migration, it's negative, in 11 of the last 13 years. What we see here on this chart is domestic international and then net migration overall.

So what we're seeing is prior to 2020 international migration generally outweighed the losses from domestic net migration that were going to other states. But since 2020, total net migration combining the two has been negative. So now we're really losing people in Minnesota, and that's quite concerning.

We also want to think about the makeup of the society and of the labor force. And so, as a result of those immigration patterns, we see the immigrant share of the population in Minnesota has been low, right? Historically well below the national average. If we're looking at U.S. immigrants, the black line as a percent of the U.S. population, and the red line is Minnesota's immigrants as a percent of the population. The bars that you're seeing there are the number of immigrants in Minnesota. So we've had low net migrations. Now we're saying, okay, we're not having enough children, but we're also not getting enough workers from outside.

And what we can see is this is causing slow population growth, right? The vast majority of counties in Minnesota saw their working age population shrink from one decade to another. What you're seeing here is 2002 to 2012 on the left and 2012 to 2022 on the right. Now we got this data all the way down to the county level, and you can see where those dynamics are at play, where almost every county is seeing a shrinking of population, and that's quite concerning. 

So that's where we've been, where we headed, where are we now and what's our currently rare crisis like? So first and foremost, we have a dwindling labor supply, right? We just walked through that. We also have misalignment between supply and demand for workers in Minnesota, and that's leading to today's labor crisis.

We're feeling acute labor shortages with more job openings than people available to fill them. We've got employment in Minnesota still well below pre-pandemic levels, we saw that early on. Job creation and recovery is lagging the national pace. And then there are key sectors that are feeling acute pain that we can call out through micro data.

Relative to other states, Minnesota's struggling to attract and retain workers. This graphic comes from another report that we have done here at Lightcast, called the Talent Attraction Scorecard, and we can get you that link in the chat so that you can access this for your state. But, what we're seeing here is Minnesota ranked 46th within the country in terms of attracting talent into their borders.

You see the top 10 states and the bottom 10 states here. And these rankings are a composite measure of a number of different metrics. But before, we spend too much time there, we just want to get to that message of Minnesota struggling to get workers and to keep them there. And that's really critical for a healthy labor market and a healthy economy.

To put a finer point on the impacts of immigration on a labor market, we want to take a minute to do a bit of a case study within a case study. We want to look at the health care sector. Labor shortages in health care are largely in Minnesota driven by lower immigration rates than the national average.

Healthcare is a sector where we do rely quite heavily on immigration nationwide. So in Minnesota, one out of every three nursing assistants, one out of every four personal care aides, and one out of every seven physicians or surgeons is foreign born. We can see how that lines up to the national average. But either way, there are a lot of resources that come from immigration into these labor markets, both in Minnesota and elsewhere in a very critical sector, that is the health care sector.

If we look at the immigrant share of healthcare workers overall and compare it to other selected states in 2021, we see Minnesota ranked roughly middle of the pack. New York has the highest share. And then Mississippi and West Virginia are down on the lower end. This is something that we really need to think about as we think through the implications of our labor shortages, where they're going to be even more acutely felt, despite the fact that we're feeling pain across the economy.

Now, what are the main factors contributing to this labor crisis? We see it again in five parts. But the single most significant driver of this crisis, this tightness, this acute feeling of pain is the ongoing retirement of baby boomers, right? That followed by workforce participation rate falling amongst other key age groups, and sex and race demographic breakdowns, there are all kinds of factors going into this concerning issue. 

So we've got massive retirements. We've got low net migration. We've got a misalignment between the jobs that we have available and the talent we have to fill it. We've also got accumulated wealth that could cause different groups in the economy to maybe make choices to leave the labor market at phases of their life that may be earlier than we expect. So this will make our pain even more acute. And then we have opioids and overdoses. And this is something that also should not be overlooked as being an impact factor for our labor market struggles. 

Since COVID, labor force participation of older workers, those ages 55 and above, has dropped in Minnesota faster than the national average. You'll notice that we have two different axes here on this graph so that you can really see the dynamics at play. Older worker participation in Minnesota dropped 2.8 percentage points from 2019 to 2022. That's compared to a 1.4 percentage point drop in the U.S. overall. So we've got massive retirements going on and they may even be happening earlier.

