Regional Analysis

1
Regional Planning in Southwest Minnesota

• Cameron Macht
• Regional Analyst, Southwest MN
• Dept. of Employment and Economic Development
• www.deed.state.mn.us/lmi/
• 320-231-5174 ext. 7535
• cameron.macht_at_state.mn.us

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Presentation Agenda

• Regional profiling in Southwest MN
• Changing Demographics
• Changing Labor Force
• Changing Economy
• Conclusions and Questions

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Why Does Regional Matter?

• Despite the intricacies of each countys
  workforce and economy, there are more
  similarities than differences
• We are in a global competition for good jobs and
  good workers including our own youth!
• Businesses and people make decisions on where to
  locate based on the image and reputationof the
  region
• Southwest Minnesota is at a turning point
• Competing on low-cost, low-wage production
• Rural areas, but also other countries
• Competing on high skills that can support higher
  wages

4
Opportunities For Success

• There is no guarantee that Southwest Minnesota
  will be a region in which advanced manufacturing
  or other high-skilled industries can compete and
  survive
• This report presents a baseline of information
  about where the region stands today
• There are strengths and weaknesses
• The challenge for Southwest Minnesota isto fully
  embrace the notion of becoming aregion that is
  focused on growingemployment in high-skill
  industries
• That change will require strategic thinking,
  commitment, and effective leadership

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There Are No Easy Answers

• Regions and economies are giant, complex
  organisms that change slowly in some ways and
  quickly in others
• No single idea or answer is going to solve every
  problem or maximize every strength
• Everyone should feel open and welcome to provide
  ideas, comments, and feedback at any time
• Everyone needs to be able to say whatever they
  want to say whenever they want to say it.
• This meeting is for brainstorming and creating
  ideas the next meeting will focus on
  formulating action plans and building work
  groups/industry forums

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Population is Declining

• Region 6W has seen a steady decline -27.6
  decrease in population since 1960
• -1.6 decrease from 1990 to 2000
• -2.7 from 2000 to 2003 (-1,350)
• Region 8 has seen a steady decline -18.5
  decrease in population since 1960
• -1.3 decrease from 1990 to 2000
• -2.0 from 2000 to 2003 (-2,422)
• Central Minnesota more than doubled (114.5
  increase)
• Region 6E increased 20.1
• State of Minnesota increased 48.2 from 1960 to
  2003

2003
2003
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Percent Population Change, 1990 to 2000

• Slow but steady decline
• Only Lyon (2.6) Nobles (3.7) Swift (11.5)
  grew from 1990-2000
• Big Stone -7.4
• Chippewa -1.1
• Cottonwood -4.2
• Jackson -3.5
• Lac qui Parle -9.6
• Lincoln -6.7
• Murray -5.1
• Pipestone -5.7
• Redwood -2.5
• Rock -0.9
• Yellow Medicine -5.2
• ZERO Southwest counties grew from 2000 to 2003

Source 1990 2000 Census
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Moving From Rural to Urban

• Nationwide trend U.S. population was 75 urban
  in 1990 it jumped to 79 urban in 2000
• Statewide trend MN population was 69.8 urban in
  1990 it crept up to 70.9 urban in 2000

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Negative Rate of Natural Increase

• In 11 of the 14 counties, there were more deaths
  than births
• Only Lyon, Nobles, and Chippewa County had more
  births than deaths
• Big Stone, Lac qui Parle, Cottonwood, Lincoln,
  and Murray had the largest natural rate deficits
  (-5 through -9)
• Southwest Minnesota has a natural rate of
  decrease of -1 percent
• The state of Minnesota has a natural rate of
  increase of 6 percent

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Percentage of the Population Age 65 and Over

• Ahead of our time . . .
• By 2030, 20 of the MN population is projected to
  be aged 65 years over
• Minnesota 12.1
• In 2000, 20 of the Southwest MN pop. already
  was
• By 2030, 30 of the Southwest MN pop. is
  projected to be aged 65 years over

Source 2000 Census
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So the Population is Growing Older

