MANKATO – Lee Xeng Thao is the kind of person Mankato would like to keep — a native of Thailand who came to Minnesota State University from the Twin Cities to earn a professional degree.
But when the senior graduates with a major in accounting in the spring, he expects to move to the Twin Cities. He likes Mankato, but perceives it isn’t the best place to build a career.
“I think they hire more for entry-level positions,” he said of companies in Mankato. “I’m excited about more competition.”
Mankato and the surrounding towns boast the fastest-growing economic output of any Minnesota metropolitan area, rock-bottom 3.2 percent unemployment, momentum-building downtown redevelopment and an agriculture-focused economy well-positioned for the 21st century.
But that prosperity is not creating enough of the high-paying opportunities that would enable Mankato to retain more of its most precious product: educated, skilled workers.
Across the United States, the long-running economic recovery has failed to noticeably lift wages or boost most people’s financial prospects. In Mankato, the contrast between the overall state of the economy and what workers see on their paychecks is particularly sharp.
Inflation-adjusted pay in the Mankato-North Mankato metropolitan area has fallen by almost 10 percent since 2008, even as pay has risen in St. Cloud, Rochester and Duluth, according to survey data compiled by the Minnesota Department of Employment and Economic Development.
Many midsize cities across the country face the challenge of attracting educated workers with their skills and spending money, and Mankato has a leg up thanks to its large population of college students. For a city where so much in the economy is going right, the question of why wages have declined is vexing.
“I think there’s a lot of people who wish they knew the answer,” said Pam Weller, director of the Career Development Center at the university.
Minnesota State University Mankato enrolls 16,000, including 500 international students. Gustavus Adolphus College, which is 10 miles away in St. Peter, enrolls 2,500. Bethany Lutheran, a smaller liberal arts college, has 600 students, and South Central College, a community and technical school, enrolls 6,000.
That’s a big source of potential workers. Jacob Waletzki, a sophomore manufacturing engineering student who comes from Rochester and goes to Minnesota State, said he’s open to living in the region.
Waletzki’s senior design project will be a practicum with a local company, and he has his eye on either AGCO in Jackson or Cambria Quartz in Le Seuer, which is now hiring for 54 positions. “What I’m focused on most,” Waletzki said, “is the best opportunity.”
But for many graduates, the pull of the Twin Cities and other places is too strong. Typically about 20 percent of Minnesota State’s graduates stay in the area. In 2015, that was 442 people, said Weller.
Economic development leaders recognize that persuading more of them to stick around will be important for economic growth and vibrancy.
“The workforce, that’s going to be a challenge — retaining more students, attracting more people to the area,” said John Considine, director of business intelligence for Greater Mankato Growth, a group that carries out the work of an economic development agency and a chamber of commerce.
A good run
Mankato has had a good economic run in recent years.
Since 2005, gross domestic product from the two-county area (Blue Earth and Nicollet), whose population is pushing 100,000, was growing faster than in Duluth, Rochester, the Twin Cities and St. Cloud. The gains, which averaged 2.7 percent each of the past five years, have been broad-based, with agriculture leading the way.
Companies are hiring. According to Indeed.com, a website that collects job listings, there are 4,624 job openings within 25 miles of Mankato, and only Rochester has lower unemployment than Mankato among Minnesota cities.
“For the first time that I can remember in 15 years, hiring bonuses, signing bonuses,” said Kyle Smith, a real estate developer.
Mankato’s downtown is undergoing a renaissance. Smith led construction of a gleaming five-story office building whose anchor tenant is Profinium, a Fairmont-based bank. The $40 million development includes a second office building, a building with apartments and street-level retail, and a public parking ramp.
Several new eating and drinking establishments have emerged on South Front Street on the adjacent block, including WYSIWYG Juice Co., a cold-pressed juice and smoothie bar that opened in January.
“We feel as business owners that the economy is ripe right now,” said Kristi Schuck, co-owner of WYSIWYG.
She employs 14 people — half of them college students and half of them out of college — in a bright kitchen that churns through 500 pounds of carrots and 250 pounds of spinach a week.
Riley Grunzke, a junior studying secondary English education at Minnesota State, was throwing veggies down a steel cylinder into the juicer. She said she does not plan to stay in Mankato after she graduates. She’s from Coon Rapids and would rather live in a Twin Cities suburb.
“I probably won’t stay, but I just prefer the suburbs,” she said.
The pay situation
One way to attract talent is to offer good pay, and Mankato has fallen behind the rest of Minnesota on wages.
Average wages in Blue Earth and Nicollet counties — including the many doctors, nurses and professors there — are $22.86 per hour. Adjusted for inflation, that’s $2.40 less than in 2008, and $4 below the statewide average in 2016, according to data from the Minnesota Department of Employment and Economic Development.
According to Indeed.com, of the 4,624 job openings within 25 miles of Mankato, only 346, or 7.5 percent, pay more than $35,000 per year.
Officials at Greater Mankato Growth argue that the cost of living in Mankato is lower than other places in Minnesota, and certainly the Twin Cities. That explains Mankato’s lower wages partly, but average wages still go further in St. Cloud, Rochester, Duluth and the Twin Cities, even considering the cost of living.
They also argue that wage data can be unreliable in a relatively small city like Mankato, and other measures of wages don’t show the same decline as the state data.
A key factor is Mankato’s loss of well-paid manufacturing jobs since 2008. The city lost 23 percent of its factory jobs.
An ag powerhouse
Economic development officials believe the city is well-positioned for future growth.
Earlier this year, Greater Mankato Growth rolled out new branding for Southern Minnesota and Northern Iowa, calling it the GreenSeam region. The idea, according to Sam Ziegler, the initiative’s director, is that Mankato is capital of an agricultural and ag-manufacturing industry cluster.
It is the No. 1 soybean-crushing city in North America, with Archer Daniels Midland and CHS plants that turn soybeans into vegetable oil and animal feed. Wal-Mart Stores Inc. opened a distribution center in 2015 that employs 525 people.
Within 100 miles of Mankato, there’s Hormel Foods Inc.’s headquarters in Austin, Kraft Foods spent $100 million to expand a cheese plant in New Ulm, AGCO makes equipment in Jackson, and the cities of Worthington and Albert Lea have meatpacking plants. Also, Wakefield Pork is headquartered in Gaylord and Mankato businessman Glen Taylor (who also owns the Star Tribune) has invested up to $25 million in a pork-processing plant in Windom.
As the world’s population grows, Ziegler said, Mankato should emerge as an increasingly important hub of global food production.
“The area is going to be looked to to carry the load,” Ziegler said. “Everybody in this world wants to eat three meals a day, seven days a week.”
Students at Minnesota State who are interested in ag-related jobs have plenty of opportunity in the region. Prabhakar Upretui, a freshman mechanical engineering student from Nepal, came to Mankato for the low tuition and good engineering program.
So far, so good, he said. “The environment is quite favorable for me,” Upretui said, “so I don’t think I need to go anywhere else.”