Minnesota is also one of the 10 states with the lowest net migration in the country. Again, we can't find workers from within and we're not getting workers from outside. You see here the top 10 and the bottom 10 states for migration in 2020 to 2021, so really the most impacted COVID years, and then in 2022.

We also have misalignment, and I want to dive a little bit deeper into that term here. In Minnesota, we have more demand for lower skilled roles than potential people to fill them. What you see in this graphic is a comparison of the population available to work, ages 25 plus, and labor demand in two different time periods, in 2010 and in 2022.

Now, in 2010, I want to focus on the high school diploma holders in the population, that’s 37 percent of the population, and that corresponds to labor openings for workers with that level of education that was at 27 percent. So we had more workers than openings that needed to be filled for that group of individuals.

And if we look at the bachelor's degree side of things, 31 percent of the population over 25 had a bachelor's degree compared to 56 percent of job openings requesting one, right? That has now completely flipped on its head. Now we see a population that has only 28 percent of individuals with a high school diploma or equivalent compared to 45 percent of open jobs requesting that.

That is causing a lot of pain and it's causing a lot of visible pain. These are frontline service sector jobs that we really need to fill because these are the ones you're noticing most days in your errands, your day-to-day life, the healthcare sector, the service sector, retail, all of those sorts of roles.

So this misalignment is likely due to just how we thought through things in society for so many years. You were encouraged to go get a four year degree and that was true for many decades. It was, “that's the only way you get a job, you get a four year degree.” And so this is a bit of a messaging issue. This is something that we need to think through as a society so that we best allocate resources, meaning labor, throughout our economy for years going forward. 

Now, we also want to call out issues like cost of living and accumulated wealth. In Minnesota, real median income is high, right? Real median income is surpassing the national average. This is largely driven by the boomer generation who are a group of money focused individuals who drove really large increases in income and wealth over their working lives. And this could actually reduce work incentives for future generations. 

What do I mean by that? As boomers bequeath their wealth to the next generation and the next generation comes into additional money, they may have reduced work incentives because they no longer have the financial impetus to be in the labor force, so they may take early retirement. Those early retirements will add insult to injury to an already tight labor force in years to come. 

And finally, we want to talk about the impacts of the opioid epidemic. Now, this is nationwide. It's something that's been of great concern for quite a number of years now, and it's something that does affect people's labor force participation.

So in 2021, about 5.1 thousand working age persons in Minnesota were out of the workforce due to fatal and non-fatal opioid overdoses. And we'd like to note that, Minnesota, as compared to many other states, actually is doing fairly well in the rankings of having fewer opioid fatal and non-fatal overdose rates. But it's still a very important number and an important issue to think about. Remember we need to fill a gap of about 168,000 workers. There's 5.1 thousand right there. Something to be very aware of. 

And now we want to think about where we're headed, right? That's our next item of business. Where are we going, right? Minnesota's been aging more rapidly than the nation as a whole. And over the last decade, the working age here, the population has been declining rapidly in Minnesota, far more than the U.S. average. By 2030, only 61 percent of Minnesota's total population will be within working age. And that's down from 66 percent just in 2010. What you see here on this graph is projected working age populations as a share of the total population.

Minnesota will level out, while the national average will continue to drop. Why are we seeing this? Shifting demographics, slowing immigration, and falling workforce participation will affect higher ed, employment, and overall growth. This is going to mean declining college enrollments, especially at two year institutions. And that means, we're going to see strain on the educational side of things. We're going to see lower employment, an aging population and low immigration translates into lower annual employment gains. It's just simple math, right? Job growth in Minnesota through 2030 is projected to be two percentage points lower than the U.S. average growth.

We're also going to see lower economic growth, right? Because Minnesota's rate of economic growth has typically lagged behind the nation's. To sustain economic growth, you either need to grow the size of the workforce, increase productivity, or a little bit of both, as Elizabeth mentioned earlier today.

Now, let's take a moment to double click on college enrollments. College enrollment in Minnesota will continue to decline. In most states, these demographic shifts that we're seeing are behind enrollment declines. We're seeing them all over the place. And it's as a result of living below the 2.1 total fertility replacement rate. It simply comes down to the fact that there are fewer and fewer college age adults.

