Northern Minnesota saw significant declines in employment in the leisure and hospitality industry
By Kelly Asche, Senior Researcher
January 2023
Every year the Center for Rural Policy and Development publishes the “State of Rural Minnesota,” a report outlining the demographic and economic trends in Minnesota using the most recent data available. Typically, the report only needs minor tweaking as the trends change slowly.
But sometimes there’s a remarkable event that causes significant disruptions. The pandemic was exactly one of those events.
A few weeks ago we documented the significant shift in migration patterns. Another way in which the pandemic impacted our normal patterns is the top employment industries across Minnesota.
In previous years, including as recently as 2019, leisure and hospitality was the largest employment industry in a number of counties in Greater Minnesota (Figure 1). By 2021, the number dropped to two counties.
Figure 1: In 2019, leisure and hospitality was the top employment industry in five northern Minnesota counties. After the pandemic, it dropped to two counties. Data: MN DEED – QCEW
Although a drop from five counties to two may not seem like a lot, the employment dip in leisure and hospitality was significant. Figure 2 shows the index of employment in leisure and hospitality since 2001. All regions either saw an increase or stable employment numbers in this industry since 2001. However, all regions experienced a significant decrease in employment in this industry by 2020 with little recovery in 2021. This was particularly true in northern Minnesota. For example, in 2019 Northeast Minnesota had 5% more employment in leisure and hospitality than in 2001, but in 2020 it had 20% less than in 2001. By 2021, it still had 15% less than in 2001.
Figure 2: Employment in leisure and hospitality declined significantly from 2019 to 2020. Data: MN DEED – QCEW
It will be interesting to see if and how quickly this industry recovers to it’s pre-pandemic levels. However, the pandemic isn’t the only factor. Historically high job vacancy rates will continue to add pressure and competition for labor across all industries. In northeast Minnesota the job vacancy rate is especially high, at nearly 10% (Figure 3). We consider a 3% job vacancy rate to be healthy. And with leisure and hospitality having some of the lowest wages across industries, it might be hard to convince the available laborforce to work in these positions.
Figure 3: The job vacancy rate is at all-time highs after the pandemic. It’s especially high in rural Minnesota. Data: MN DEED – Job Vacancy Survey
Over the coming years we will likely see significant changes in this industry. These businesses will have to do more with fewer people, and that will likely mean more computerized services, as well as an increase in self-service as a way to stay alive in a tough environment.