Rural Minnesota still copes with labor shortage as unemployment rises in pandemic

Unemployment rates have risen in rural Minnesota due to the COVID-19 pandemic, but they mask a bigger challenge.

A decade-long worker shortage continues to persist in many industries in rural Minnesota, according to new research conducted for the Center for Rural Policy and Development by Kelly Asche and Marnie Werner. Asche presented the findings Jan. 21 on a webinar in which he was joined by representatives of workforce centers in the state’s rural regions.

Even as the pandemic caused many in the hospitality sector to lose their jobs, demand for workers in sectors such as health care, production, transportation and social services remained higher than the available supply. The job vacancy rate remains above 3 percent in rural Minnesota. That’s lower than the 5 and 6 percent rate measured before the pandemic, but still considered too high by economists.

“People are dropping out of the workforce,” said Asche.

With an aging population, rural areas are continuing to see more people retire and leave the workforce than there are young people to replace them.

The pandemic has only exacerbated the challenge, according to Asche. Many women have left the workforce, likely due to decisions to care for children at home. And, men and women alike have left the workforce due to their concerns about health risks.

Not surprisingly, the highest unemployment rates are in the hospitality industry. Asche said it is projected that job numbers in this industry will not rebound to pre-pandemic levels.

Unemployment rates have dropped since earlier in the pandemic, but this drop is attributed to those who have dropped out of the workforce and are not currently seeking employment.

Read the full report on rural jobs and the pandemic at ruralmn.org.

The availability of people who are unemployed due to the pandemic can be viewed as an opportunity. They can be recruited to meet the demand for workers in industries where job vacancies are high. But there is a major challenge, according to Asche and those who joined him on the webinar.

The available jobs are in a wide variety of industries and come with the need for skills that many of the unemployed workers do not have. There is a growing need to help workers acquire the skills and transition to new occupations.

Yet it's difficult to help people make the transition to new occupations right now. Many workforce centers are closed for in-person services. Many of those who dropped out of the workforce are not voluntarily taking steps at this time to pursue new training opportunities.

There is no quantitative data, but there is also a belief that the extended unemployment benefits provided due to the pandemic may be playing a role. Luke Greiner, regional analyst with the Minnesota Department of Employment and Economic Development, said many employers are telling him that people are turning down jobs.

“We’re still struggling to fill our jobs,” said Greiner of the challenge many rural employers still face.

He pointed out that the challenges now are much different than were experienced during the recession. The needs for job training and getting people back to the workforce, as well as to encourage young people to remain in rural areas, are likely greater than they were before the pandemic.