And we see this across different states here on this graph of, fall 2017, all the way to the fall of 2022, what enrollments looked like. And obviously you're seeing a little uptick after everyone halted for a moment for COVID. 

So, slower growth in Minnesota's working age population implies slower employment growth. And we're going to be constrained by low levels of immigration, rising retirements, annual unemployment growth in Minnesota is projected to decline through 2027.

And that's quite concerning. You can see here that we have the actual data for 2021 and 2022, and then projected data from there onward for both the Minnesota and for the U.S.. And you can see that declines are a national problem as well. So from here, I'm going to hand it off to Elizabeth. So we can talk about how to move forward after I talk through all of these uplifting issues and hopefully can put some positive spin on this.

Elizabeth Crofoot: 

Thanks, Rachel. Yeah, go ahead and move to the next slide. So these are five different strategies that we wanted to really focus on in terms of what policymakers, employers, educators, training providers do to really mitigate the economic drag of the demographic drought. 

So number one is just getting more people into the workforce and keeping them there. So doubling down on efforts to reach younger workers, especially those that you know, 20 to 25 years of age that we've seen a lot of decline in their participation rates. The same thing for older workers, 55 and over, key immigrant populations, but also, all sorts of other populations, people with disabilities, people that were previously incarcerated. It's moms that have left the workforce and just haven't come back. There's ways to really target these types of individuals to just understand their specific circumstances and try to key in on those. 

Number two, increasing the net domestic and international migrations. One really super interesting data point is that immigrants have accounted for over half of Minnesota's labor force growth over the last 10 years. This is less than 30 percent for the U.S. as a whole. So Minnesota has really been able to leverage their immigrant population. Even though it's less than the U.S. average, they are more engaged in their workforce and have been making a bigger impact in Minnesota than in other parts of the country. So that's really key. Also improved access to affordable housing and public transit can also attract and keep residents. There's a lot of out migration from Minnesota to other states So it's trying to create a balance between immigration from other countries and really minimizing those residents that are leaving the state.

Number three, increasing the skills of the workforce. So employers can improve their on-the- job training. They can develop career pathways and really improve upskilling programs. Just focusing on increasing the skills of their incumbent employees and also new hires to the extent possible. In terms of new entrants into the workforce, educators can offer short-term stackable training opportunities that just make it easier for individuals to make the commitment to get these skills and also at different a price point, because we know that college loans, for example, is a huge deterrent to getting that additional education.

Number four is improving alignment between job requirements and available talent. And Rachel was describing this earlier, that we have that misalignment between the skills that are sought in the job market and also those that are taught or those that individuals have coming out of school. So starting in K-12, for example, really focusing on those juniors and seniors in high school and getting them employer connected education through pre-apprenticeships or apprenticeship programs, starting at that early age, really making sure that young people know their career opportunities.

Also having employers have some input into the curricula and training programs. And again, more working with community colleges and other training providers on those internship and apprenticeship programs. 

Five, embracing technology and innovation. And really more than just embracing, this is about diffusing technologies throughout the workplace in day-to-day business practices and operations so that we can start to make workers more comfortable with new technologies and really upskill them and have them adapt to new business models. And that's all toward increasing productivity and again making each worker more productive. Next slide.

So really, you know, harping on this sort of productivity message we have seen that labor productivity in Minnesota has grown modestly over the last 15 years. It is below the nation's 2.1 percent historical average. It's at about 1.3 percent during the last 15 years. And it ranks 17th across the nation.

So you can see the top and bottom states here in terms of overall labor productivity. So again, Minnesota's kind of middle of the path, but there's always room for improvement, and you can see really the spectrum of change, or the extent to which certain states are going to have to work a little bit more. Because they're all seeing declines in the labor force and are facing a similar challenge of not having enough people to fill the jobs and do the work that needs to be done. Next slide. 

Maintaining Minnesota's robust productivity rates of the last three years over the pandemic is really going to be key to mitigating those labor shortages. So you can see here that prior to the pandemic, Minnesota had a 1.1 percent change in labor productivity and that accelerated to 2.1 percent over the pandemic years because of adoption of new technologies, new business models, and businesses in Minnesota seem to have been more effective during these times. Whereas for the U.S. it was also growing, but not to the same extent. Next slide. 

