DEED Commissioner Highlights Strength of MN Economy, Warns of Labor Shortage Issues at Recent SE MN Economic Development Summit

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Last week the Rochester Area Chamber of Commerce’s Southeast Minnesota Economic Development Summit focused in on the state’s manufacturing industry and its importance to the Minnesota economy.

Keynote speaker and Minnesota Department of Employment and Economic Development (DEED) Commissioner Shawntera Hardy said she was excited to be in Southeast Minnesota for this event, in a region of the state “where so many great things are happening from an economic development standpoint.” Hardy is self-proclaimed “new kid on the block” at DEED, the state’s main agency for economic and workforce development. A graduate of Ohio State University, she has served as Commissioner at DEED since last April.

Hardy stated that Southeast Minnesota is “full of talented and innovative people.” She will return to the region next week with eight other state agency leaders for the “Commissioners on Wheels Tour,” visiting eleven different Southeast Minnesota communities and thirty businesses and organizations. During the tour, Hardy aims to get a first-hand look at important work being done in the region, efforts she said are critical to DEED’s mission “to highlight the success of current Minnesota companies and find new ways to attract new players to the state.”

DEED, Hardy stated, is committed to building an economy that works for all Minnesotans.

She said there are clear signs that the state’s economy, overall, is moving in the right direction. The latest jobs report showed the addition of 7,700 jobs that month in Minnesota. The unemployment rate in the state continues to hold steady at 3.7%. Minnesota gained 66,000 jobs over the past year. Furthermore, a recent U.S. News & World Report ranked Minnesota as the best state for workforce participation, which is seven percent higher than the national average.

Hardy said these are all signs that the state has a “national model for building an economy that works.”

“Minnesota’s overall economy is doing well,” she stated. “But there are challenges ahead on the horizon.”

One daunting issue the state faces is workforce, particularly a labor shortage caused by baby boomer retirement. Hardy said Minnesota’s workforce today is 40,000 workers smaller than it was one year ago. Minnesota had 98,000 unfilled jobs during the last quarter of 2016, among the highest levels ever in the state. Currently, 9,000 jobs remain unfilled in Southeast Minnesota alone.

DEED’s employment outlook tools indicate that 130,000 jobs will be created statewide over the next decade; 75,000 of these will be located in the southeast part of the state.

“We don’t have a job creation problem in Minnesota. We have a job matchmaking problem,” Hardy explained. “The challenge is how do we find the right people, with the right skills, to fill the existing future roles, while continuing to keep our economy strong?”

She said that DEED is taking an “all-in” approach to address these labor issues, which includes training or re-training of “seasoned” workers for the next stage in their careers.

“We cannot afford to ignore or not tap the Minnesotans that are ready to work,” she stated. Hardy believes that the state must take this challenge seriously in order to remain a top location for business and quality of life.

The state’s manufacturing industry, she said, well positions Minnesota to remain economically strong as it moves into the future.

“Minnesota’s manufacturing sector is the backbone of our state’s economy and the envy of our competitors, everywhere,” she stated.

One-third of all jobs in Minnesota are directly in manufacturing or a spinoff of the industry. Manufacturing, in Minnesota, pays higher wages on average and employs 38,000 workers. One-fifth of these jobs are located in Southeast Minnesota. Last year, the industry added $48B to the Gross Domestic Product, the largest private sector contribution.

Manufacturing, however, is not immune to the state’s skill mismatch problems, Hardy explained. In addition to workforce shortage issues, the industry also faces uncertainty in the international trade system and high infrastructure, raw materials, tax, housing and childcare costs.

Several job skills training programs exist in the state to address these issues and help Minnesota’s manufacturing sector prosper.

DEED itself has seventy workforce development programs in partnership with local workforce boards and Minnesota non-profit agencies. Such initiatives include the Job Skills Partnership Program, which has awarded over $41M in grants since 2011, training over 48,000 workers. Locally, Rochester Community and Technical College and Schmidt Printing utilized $227,000 from this program to train 180 workers.

In 2016, DEED assisted over one hundred business expansions in the state using the Job Creation and Minnesota Investment Funds, creating over 6,000 new jobs and $2B in private investment. These efforts included a $2M expansion at Pace Electronics in Rochester.

“In order to ensure that Minnesotans have access to an economy that works, we need to continue to invest in our high performing sectors, especially manufacturing. And we need to see the challenges ahead, plan for them, and then act. We can’t wait,” Hardy concluded.