As we noted in our report The State of Minnesota’s Economy: 2018, our state’s Labor Force Participation rate, which, at 69.7% in 2018, was the third highest in the country after the District of Columbia and Nebraska, is forecast to fall to 64.6% by 2035. Indeed, Minnesota’s participation rate is already down from a peak of 76.1% in 2001.
As we note in a forthcoming report into Minnesota’s labor force, this trend is also forecast both nationally and across the developed world as populations age. But the aging of the population is not the whole story. According to the Bureau of Labor Statistics, between 1999 and 2018, the participation rate for those aged 16 to 19 in Minnesota fell by 19.1 percentage points. By contrast, since 1999, the participation rate of those aged 55 to 64 has risen by 9.6 percentage points and it is up by 4.4 percentage points for those aged over 65.
And these trends are forecast to continue. According to the Minnesota State Demographic Center, the participation rate for 16 to 19 year olds is forecast to fall by 9 percentage points between 2020 and 2045 while it will rise for every age group above 45.
This doesn’t just pose a problem for Minnesota by exacerbating the participation rate decline stemming from an aging population. As I’ve written before, it is also a problem for the younger workers themselves. As Greta Kaul writes for Minn Post today,
It is rare that you will make a living doing what you do in your very first job. The pizza making skills I picked up in my first job have long rusted away. But the ‘soft skills’ you pick up in that first job, “things like the ability to resolve conflicts at work, knowing how to conduct yourself as a professional in the workplace,” according to Joe Mahon, regional economist with the Minneapolis Federal Reserve, will stand you in good stead throughout your working life. The longer Minnesotan workers leave it to start accumulating these skills, the bigger disadvantage they will find themselves at.
John Phelan is an economist at the Center of the American Experiment.