And so just to speak a little bit to the five strategies that I noted beforehand, so the first was recruit and retain. Part of this again is just identifying the populations and targeting them with specific tactics. One example, and this sort of speaks to that immigrant population, is offering English as a second language classes as a recruitment tactic from employers or through a public program that policymakers could potentially stand up. This is really to expand those immigrant talent pools because that language barrier can really make a difference in whether immigrants are part of the labor force or not, and this graph just gives a sense of what are the different demographic groups or nationalities or ethnicities that are living in Minnesota today and how employers can really target them more specifically. Next slide. 

Two is increasing immigration. So without further action, immigration is projected to slow in the U.S. through 2040 and it's going to squeeze labor supply. So this is a trend that's common throughout all developed economies. You can see here in the chart projections for net immigration rates. These are from the United Nations database on population growth and immigration trends.

And you can see that the United States is no different than any other. But again, without action this is only going to get worse. And what's interesting is that all U.S. labor force growth in the last couple of years has been fueled by immigration. That's the only reason why today we are seeing a growth in our labor force. It's primarily immigrants that are coming now to the U.S. after having very little immigration during the pandemic years. So this has really prevented the decline of our working age population. Next slide. 

Number three was increasing workforce skills. So it's really, the onus is on employers to try to increasingly grow their own talent, right? If there's not enough people out there, they don't have enough skills. Let's identify those talent pools and let's give them the skills that they need. So one way to do that is by assessing future skill and technology needs as an employer and then identifying the talent pools and then helping those individuals close those skill gaps through those training mechanisms that I mentioned earlier. But here what you see is a graph of computer and mathematical hot and cold skills in computer and mathematical occupations in Minnesota.

This is just an example, but in these particular occupations you can see that skills related to AI, automation, cloud storage, and computing are really growing the fastest. So there are specific technologies that we need to upskill more so than others. Next slide. 

Four, on improving alignment. Again, there are specific actions that all of these actors can do to really help improve alignment from increasing employer connected education from an early age, implementing state approved non-degree credentials. So having a system of credentials, right? There are so many different credentials, so many different training providers. It's really a Wild West out there when it comes to these different badges and credentials that you can get, and it's difficult for employers to really weed out what signals actual skill or talent. So having some sort of state approved system would help with that. 

In terms of employers having them focus on skills rather than degrees when training, more robust onboarding and training programs, career pathing, internships and apprenticeships, I already mentioned all of that. With educators, again just improving or working with employers to improve curricula and training programs, working with policymakers on state approved credentialing, and then offering those short-term stackable training opportunities. And there's much more detail in the report about all of these suggestions but these are just as an example of what can be done to really improve alignment in the labor market.

And then one more slide, I believe. In terms of embracing technology and innovation, really diffusing those AI technologies into the workplace seems to have slowed down in Minnesota specifically. So what we see here is a graph of the percent change in AI job postings. So in Minnesota, you can see that it was relatively high in an earlier five-year period from 2012 to 2017, but that growth rate has slowed somewhat compared to overall for the U.S. AI job postings have been increasing. 

So what this suggests is that the pace of AI adoption in Minnesota, specifically may have recently had some hurdles in terms of employers really diffusing these types of technologies in their day-to-day. So it's something to just keep in mind. And this is just one particular technology. It doesn't speak to the whole stack of technologies that employers are implementing,but it's just an example of how we can see this in the data. Especially with our Lightcast job postings information as to what technologies employers are more effectively implementing or not in the labor market. And I think, let's see, yes, I think that's about it in terms of our strategies of the overall labor market trends and some strategies to really mitigate those Demographic Drought challenges.

Alyssa Petersen: 

Hey, thank you both so much.

Elizabeth and Rachel, that was such good information. Obviously a lot to think about and a lot to chew on and really big, important decisions that policymakers, educators, and employers are all thinking about. For the audience we're out of time for questions, but what we would invite you to do is if you sent in a question or if you have questions that are outlying still, if you would fill out the form at the end of this presentation and put that question in there, we'll get back to you directly to continue this conversation.

That's something that we offer at Lightcast, is to work with you specifically in your specific sector, business, educational institution to have these conversations and as we saw today, Minnesota is a case study, but this applies across every sector and state and really important information.

Thank you again, Rachel and Elizabeth for presenting and thank you all for attending. We'll go ahead and close out.