Minnesota’s employers get creative to beat the labor ‘shortage’

Back in June, Minnesota’s Department of Employment and Economic Development (DEED) reflected on the supposed ‘labor shortage’ in the state. “[E]mployers in the Twin Cities will need to get creative in order to sustain economic vibrancy,” DEED wrote. Some of our state’s employers have been showing how to do that.

As MinnPost reported recently,

One often underappreciated issue for workers, and why some employers struggle to attract and retain employees, has to do with transportation, said John Kammeyer-Mueller, a professor at the University of Minnesota’s Carlson School of Management.   

“I often hear that where employers are located and where eligible workers are located are not very close to one another,” he said. “So the actual physical location of some workplaces is not accessible to people, and especially if you’re thinking about places like Minnesota, where the public transportation system is not great.”

It’s the reason some companies are starting to create specialized transportation solutions for employees. Amazon — and its regular bus service from the Cedar-Riverside community to its fulfillment center in Shakopee — is the best-known example. But they’re not alone. Kammeyer-Mueller said a manufacturing company located just across the Minnesota-Wisconsin border is also planning to put together a transportation system that would transport workers from the Twin Cities metro area.

“They said they’ve got a lot of vacancies,” he said. “What they want to do is actually have their own bus service to drive people to and from work.”

Another thing employers have been doing, as we at the Center have spoken about before, is to reach into the parts of Minnesota’s labor market where there is ‘slack’. This can be found in sections with higher rates of unemployment. Primarily, these are teenagers and certain ethnic groups. As MinnPost reports,  Summit Academy OIC President and CEO Louis King, goes into minority neighborhoods and churches to advertise employment opportunities.

And once companies bring in diverse workers, King said, it’s crucial for them to be deliberate about integrating those employees into the organization, mentoring them and making them feel valued — a process that can lead to greater retention. “That’s not an easy task,” King said. “But employers have to acknowledge the fact that the way they’ve gone about getting people in the past is no longer going to work for them.” 

Kammeyer-Mueller added that if employers want to do a better job of attracting and retaining skilled workers, they also have to provide career development programs that would help employees advance their profession, both in terms of pay and skills. “It seems like career advancement is one of the key things that’s missing here that you would see in countries where they have a lot better match between workforce skills and staffing.”

A free economy has more potential to generate widespread wealth than any other system in human history. If it is allowed to be free, that is. What the ‘labor shortage’ really means is that demand for labor is greater than supply at the current price. At some higher price, wages in this case, supply and demand will reach equilibrium. As we’ve said before, the current labor market situation represents an opportunity to see wage growth. It represents an opportunity to bring in sections of the community which have, traditionally, struggled to get into the workforce. Minnesota’s businesses are leading the way.

John Phelan is an economist at Center of the American Experiment.