• Region 6W is already there 20.7 were 65 years
  and over in 2000 projected to reach 30.2 by
  2030 almost 1 in every 3 people!
• Region 8 was 19.1 in 2000 projected to reach
  26.3 in 2030
• Region 6E was 15.6 in 2000 projected to reach
  24.4 in 2030

Baby Boomers begin reaching retirement age in
2011
Source Minnesota Planning
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Pop. Increases

• Southwest Minnesota can expect a marginal 2.3
  pop. increase from 2000 to 2030
• Not due to births or in-migration
• Due to longer life expectancies
• Only one age group (25-29) under the age of 55
  will grow
• 35-49 sees the biggest declines
• 0-19 sees corresponding losses
• Every age group from 55 years on will grow
  rapidly
• 65-79 sees the biggest growth
• However, this assumes that retirees will remain
  in the region

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Migration Patterns Losing Our Youth?
Net Migration, Age 30 to 44
Net Migration, Age 15 to 24
Source 1990 2000 Census
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Minority Populations, 2000
Source 2000 Census
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Demographics Affect the Labor Force

• Demographic trends set a crucial context for
  workforce strategy decisions
• Any future regional strategies will need to
  account for continued population declines and an
  aging population
• Actions designed to stop the loss or reverse the
  trend
• Actions designed to maximize the experience and
  productivity of the residents who currently live
  in the region
• Low growth regions risk being perceived by
  employers and people as places in which they
  wont be able to find what they need (labor
  force, wages)
• Southwest MN may have to rely more heavily on
  in-migration to support the growth of its
  population

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What can we do?

• These trends impact
• Workforce availability
• Industrial recruitment efforts
• The politics of economic development
• Rural v. Urban service distribution
• Youth v. Aging service needs
• These trends make a compelling justification for
• Increasing our birth rate
• Making Southwest Minnesota more attractive to our
  youth
• Making Southwest Minnesota more attractive and
  more receptive to international migrants
• Lowering our expectations for the future

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Why?
Access to a skilled work force remains the No. 1
priority of corporate site seekers, according to
a recent Site Selection survey of economic
development (ED) groups and service providers.
Survey Reveals New Factors Behind Site
Location Decisions by Mark Arend, Site
Selection magazine, May 1999
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Brainstorming about Demographics

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A Job Bust from the Baby Boom?

• Labor force participation rates are increasing
  for
• Women of all ages
• For females aged 16 years and over, Labor force
  participation rates grew from 62.5 in 1990 to
  66.0 in 2000 (Minnesota ranks 1 in the U.S.)
• Older adults
• For males aged 65 to 69, Labor force
  participation rates grew from 28.7 in 1990 to
  33.2 in 2000 females grew 18.2 to 24.0
• Teenagers
• For males aged 16 to 19, Labor force
  participation grew from 59.7 in 1990 to 60.3
  in 2000 females grew from 61.0 to 63.9

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Not Necessarily

• The Region 8 labor force is projected to grow
  2.8 through 2030
• Female labor force will grow 5.9 in Region 8
• 65 years labor force will grow 108.3
• 25-44 years labor force will decline -11.9

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Not Necessarily

• The Region 6W labor force is projected to grow
  0.8 to 2030
• Female labor force will grow 5.0 in Region 6W
• 65 years labor force will grow 123.2
• 25-44 years labor force will decline -13.7

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Women in the Work Force

• The region has long had a much lower female labor
  force participation rate
• Minnesota is 1 in the U.S. at 66.0
• Southwest Minnesota was at 59.9 overall
• Only Lyon County surpassed the state rate
  (66.3)
• Big Stone (51.4), Lincoln (56.0), Cottonwood
  (57.5), Lac qui Parle (57.7), and Yellow
  Medicine (58.2) were lowest
• However, there were more females aged 25 years
  and over in every county except Swift (prison)

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Growing Faster in Regional Centers

• Kandiyohi, Lyon, McLeod, Meeker, Nobles, Swift,
  and Redwood Counties will see the biggest
  increases in labor force through 2030
• Willmar, Marshall, Hutchinson, Litchfield,
  Benson, Worthington, and Redwood Falls
• Other counties will see declines or increases
  only in 65 years over

