January, 2021
By Kelly Asche, Research Associate
Last week the Center released a new report on the state of rural Minnesota’s workforce. In 2019, we assembled a four-part series on rural Minnesota’s worker shortage, it’s impact on economic growth in Greater Minnesota, and what rural communities are doing about the problem.
Now, almost a year into the global pandemic, we’re looking at the impact COVID-19 has had on our workforce, not from a health standpoint, but from a labor standpoint. The short-term issues and opportunities due to the impacts of the pandemic are becoming increasingly clear – rural Minnesota has a larger-than-normal pool of unemployed workers and an historically large pool of businesses looking for people. And despite the difficult position that many households are currently facing, it is also a great opportunity for rural communities.
And this isn’t a short-term issue, at least, not according to projections. These models are projecting that the pandemic will impact the number of jobs available over the next 5 years and that the occupations bearing a majority of that loss are the same ones with currently high unemployment. Let’s take a look at the data.
A primer on projections
Models projecting the availability of jobs and the supply of labor to fill those jobs isn’t an exact science. They are estimates that take into account historical trends while also pulling in market data that predicts how things may change. It’s a global economy and things change quickly. Take, for example, the pandemic.
The models that created the projections in early 2020 had no way in knowing that a global pandemic was going to bring significant disruptions to the economy. Even though those projections are now outdated they are still useful. Instead of using them to help us prepare for the future, we can use those to act as a sort of “baseline” of what employment was supposed to be if there was no pandemic. By comparing this baseline with new projections that take into account the current economic situation we get a sense of the overall impact.
First, let’s take a look at the historical employment numbers. We will use Southwest Minnesota as an example. The chart below provides the employment for each quarter from 2016 to the first quarter of 2020. Employment has been largely decreasing over the last 5 years in Southwest largely due to the lack of people to fill available jobs. This is important – the decrease isn’t due to a lack of jobs available, but rather a lack of people to fill the jobs. This is a combination of demographic changes in the labor force (lots of retirements) along with economic growth (more jobs being created) and not enough people to fill this combination of jobs available. (Figure 1)
Figure 1: Historical employment from Southwest Minnesota shows an overall downward trend. This trend is largely due to the lack of people, not jobs. Data: RealTime Talent analysis of ChmuraJobsEQ forecast data
Now, let’s add the baseline projections – these are the estimates developed before the pandemic hit. Those projections estimated a continued downward trend in employment. And just like the historical numbers, this trend is projected to continue due to the predicted lack of people available to take jobs rather than a lack of jobs available. (Figure 2)
Figure 2: This chart includes the historical values of employment as well as the baseline projections that were created before the pandemic hit. The downward trend in the projections is again due to the predicted lack of people to fill available jobs. Source: RealTime Talent analysis of ChmuraJobsEQ forecast data
Now we can add the employment projections that takes into account the impact the pandemic has had on the overall economy and businesses (Event-based model). Figure 3 shows the significant drop in employment immediately after the pandemic and slowly recovers throughout 2021 but it never fully recovers to the levels projected by the model before the pandemic began. That gap between these two projections is due to the loss of jobs. That job loss is associated to businesses that were severely disrupted by the pandemic and either no longer exist or may take years to recover.
Figure 3: Adding the new projections which take into account the impacts of the pandemic on businesses shows a gap in which employment is down. This is caused by the closure of businesses. Source: RealTime Talent analysis of ChmuraJobsEQ forecast data
A projected loss of jobs concentrated in a few occupations
Now that you have a sense of how to read these numbers, figure 4 provides these projections for each planning region. Each region has their own unique long-term projected trends either slowly up or slowly down. Some regions such as Southwest and Northeast are projected to experience decreasing employment due to a lack of people to take jobs. Other regions such has Central and the Seven County metro will experience an increase in employment due to having a growing population of working adults. However, none of the regions are projected to recover to their originally projected employment levels. The percentage difference in the baseline projections vs. the event-based projections after 2022 is between 1% and 2%.
Figure 4: Although employment projections may differ in their upward or downward trends, each region is projected to experience a similar loss of jobs due to the pandemic. Source: RealTime Talent analysis of ChmuraJobsEQ forecast data
A deeper dive into the projections highlights the occupations that will bear the burden of this job loss – food preparation and serving related, sales and related, and office and administrative support. On the flip side, these projections also continue to show a workforce shortage in rural in nearly all other occupations. As we continue to move forward, the biggest question on workforce development organizations minds is how do we get those who will likely not be able to return to their previous employment trained and certified to work in occupations in demand?
Our report dives into some of the barriers workforce development organizations are currently facing in tackling this task and recommendations for how state legislators can help. Check out our report here to read more.