Where are the workers?

We’ve written a lot recently about Minnesota’s declining workforce and the potential problems that go with it.

But the trends are nationwide. The Economist magazine weighed in recently with a piece asking the same question: Where are the workers?

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Minnesota’s always been a state with high labor force participation rates and high employment to population ratios. It’s been falling since April.

The initial big drops looked like they might be statistical noise. But it’s continued a slow decline since the spring with nothing to indicate that it’s coming back. More than 30,000 Minnesotans have left the labor force since the spring.

One local theory is that many of the folks who left the labor force went back to college. Community college enrollments jumped in 2008 and 2009. But we would have expected to see those people start to re-enter the workforce.

There’s a bigger concern that the marketable skills of the unemployed or new grads don’t seem to match up with the needs of a recovering economy — a “lost generation” of Minnesota workers, in the words of the state demographer.

Need more reason for concern? MPR’s Annie Baxter noted in her recent story that, “a drop in workforce participation echoes a decline in Minnesota’s prosperity relative to other states. Minnesota ranked seventh in total income per person in 2003. The state has fallen to 14th.”

Across the nation, writes The Economist:

Most striking has been the drop for men aged 25-54, who have long had the highest participation rates….The participation rate of men has been declining for years, apparently because many who lost their high-paid, low-skilled jobs in manufacturing, transport and construction have retired or registered as disabled rather than retraining.

Julia Coronado, an economist at BNP Paribas, reckons a wave of early retirements by state- and local-government staff and manufacturing workers may explain the latest downturn.

Here’s a chart from The Economist story showing the paths of unemployment and people in the work force.

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We’ve been looking at this issue in a bunch of recent posts.

“Lost generation” of Minnesota workers?

Labor force decline: Is it a guy thing?

No good news on MN labor force decline

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  • John O.

    Some of it is still attributable to those who are back at a community college learning a new trade or sharpening up skillsets. For older workers who have been displaced, the question may be how many of them have opted for part-time work, or are working under-the-table jobs for cash?

    Have some of these folks migrated out of Minnesota?

    Longer term, the participation rate IS going to drop as more and more of the “boomers” retire either by choice, or be default as they are let go. The demographics seem to suggest that the pipeline of younger workers coming in is getting smaller and people like my oldest who just graduated from college, will face the daunting task of working to try and pay for a lot more of us “old folks.”

    Just a couple of thoughts.