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Hard Work Ethic

• In Region 8, labor force participation rates for
  young people (16-34), middle-aged people (35-54
  and 55-64), and senior citizens (65 and over)
  exceeded comparable rates for the state

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The Loyalty Effect

• Research shows that Americans are changing jobs
  and careers more frequently, regardless of the
  economy. The median number of years that wage and
  salary workers had been with their current
  employer (referred to as employee tenure) was 3.7
  years in January 2002
• Despite these trends to the contrary, workers in
  Southwest Minnesota continue to display a
  remarkable amount of loyalty to their
  employers. According to a recent Labor Force
  Assessment, the median employee tenure was set
  almost twice as high, at 7 years

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Demography and the Economy

• These regional demographic trends impact the
  local economy
• A long-term tightening of the labor force in our
  region is predicted
• The loss of the young adult population leads to a
  different kind of labor market
• Right now, there is slower growth in entry-level
  workers
• That leaves an available pool of experienced
  workers
• But experienced workers typically demand higher
  wages, or perhaps better health insurance or
  more schedule flexibility
• In-migration has become much more important to
  the local labor force, requiring new workers to
  fill in available jobs
• Therefore, non-traditional students and
  continuing education are areas of potential
  future growth for higher education
• What does that mean for businesses?

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What Does It Mean?

• With fewer mid-career and less growth in new
  entrants, employers will probably be looking for
• Productivity increases
• Workforce development
• Recruitment
• Relocation
• What comes first, the people or the jobs?
• Population and income growth generates demand
  for services
• If people are retiring or moving away, who will
  fill the jobs?

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Educational Attainment

• The region has fewer entry-level workers, but a
  stable, available pool of experienced, older
  workers
• Although they are loyal, they arent necessarily
  more skilled
• Southwest Minnesota lags the rest of the state in
  most measures of educational attainment, with
  fewer workers having associates, bachelors, or
  advanced degrees
• 56 percent of the population aged 25 years and
  over stopped with a High School diploma or less
  (State 40.9)

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Market-Clearing Match

• Research shows that close to 71 percent of jobs
  in Minnesota and 76.4 percent of jobs in
  Southwest require only a High School diploma
• As compared to 8.2 percent of jobs that require
  some college or an associates degree
• 15.4 percent of jobs require a bachelors degree
  or above

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Wages are VERY Important

• 90 of respondents rated an increase in pay as
  important with 64 of respondents rating it as
  very important
• 87 of respondents rated an increase in job
  benefits as important with 64 of respondents
  rating it as very important
• 80 of respondents rated better utilization of
  skills as important
• 79 of respondents rated more job security as
  important

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Wage Comparison Analysis

• Wages are much lower in Southwest Minnesota than
  in the rest of the state (exc. NWMN) less than
  10 of jobs pay 25 or more
• State 21

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Wage Comparison Analysis

• Low wages in Southwest Minnesota have got to be
  one reason for our high rate of out-migration
• The median hourly wage for Region 6W is 11.83
  (78 of state)
• The median hourly wage for Region 8 is 12.29
  (80.6)
• The median hourly wage for Minnesota is 15.25
• The highest paying jobs are typically
• Management occupations (27.10-29.55)
• Architecture and engineering occupations
  (21.93-22.48)
• Business and financial operations occupations
  (21.65-19.69)
• Life, physical, and social sciences occupations
  (21.04-18.93)
• The lowest paying jobs are concentrated in
• Food preparation and serving related occupations
  (7.55-7.71)
• Sales and related occupations (8.15-8.95)
• Building, grounds cleaning, and maint.
  occupations (8.61-9.28)

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Regional Salary Surveys

• Minnesota Salary Survey is based on a rolling
  survey of 22,000 employers
• Updated quarterly and annually for the state,
  regions, and MSAs
• Third Quarter 2004
• Distribution stats for 10th, 25th, 50th, 75th,
  and 90th percentiles
• Southwest Minnesota typically pays less than 80
  percent of the metro wage

www.deed.state.mn.us/lmi/tools/oes/
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Competitive Occupational Groups

