Trends in The Minnesota Economy Part 2 - The Labor Force

In this next part in the series, we’ll look at how Minnesota’s labor force has changed between 2019 - 2022. The pandemic and resulting shutdown has changed the size and composition of our labor force, and the following analysis will reveal trends in this shift. The reason this time frame was selected was to show the impacts of the COVID pandemic, and whether the labor force has rebounded to pre-pandemic levels.

First, figure 1 on the right shows the labor force participation rate(LFPR) for Minnesota between 2019 - 2022. The LFPR shows employed people as a percent of total population. The figure further breaks down the LFPR by age cohorts, and shows the lowest LFPR rate on each cohort line.

There are a few interesting points to note in figure 1:

• Total LFPR(represented by the blue line) has not recovered from 2019 levels

• The 25-54 age group, also know as the “prime working age” cohort, is actually higher than in 2019.

• The 16-19 age group saw the biggest decrease during this period, but is also now higher than in 2019

• The lowest LFPR for the 25-54 and 16-19 age groups occur at the same time(04/01/2020)

• The lowest LFPR for total LFPR and 55+ age group occur at the same time(04/01/2021). This could be because baby-boomers constitute such a large portion of the total work force.

Figure 1

Next, we have charted the percent change in total employment by industry between 2019 - 2022. The Arts, Entertainment and Recreation industry, for example, employs 18.89% less people in 2022 than it did in 2019. In fact, only four industries in Minnesota employ more workers in 2022 than they did in 2019 - those are listed toward the bottom of the chart.

The pandemic affected employment levels particularly for industries which required workers to be physically present to perform their duties, like restaurants, retail, and entertainment. Some of these changes will be permanent, whether due to automation or employers adapting to Covid restrictions by changing their business model. It’s unclear from the data whether these industries’ employment numbers will rebound in the future, or if we’re looking at long term lower employment in these sectors. What is clear, is that Minnesota’s total labor force shrank from roughly 2.9 million in 2019 to 2.8 million in 2022. These losses were pretty evenly spread among among all major sectors, with the exception of those four listed at the bottom of figure 2.

Compare figure 2 to figure 3 below it, which is from part 1 of this series. In Figure 3, we showed which industries grew and shrank between 2010-2020. By comparing these two figures, we can determine which industries’ labor force shrank more as a result of the pandemic, or more as a result of long-term trends.

We notice that both Accommodation and Food service and Arts, Entertainment and recreation showing longer term downward trends in output. It may be the case that the pandemic exacerbated an existing decline in those industries, which helps explain in part the dramatic decrease in employment shown in figure 2.

Conversely, Professional, Scientific, and Technical Services grew by over 28% between 2010-2020, and is also one of the few industries showing positive employment increases between 2019-2022.

Figure 2(Above) Figure 3(Below)

Figure 4(above) Figure 5(Below)

In figure 4 to the left, we show the total number of workers gained or lost in an industry between 2019-2022. This is similar to figure 2 except this chart shows the actual number of employees, rather than a percentage increase or decrease. For example, Accommodation and Food Services employs 31,184 fewer workers in 2022 than it did in 2019, which represents a decrease of 18.89%(as shown in figure 2).

Finally, figure 5 to the left shows the composition of all workers in the Minnesota economy by industry. Interestingly, our analysis shows that this composition has changed little between 2019-2022. Health Care and Social Assistance employed roughly 17% of all Minnesotan workers in 2019 as well as in 2022. In fact, none of the top 5 employing industries gained or lost in percentage share of total workers during this period.