Projected Regional Employment Growth, 2009-2019

by Dave Senf
May 2011

Minnesota’s agonizingly slow job recovery from the Great Recession will gradually speed up over the next few years as the economy adjusts to the fallout from the worst economic downturn since the Great Depression. Job growth over the decade of 2009 to 2019 will appear robust compared to the prior decade but like a crawl compared to two decades ago. Minnesota added 538,000 jobs between 1989 and 1999 but lost 12,000 jobs between 1999 and 2009. All Minnesota regions are projected to surpass their previous peak employment by 2019, but growth will be restrained by structural changes brought on by the Great Recession and the ongoing slowdown in labor force growth as the baby boomers move into their golden years.

Minnesota’s economy is projected to add 247,000 jobs between 2009 and 2019, recapturing the 130,000 jobs lost from the Great Recession and then adding another 117,000 by 2019. The projected job growth won’t bring back all the lost jobs in some industries. Job growth in other industries will push employment in the state to 3,084,000 by 2019 topping the current record high of 2,967,000 reached in 2007. In percentage terms Minnesota’s employment is projected to expand 8.7 percent between 2009 and 2019 compared to the -0.3 decrease during the previous decade and the 23 percent growth enjoyed two decades ago.

Central Minnesota, which experienced the strongest job growth during the last decade (adding jobs since 1983 including during the jobless recovery following the 2001 recession), suffered the steepest job loss in 2009. Figure 1 shows annual average job growth over 18 years from 1991 to 2009.[1] Job loss was almost as severe in the Twin Cities and northeast Minnesota. All three of these regions lost a larger share of their employment base compared to the statewide decline.

The aftereffects of the Great Recession will differ across regions, lingering longer or being more permanent, depending on the industrial mix of each region. For example, a good portion of job cutbacks during the Great Recession in northeast Minnesota occurred in the taconite mining payrolls. The taconite mines have already called most of their workers back, so some of the projected growth in this region has already occurred. The center of the housing boom in Minnesota was in the Twin Cities suburbs and along Interstate 94 up to St. Cloud. When the boom turned to bust, construction workforces in central Minnesota and in the Twin Cities metro region plunged the most. Home-building construction jobs will gradually increase in these regions over the next decade but will not reach the boom-year levels.

Central Minnesota

Central Minnesota, with five counties adjacent to the Twin Cities metro area, has been setting the pace for employment expansion in percentage terms for more than three decades and will continue to be the fastest growing region despite being hit the worst by the economic downturn. The residential development spillover, from the Twin Cities along the I-94 corridor between St. Cloud and Interstate 35 north of the Twin Cities, will eventually resume but not at the torrid pace set before the Great Recession. Retail and service-related employment will follow population growth. Employment in central Minnesota is expected to expand 12.9 percent or about 36,000 jobs between 2009 and 2019 (see Figure 2). During the 1999-2009 period, the region experienced  6.9 percent growth.
 

Twin Cities Metro Area

The seven-county Twin Cities metro area is projected to add 144,000 jobs between 2009 and 2019 or roughly 58.5 percent of statewide projected growth for the 10-year period. The metro area’s share of the state’s employment pie peaked at 60.3 percent in 2000 and has slipped each year since then except for 2006 and 2007. The brunt of job losses occurred in the region’s manufacturing and information sectors and in the airline industry. Manufacturing jobs are expected to continue to decline gradually, but job growth in service-providing industries is projected to offset goods-producing job loss leading to a projected 8.5 percent expansion of employment between 2009 and 2019.[2] Service-providing industries, such as health care and social assistance, professional and technical services, and educational services will drive employment growth in the metro area.

Northwest Minnesota

Northwest Minnesota’s 24-year streak of job growth came to an end in 2007 as the recession came early to the region with home-building-related manufacturing falling off as the housing collapse developed. Employment in northwest Minnesota is projected to grow 7.6 percent over the 10-year period, with 19,000 new jobs created. The health care and social assistance industry will add the most jobs as is true across all regions. Manufacturing jobs will partially rebound in the near term, but factory jobs will be down slightly from 2009 levels by 2019.

Northeast Minnesota

Northeast Minnesota has the smallest employment base of all the regions with an economy that is heavily dependent on tourism, taconite mining, and timber-related activity. Mining employment sank during the recession but has already bounced back as worldwide steel demand recovered. Mining may expand further over the next 10 years, but timber-related employment is expected to  rebound only partially. The 8.9 percent projected growth, including the rebound in mining employment, translates into 13,800 jobs. The projected employment growth will keep the northeast’s share of state employment right around 5.5 percent.

Southwest Minnesota

Southwest Minnesota employment declined the most during the previous decade and will have the slowest job growth during the next 10 years. The projected growth of 10,400 jobs will, however, push the region’s employment base to just above its all-time high set back in 2000. Southwest Minnesota is the most agriculture-dependent region with jobs directly involved in agricultural production accounting for 8.4 percent of all employment. The agricultural share of employment will slip over the next decade but still account for 7.9 percent of jobs in 2019.

