Shrinking workforce, racial disparities may curb growth

Minnesota’s low unemployment rate reinforces its strong bounce-back from the recession, but experts warned Friday that a shrinking workforce could threaten further growth – a risk compounded by racial disparities that have long dogged the state.
The state’s 3.5 percent unemployment rate significantly outpaces the nationwide rate of 5 percent, but that doesn’t mean everyone in the state is thriving. Among black Minnesotans, the rate jumps to 14.7 percent, up from 11.2 percent a year ago.
Nationally, the unemployment rate for blacks is about twice the rate for whites. In Minnesota, it’s five times as high. The difference hints at longstanding income, homeownership and achievement gaps that have tarnished the state’s reputation for success.
In today’s tightening labor market with unmet demand for workers, the unemployment disparity is especially problematic, state economist Laura Kalambokidis told several dozen business leaders at a discussion organized by the Minneapolis Regional Chamber of Commerce.
“These numbers are not outperforming the U.S. numbers for everybody,” she said at the downtown Minneapolis event, which centered on the outlook for the Twin Cities region.
The racial contrast in unemployment exposes a missed opportunity among businesses to reinforce their staffs as baby boomers ease into retirement, further shrinking the pool of available workers. Changing demographics have altered the pathway to growth.
From an economic perspective, Kalambokidis said, businesses that thrive in the future will be the ones that find ways to recruit and train the available workers the state already has.
“We need to figure out every way possible to build our workforce in the next 10 years – and in the next two years,” chamber President and CEO Todd Klingel said. “People of color are going to be a part of that.”
Several big-name employers in the Twin Cities have publicly committed to diversify their staffs. Many have created new positions to develop more focused inclusion strategies. But even small outfits can – and already do – play a role.
Small businesses account for 55 percent of all jobs, and 66 percent of all net new jobs created since the 1970s, according to the U.S. Small Business Administration.
Meanwhile, the number of companies owned by women and people of color has steadily ticked up – and the employment outlook for those groups remains strong in small business, said Darielle Dannen, public policy director for the Metropolitan Consortium of Community Developers.
“Small businesses are particularly important to address employment and income disparities,” she said. “It’s one of those bright spots where we’ve seen job additions.”
But undoing generations of inequity requires more than progressive hiring practices now.
Some policymakers, including Gov. Mark Dayton, have outlined an equity agenda that pinpoints a need for better workforce development, new affordable housing and other improvements – gateways, advocates say, to healthier individuals and a stronger economy overall.
Dayton pushed to convene a special session specifically to address racial disparities in the state, though that effort appears to have fizzled. Still, a continued spotlight on Minnesota’s blemished racial record prompted several lawmakers to commit to raising the issue when the regular session kicks off in March.
In a letter sent to Dayton earlier this month, House Minority Leader Paul Thissen, DFL-Minneapolis, said the “disparities have become an emergency which threatens the health of our state in both the short term and in the long term.”
At Friday’s chamber event, Minnesota Department of Transportation Commissioner Charlie Zelle emphasized his broad perspective on the issue – one he says is vital to plugging gaps. Equity should be a consideration in highway projects as much as it is in other state programs, he said.
Zelle blamed traditional highway design, in part, for reinforcing some income imbalance in the region. In some cases, he said, outdated models cordoned off neighborhoods, leaving them without easy access to job centers throughout the Twin Cities.
It remains unclear exactly how lawmakers will craft a transportation bill in the upcoming session. Dayton is leaning on the Legislature to finance highway and bridge projects, but it will also factor into a debate over Twin Cities transit – namely, the proposed $1.8 billion Southwest Light Rail Transit line.
Building out metro area transit options could be a major boon for the state’s economy, advocates say. For his part, Zelle said a wider-reaching transit network is worth fighting for, mainly because broader bus and light-rail service would amplify job access for thousands of people across the region.
“Infrastructure and specifically transportation are inextricably connected and a foundation for livability, affordable housing and for our economy,” he said. “Overall, access is key.”

Related content:

Dayton takes aim at minority disparities with new office
Met Council plotting ways to diversify staff

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