Data show that Minnesota’s employment has declined most among 20- to 24-year-olds — fifth biggest fall in the US

Yesterday, writing about Minnesota’s supposed labor shortage, I noted that our state’s birthrate has held up relatively well. But, as a recent report by labor market analytics firm Lightcast titled “Minnesota’s Vanishing Workforce,” helpfully summarized by Axios, found:

…labor participation rates have fallen in the state, especially for people in their early 20s.

Again, this won’t come as a surprise to those who have been following our work. In my 2019 report “Minnesota’s Workforce to 2050,” I noted that: 

…overall, the steepest falls in employment ratios have been among younger Minnesotans. The largest decline has been among those aged 16 to 19 years. The next two largest falls are found among male and female Minnesotans, aged 20 to 24. The story is broadly similar nationally, with the larger declines being found among younger workers, especially young men. But Minnesota has underperformed the national average by some margin in some of these categories, particularly in the 20 to 24 category. On youth employment, this century Minnesota has performed poorly compared to the U.S. generally.

This continues to be true. As I wrote in May, data show that Minnesota’s employment has declined most among 20 to 24-year-olds, with the fifth biggest fall in the United States.

Noting that Minnesota was one of only a few states not to have regained its pre-pandemic number of private sector jobs, I looked at the percentage point change in the employment ratio (the share of a given component actually employed) from 2019 to 2022 for various categories of age, sex, and race. I found that “the component of Minnesota’s labor force with the steepest fall in its employment ratio is “Total, 20 to 24 years,” whose employment ratio fell by 7.4 percentage points from 2019 to 2022” and also that “the number of 20- to 24-year-old Minnesotans not in the labor force increased by 25,000 between 2019 and 2022, a 41% increase, which was the largest of any of these components.”

But remember, the appropriate question to ask is often not “Why is Minnesota doing badly?” but “Why is Minnesota doing worse than other states?” — and here we see that Minnesota is doing relatively poorly:

Fourteen states — including Ron DeSantis’ Florida — and the District of Columbia have seen their employment ratio for 20- to 24-year-olds increase from 2019 to 2022. Not only is Minnesota one of the 32 states that saw its employment ratio for 20- to 24-year-olds fall from 2019 to 2022, its fall — 7.4 percentage points — was the fifth worst in the United States.

The report attributes this to:

…a misalignment between available jobs and available talent, reduced work incentives for younger workers, and the opioid epidemic.

So, if we’re looking to new workers to solve our labor shortage, birthrates are declining, although less so here than elsewhere, but young workers are failing to enter the labor force — or leaving — in greater numbers than elsewhere. There are problems in Minnesota’s labor market.