• Only two major occupational groups pay more in
  Southwest Minnesota
• Education, training, and library occupations
• Protective service occupations
• Several occupational groups are competitive
• Healthcare support occupations
• Food preparation and serving related occupations
• Farming, fishing, and forestry occupations
• Transportation and material moving occupations
• Several occupational groups earn significantly
  less
• Management occupations
• Business and financial operations occupations
• Computer and mathematical occupations
• Architecture and engineering occupations
• Arts, design, entertainment, sports, and media
  occupations
• Healthcare practitioners and related occupations
• Construction and extraction occupations

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Occupational Selection

• Southwest Minnesota had a much lower percentage
  of people employed in management and professional
  occupations (29.9) than the rest of the state
  (35.8)
• And a much lower number of sales and office
  occupations (21.7) than the state (26.5)
• But a much higher percentage of people employed
  in production, transportation, and material
  moving occupations (18.6 vs. 14.9 statewide)
• Defined by the regions industry composition
• And most notably, in farmers and farm managers
  (8.1 vs. 1.5 statewide)

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Gender Differences

• Males had a higher percentage of management
  occupations (20.7 vs. 6.1) females had a
  higher percentage of professional occs. (20.8
  vs. 8.6)
• Female workers were more likely to be employed
  in
• Office and administrative support occupations
• Education, training, and library occupations
• Healthcare practitioners (Registered Nurses)
• Bookkeeping clerks, accountants and auditors
• Cooks and food prep workers
• Male workers were more likely to be employed in
• Agriculture
• Construction
• Manufacturing

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What Money Cant Buy

• 93 of working residents in Region 8 and 84 in
  Region 6W were employed within their region
• Less than 5 are employed in the bordering
  counties of North and South Dakota and Iowa
• In Region 8 75 had one-way commute times under
  15 minutes and 93 had one-way commute times
  under 30 minutes
• In Region 6W 74 had one-way commute times under
  15 minutes
• In Region 7W 46 had one-way commute times under
  15 minutes and 18 at 46 minutes or more

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Brainstorming about the Workforce

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Southwest MN Economy

• Region 8 had 3,978 firms 52,858 jobs paying
  1.34 billion in 2003
• 75.6 of employment in Region 8 is in
  services-producing industries 24.4 of jobs are
  in the goods-producing domain (state 19.3)
• 78.9 of employment in Region 8 is in the Private
  sector 21.1 of jobs are in the Public or
  Government sector (state 14.4)
• Region 8 gained a net of 212 jobs but lost -66
  firms from 2000 to 2003
• Region 6W had 1,653 firms 18,126 jobs paying
  440 million in 2003
• 78.8 of employment in Region 6W is in
  services-producing industries 21.8 of jobs are
  in the goods-producing domain
• 72.1 of employment in Region 6W is in the
  Private sector 27.9 of jobs are in the Public
  or Government sector
• Region 6W lost a net of -269 jobs and -37 firms
  from 2000 to 2003

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Distinguishing Industries

• Value-added Agriculture Production
• Animal Production
• Crop Production
• Agriculture Support Activities
• Food Manufacturing
• Machinery Manufacturing and Wholesale Trade
• Farm Equipment
• Truck Transportation and Gasoline Stations
• Healthcare and Nursing Care
• Nursing and Residential Care for elderly
  residents
• Public and private

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Largest Industries Region 8
48
Largest Industries Region 6W
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Manufacturing

• Manufacturing is the largest employing non-ag
  industry in Region 8, with 17.8 of total
  regional jobs (9,425 jobs)
• Statewide, manufacturing lost just over -50,000
  jobs during the recession
• Region 8 lost -1,596 manufacturing jobs from 2000
  to 2003
• Food Manufacturing lost -1,225 jobs but is still
  the largest employing manufacturing specialty
  (4,339 jobs)
• Computer Electronic Product Mfg. lost -460 jobs
• Machinery Mfg. gained 316 jobs (highest-paying)
• Manufacturing is the second largest employing
  non-ag industry in Region 6W, with 13.7 of total
  regional jobs (2,490 jobs)
• Region 6W lost -631 manufacturing jobs from 2000
  to 2003
• Food Manufacturing is the largest specialty (620
  jobs)
• Computer Electronic Product Mfg. gained 37 jobs
  (highest-paying)
• Fabricated Metal Product Mfg. gained 36 jobs, up
  to 259 jobs
• Machinery Mfg. lost -278 jobs, down to 470 jobs

