Area employers grapple with labor force, as boomers retire

While the local job market remains at historically tight levels, the last year appears to have brought some much needed relief for local employers who have had to get creative — and boost pay and benefits — in order to fill their workforce needs.

Despite workforce participation rates that are among the nation's highest and record low unemployment, Minnesota's labor force remains more than 30,000 people behind where it was prior to the pandemic — in large part because of a spate of retirements post-COVID.

"Many people retired during or immediately after the pandemic when they had the chance to do it," said St. Peter Chamber of Commerce President Ed Lee. "Filling those slots after losing all of that institutional knowledge has been a big challenge, but thankfully, there's so much bright young talent graduating from the tech schools, high schools and colleges."

New workers, new expectations

Erik Larson, General Manager of the St. Peter Food Co-op, said that the move of baby boomers out of the workforce has been building up since around 2017 or 2018. In the wake of the pandemic, the shortage of strong prospective job candidates has driven long awaited growth in wages — especially for lower wage workers.

Todd Markman, President of Faribault's Reliance Bank, reported that strong candidates with a variety of prospective employers are often looking not only for a robust salary but for a well rounded package, including a flexible work schedule, opportunities for remote work, generous health insurance and strong retirement benefits.

"It's a highly competitive market," Markman said. "We have to be very competitive with other banks, not only locally but in the Twin Cities region as well."

Kelley Watts of the Faribault Community Co-op — a gasoline, propane, tire sales and service center — said that retiring employees from the baby boom generation have been tough to replace, given the decades of know-how and experience, along with the determined work ethic that so many always brought to the job.

"The baby boomers have a different work ethic than the newcomers," Watts said. "(Young workers) have different expectations of their employer, and we try to meet their needs and be flexible, but it's a different pool of candidates to choose from."

Health care

The workforce shortage has had a particularly notable impact on health care providers. Health care is Minnesota's largest employment sector, and according to the Minnesota Department of Employment and Economic Development, there are currently more than 45,000 unfilled positions in the field.

Michael Johnston, President of Allina Health's Owatonna Hospital and Faribault Medical Center, said that hiring conditions have dramatically improved over the last few months in Steele County, with at least one qualified candidate usually applying for each open position.

By contrast, Faribault Medical Center is still struggling to find even one qualified candidate to fill open positions. According to Johnston, the difference likely has to do with greater competition in Rice County for candidates, in part because of closer proximity to the Twin Cities metro.

When positions are left unfilled, Allina relies on travel nurses to meet its needs, paying a premium for talent from the Twin Cities and other areas. Through its "Scrub Club" program and more robust social media outreach, it's trying to draw more young people into the field.

Allina has also become more creative in how it puts together its schedules, helping staff to accommodate a healthy work-life balance and offering options such as part time work to those interested — such as baby boomers looking to ease into retirement.

Immigration boost

Anthony Schaffhauser, a regional analyst with Minnesota's Department of Employment and Economic Development, noted that this slowing of workforce growth was already anticipated, as Minnesota's labor market had a larger share of baby boomers than the national average.

Pre-pandemic projections from DEED showed that the state would likely add more than 75,000 jobs from 2020 to 2030. However, that figure was much smaller than the roughly 190,000 jobs Minnesota added from 2010 to 2020, with additional jobs offset by expected retirements.

The pandemic changed all that, as Minnesota lost about 90,000 jobs from 2020 to 2021 — potentially offsetting an entire decade of expected job growth. Most of those jobs were recovered in 2021 and 2022, while workers have seen wages rising after years of stagnation.

Schaffhauser said that one potential solution for Minnesota could be to substantially increase international migration. After peaking at over 16,000 per year from 2014 to 2016, Minnesota's net international migration numbers stood at just over 4,000 in 2021.

"The challenge is that population projections are very flat for Minnesota," said Owatonna Chamber of Commerce and Tourism President Brad Meier. "In general, we're supportive of immigration and finding ways to increase it, so that we can have more opportunities here."

Nort Johnson, President and CEO of the Faribault Area Chamber of Commerce and Tourism, reported that local businesses have benefited from being able to hire from a growing pool of immigrants from Latin American countries.

While southern states, like Florida and Texas, have traditionally been the biggest migration destinations for migration from Latin America, Johnson says that the word is spreading that Minnesota can offer better wages and a lower cost of living compared to those states.

"Many of these workers are political refugees, and they're coming to Minnesota because the wages are much higher here than in Florida and Texas for the same work," Johnson said.

After struggling to fill all of its job openings, Redemption in Faribault currently has an overflow of applications. The restaurant's General Manager Angel Perez said that being bilingual in English and Spanish has greatly helped with outreach.

Treating workers well

While local businesses have had to raise wages to help employees keep pace with inflation, Perez maintains that the biggest key to attracting high quality staff is to maintain a strong internal culture built around mutual respect.

For Jake's Stadium Pizza in St. Peter, leveraging connections has been key to weathering the workforce shortage as a small, family-run business. To fill its workforce needs, Jake's relies heavily on High School labor, with current employees recruiting their friends to join.

While keeping wages competitive amid inflation can be a challenge, Restaurant manager Jon Boyer said that Jake's does its best to show its gratitude to employees, offering steady performance based increases in pay for great workers.

Although Minnesota's inflation rates have fallen from the stratospheric levels of last year, Bruce Zelenko, owner of Culver's in Northfield, noted that concerns about rising inflation have appeared to push more workers into the job market.

"Restaurants always do well in a recession, and we've done well for the last nine months to a year," he said.