The Minnesota jobs scene finished 2016 on a strong note, with a hiring spree in November and December that amounted to two-thirds of the state’s new jobs for the whole year.
Minnesota employers added a seasonally adjusted 11,900 jobs in December, according to a preliminary estimate released Thursday by the Minnesota Department of Employment and Economic Development. The agency also revised its estimate of job additions in November to 12,700 from the preliminary figure of 5,000 it announced last month.
While the state’s monthly jobs data is volatile — October saw a loss of 12,500 jobs — November and December were clearly the best two months of the year for hiring. The state’s labor participation rate, one of the highest in the nation, held steady at just under 69 percent.
It is a performance that government and business leaders may soon look back on wistfully. Demographic data show Minnesota edging closer to a time when it will be very difficult to add to the employment base.
Some of the state’s top economists on Thursday briefed Gov. Mark Dayton on the slowdown in job growth that will unfold over the next few years and into the first half of the 2020s. And the issue will come up at a state Senate hearing next week.
“Looking down the road, we recognize there is going to be a point in time when conditions are going to get so tight that we’re going to be hard-pressed to add 11,000 jobs over a year,” said Steve Hine, labor market specialist at the economic agency.
State demographer Susan Brower, in a presentation in Minneapolis in November, projected the state labor force will add only 8,000 jobs a year in the 2020s, even fewer in the early years of the decade. The state’s working-age population will decline by about 40,000 people from 2019 to 2028, if current trends hold.
The slowdown could be arrested if Minnesota retained some residents who move out of the state for college and work as young adults, attracted more people to move in from around the U.S. or elsewhere, and encouraged more people who have taken themselves out of the labor force to jump back in.
Hine said there are about 121,000 Minnesotans under the age of 65 with college degrees who are not in the labor force, most of them women. And 6,600 Minnesotans say they are not looking for work because they are discouraged by a lack of opportunity.
The challenge that a leveling off in the job base creates for the state is the prospect that some businesses will decide they can’t find people to work — and will either not locate in Minnesota or, if here already, move to a place with a bigger labor pool.
For now, however, the combined 24,600 jobs that were added in November and December gave a huge boost to the state’s full-year results. Minnesota added 37,102 jobs in 2016, an increase of 1.3 percent to the employment base of 2.9 million. U.S. job additions rose 1.4 percent in 2016.
For much of 2016, Minnesota’s job growth significantly trailed the national pace, chiefly because the state held a stronger position with lower unemployment and higher labor participation. Through November, Minnesota’s job growth was a half-percentage point behind the nation’s.
Government and construction jobs led the end-of-year hiring spree, but Hine noted that seven of the 11 employment sectors recorded gains. “It is hard to imagine there was any one single factor driving so many different sectors of the economy,” he said.
Education and health services led hiring in the state for ’16, with about 18,600 new jobs.
The state’s unemployment rate rose one-tenth of a percentage point to 3.9 percent in December from 3.8 percent a month earlier. Minnesota has been below the U.S. unemployment rate, now 4.7 percent, since the fall of 2007.