New DEED Research Shows How Regaining Past Immigration Levels Could Help Ease Minnesota's Labor Shortage

St. Paul – Minnesota continues to experience an extremely tight labor market with workforce shortages constraining job growth, because employers can’t find the staff they need to fill open positions. The pandemic exacerbated what was already a tightening labor market due to our aging population and the decline in working age residents as Baby Boomers continue to retire. New research from the Minnesota Department of Employment and Economic Development (DEED) shows how increasing international immigration to levels seen prior to 2015 could help offset a significant portion of the labor force decline we’ve witnessed recently.

“DEED is focused on doing everything we can to help Minnesota employers find the workers they need to grow and thrive,” said Interim DEED Commissioner Kevin McKinnon. “Minnesota manufacturers aren’t able to expand in some cases because they can’t find employees – and Minnesota nursing homes aren’t able to care for patients ready to be released from hospitals because they don’t have enough caregivers. Those are just two examples of the impact we’ve seen of workforce shortages across industries, throughout the state.”

“New Americans play a vital role in meeting Minnesota’s workforce needs. In fact, from 2010-2020, foreign-born workers made up more than 50% of the state’s labor force growth,” said DEED Assistant Commissioner for Immigrant and Refugee Affairs Abdiwahab Mohamed. “Welcoming more immigrants and refugees – and doing more to bring our New American neighbors who are already in Minnesota into our labor force — will help ease our severe labor force shortage.”

Previous research has shown that foreign-born residents participate in the labor force at a rate 3.8% higher than U.S.-born residents. Analysis and calculations carried out by DEED Labor Market Information Office Regional Analyst Anthony Schaffhauser show that bringing immigration back up to 2015 levels now through 2030 would erase over 25% of the ongoing labor force shortage projected over the next eight years.

"The pandemic caused a steeper decline in an already declining immigration trend since 2016,” said Schaffhauser. “While the numbers may not seem big enough to affect our labor market overall – there are more than 3 million people in Minnesota’s workforce – they do make a big difference, especially in our ongoing tight labor market.”

View Schaffhauser’s full article Can Regaining Immigration Levels Help Resolve Minnesota’s Tight Labor Market? in the current edition of Minnesota Economic Trends.

The One Minnesota Budget contains the following proposals aimed at welcoming New Americans and helping more immigrants and refugees find work in Minnesota:

Establishing an Office of New Americans - Governor Walz and Lieutenant Governor Flanagan propose establishing an office explicitly focused on supporting immigrant and refugee integration, reducing barriers to employment, and improving connections between employers and job seekers.

Stabilizing and Expanding the Long-Term Care Workforce – System changes in the Governor and Lieutenant Governor’s budget will stabilize and expand the long-term care workforce, making it easier for people with disabilities to find and hire direct support workers to meet essential daily needs. Additionally, two permanent grant programs will address Minnesota’s long-term care workforce shortage by expanding the depth and diversity of the workforce while improving recruitment and retention. Ongoing funding will support provider capacity grants for rural and underserved communities and a new grant program focused on recruiting and retaining immigrants, refugees, and New Americans for vital long-term care positions.

DEED is the state’s principal economic development agency, promoting business recruitment, expansion and retention, workforce development, international trade and community development. For more details about the agency and its services, visit the DEED website, the JoinUsMn.com website, or follow us on Twitter.