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Healthcare Social Assistance

• Healthcare Social Assistance is the largest
  employing industry in Region 6W, with 18 of
  total regional jobs (3,259 jobs)
• Statewide, healthcare social assistance added
  just over 38,500 jobs from 2000-2003 (sometimes
  called recession-proof)
• Region 6W added 341 jobs from 2000 to 2003
• 1,047 jobs at regional Hospitals 329 jobs at
  Ambulatory Healthcare Services (clinics,
  doctors offices, dentists, chiropractors, etc.)
• 1,263 jobs at Nursing Residential Care
  Facilities
• Added 106 jobs from 2000 to 2003
• Healthcare Social Assistance is the second
  largest employing industry in Region 8, with 16
  of total regional jobs (8,458 jobs)
• Region 8 added 1,172 healthcare social
  assistance jobs
• 1,145 jobs at Hospitals 2,207 jobs at Healthcare
  Services
• 3,385 jobs at Nursing Residential Care
  Facilities
• Added 108 jobs from 2000 to 2003

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A Trade-Off?

• Longevity and Stability
• Southwest Minnesota has a large number of
  businesses that have been operating for more than
  30 years
• Vitality and Growth
• Southwest Minnesota has a smaller number of new
  businesses created in the last five years
• We need different industries not just more of the
  same
• Southwest has many older firms in older
  industries
• Competition in these mature industries has
  already squeezed out the windfall profits
• That leaves thin margin firms in thin margin
  industries

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Thin Margin vs. High Tech

• Thin margin firms are more susceptible to
• Minimal investment in research and development
• Infrequent investment in new capital equipment
• Lean staff salaries
• High sensitivity to tax environment
• Vulnerable to merger and acquisition
• High Tech Industries tend to have fat margins
• Because of the high-value added production in
  high-tech industries, and the greater demand for
  high-skilled labor, these industries compensate
  their employees well.
• America's High-Tech Economy Growth Development,
  and Risks for Metropolitan Areas Ross DeVol,
  Perry Wong, John Catapano, and Greg Robitshek
  The Milkin Institute

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Emerging Goods-producing Industries
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Brainstorming about Industries

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Conclusions

• People are moving into/around metropolitan areas
  and out of rural areas
• The population in Southwest Minnesota is growing
  older
• The Baby Boom will not necessarily create a Job
  Bust
• Labor force participation rates are increasing
  for women, older adults, and teenagers but also
  are bolstered by in-migration
• Workers in Southwest Minnesota are more
  affordable than metro areas, and they show
  remarkable loyalty to employers
• Many would change jobs if offered an increase in
  pay
• Commute times are much shorter than in metro
  areas
• The largest industries are Manufacturing,
  Healthcare Social Assistance, Educational
  Services, Retail Trade, Construction
• Manufacturing is declining overall but various
  specialties are still growing
• Healthcare Social Services are increasing
  aging population ensures demand
• Agriculture is still the foundation of the local
  and regional economy

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Making Sense

• Why is it so important that we
• Think and act regionally?
• Attract different industries not just more of
  the same?
• Because we need to overcome or compensate for
• The inevitable demographics of an aging,
  declining population
• The constraining impact of a tight labor market

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Questions?

• Cameron Macht
• Regional Analysis Outreach Unit
• 320-231-5174 ext. 7535
• cameron.macht_at_state.mn.us

• Dept. of Employment Economic Development
• LMI Analyst HelpLine
• 651/282-2714
• DEED Publications
• 651/296-6545
• DEED LMI Web Site
• www.deed.state.mn.us/lmi/

Thank You!