Southeast Minnesota

Southeast Minnesota will add the third-most jobs by 2019 with health care and social assistance accounting for 67 percent of the new positions. Spillover growth from the Twin Cities metro area in Goodhue and Rice counties combined with the strong growth in Rochester will drive the region’s 8.9 percent job gains over the decade. Job losses in durable-goods manufacturing, as in most regions, will hinder the rate of job growth.

OCCUPATIONAL PROJECTIONS

The distribution of projected regional occupational employment growth across 10 major occupational groups is shown in Table 1. Service occupations, which include about 100 occupations ranging from bailiffs, firefighters, and police officers to janitors, bartenders, and child care workers are projected to add the most jobs in all regions except in southeast Minnesota and the Twin Cities. Over the next 10 years Minnesota households will spend a larger share of their income on services than in the past. Higher spending on health care, restaurants, casinos, and personal care translates into higher demand for nursing aides, home health aides, food preparation workers, hairdressers, gaming supervisors, and amusement attendants.

In southeast Minnesota and the Twin Cities, service occupations are projected to account for the second-largest block of new jobs. Professional and related jobs are expected to add more workers than service jobs in these two regions over the next decade. Professional and related occupations will add the second highest number of jobs in the other regions. Professional occupations include most information technology jobs, educational occupations, and health care practitioner and technical jobs. Professional and related occupational jobs are spread across 250 occupations.

More than 60 percent of projected job growth is expected to be in either service or professional occupations in all six regions. Occupations in these two major occupational groups currently account for 36 to 46 percent of total regional employment, with the southwest region having the lowest percent of employment in professional and service occupations and the northeast region having the highest share. Job growth in professional and service occupations is expected to be much higher than job growth in the other occupational groups, increasing 30 to 60 percent faster than overall job growth.

Production occupations, such as machinists, team assemblers, welders, or job printers currently account for 7.4 percent of all employment in Minnesota with southwest Minnesota having the highest percentage, 10.5, and northeast Minnesota having the lowest with 5 percent. Each region’s share of employment in production occupations will drop over the next 10 years as manufacturing employment growth will fall below overall employment growth across all regions after only partially rebounding from the recession.

Since construction occupations were hit the hardest by the Great Recession, with payrolls still shrinking through most of 2010, employment in this occupational group is projected to be stronger than overall employment growth in all regions except northeast Minnesota. Construction payrolls will gradually expand starting in late 2011, but the growth in employment in construction occupations over the next decade will be well short of the boom-year highs of 2006. The net projected job increase for the construction occupations is roughly 13,000 between 2009 and 2019, which is well short of the 24,000 construction jobs lost between 2006 and 2009.

NEW JOBS VERSUS REPLACEMENT OPENINGS

Job openings generated by employment growth are only one piece of the future jobs puzzle. Perhaps the more important puzzle piece is future net-replacement openings. Net-replacement openings are generated by the need to replace workers who retire or leave the workforce for other reasons, and, hence, are available to new or re-entrants into the workforce. In addition to the 247,000 new jobs projected to be created in Minnesota as the state’s economy grows between 2009 and 2019, another 640,000 net-replacement openings are projected over the next decade. Table 2 displays the distribution across major occupational groups by regions for the projected net-replacement openings through 2019.

The distribution of projected occupational-replacement openings in each region is more evenly spread across all occupations compared to the distribution of employment-growth openings, since replacement openings are based on each region’s 2009 employment base. Employment growth tends to be concentrated in a select number of industries that have particular occupational needs, whereas retirements and exits from the labor force for other reasons happen across all industries and occupations.

Workers will be needed in the future to fill replacement needs in all occupations, even in declining occupations. The 2.8 million jobs in Minnesota in 2009 were spread across 790 occupations of which 192 are projected to shed jobs over the next 10 years. About 478,000 workers were employed in these shrinking occupations in 2009. Roughly 32,000 jobs in the shrinking occupations are projected to disappear over the next 10 years. Despite the loss of 32,000 positions there will still be demand for new workers with the right skills for these occupations since 104,000 net replacement openings are anticipated across the declining occupations over the 10-year span.

Table 3 shows each region’s 2009 employment base, 2009 – 2019 projected job growth, and 2009 – 2019 projected net-replacement openings.

Detailed industry and occupational employment projections, along with detailed net replacement openings projections, for Minnesota and for the state’s six planning regions are available online at 
www.PositivelyMinnesota.com/eo

Long-term projections are updated every two years to keep up with constantly changing economic trends.

[1]Employment totals for projection purposes includes full and part-time wage and salary jobs and self-employment jobs. Annual average projection employment by industry is estimated by the Minnesota Department of Employment and Economic Development using Quarterly Census of Employment and Wages (QCEW) employment data, Current Employment Statistics (CES) employment data, and Local Area Unemployment Statistics (LAUS) self-employment data. Minnesota’s 2009 annual average projection employment was estimated at 2,837,000. By comparison, the 2009 annual average job total for QCEW, CES, and LAUS were respectively 2,572,000, 2,655,000 and 2,712,000.
[2]More information on industry and occupational employment projections for Minnesota over the 2009-19 period can be found in the July 2010 issue of Minnesota Employment Review, www.positivelyminnesota.com/review

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