In 2017 the number of job vacancies in Minnesota exceeded all other estimates on record going back to 2001 with 122,929 job vacancies in second quarter and 113,774 in fourth quarter. With low unemployment there have been slightly more vacancies than unemployed people in Minnesota throughout 2017. The number of unemployed per vacancy was 0.9 during second quarter and 0.8 during fourth quarter.
The rising vacancy rate also shows a tightening labor market in 2017, with vacancies representing 4.5 and 4.2 percent of all jobs in second and fourth quarters respectively. This is up from a recession trough of 1.2 and 1.0 percent during second and fourth quarters of 2009. In such a tight labor market it is no wonder that many employers in a variety of industries are having difficulty filling open positions and keeping turnover in check.
Despite the tight labor market, wage offers have been rising slowly, barely keeping pace with inflation. Figure 1 shows vacancies and wage offers since the trough in the number of vacancies at the end of the Great Recession. While vacancies were building back up to the highest level on record, wage offers dropped and then remained flat in constant dollars. So while current dollar wage offers show some growth, inflation has eaten away almost all of its value.
In fourth quarter 2017 the largest number of openings by industry was in Health Care and Social Assistance with 23 percent of the total, followed by Retail Trade with 17 percent, Accommodation and Food Service with 14 percent, and Manufacturing with 9 percent. These are all large sectors with many jobs. The vacancy rate, on the other hand, allows us to determine which occupations have the highest share of vacancies to filled jobs. Accommodation and Food Service had the highest vacancy rate at 7.0 percent followed by Waste and Administrative Services at 6.8 percent and Retail Trade at 6.6 percent.
All of these sectors had median wage offers below the overall median of $14.34 per hour during fourth quarter 2017, with only two exceptions. Those exceptions were in Manufacturing at $16.88 and Administrative and Waste Services at $14.82. In other words, the lower wage sectors are showing the tightest labor market conditions and may be experiencing more difficulty hiring and retaining staff than higher paid sectors.
Looking at specific occupations can shed more light on labor shortage conditions. Of the over 570 occupations with measured vacancies in fourth quarter 2017, the top seven in terms of number of vacancies represent 25 percent of all vacancies during the quarter (see Table 1). All of these have median wages at or below $13.40 per hour, well below the $14.34 for all vacancies. Table 1 lists the 10 occupations with the most vacancies in fourth quarter 2017.
Comparing over a couple of years, most of the occupations listed in Table 1 have grown in terms of the number of vacancies. Some, like retail salespeople, personal care aides, and cooks, have grown quite substantially. Wage offers have also grown, up 5.9 percent across the board, but not necessarily in line with increasing demand. For example, in these three fast growing occupations, median wage offers bumped up 19 percent for retail salespersons, 8.5 percent for cooks, but only 0.5 percent or six cents for personal care aides over this period.
| Table 1. Largest 10 Occupations in Fourth Quarter 2017 and Three Year Change* | |||||
|---|---|---|---|---|---|
| Occupation | Vacancies | Vacancy Rate (%) | Median Wage Offer ($) | % Change Vacancies | % Change Median Wage Offer |
| Total, All Occupations | 113,774 | 4.2 | 14.34 | 18.4 | 5.9 |
| Retail Salespersons | 8,278 | 9.8 | 11.97 | 38.5 | 19.1 |
| Personal Care Aides | 6,640 | 9.8 | 11.55 | 180.5 | 0.5 |
| Combined Food Prep and Serving Workers | 3,251 | 4.9 | 10.53 | 8.8 | 10.6 |
| Nursing Assistants | 2,918 | 9.4 | 14.00 | 15.7 | 16.7 |
| First-Line Supervisors of Food Prep and Serving | 2,649 | 17.6 | 13.40 | 19.4 | 7.5 |
| Cashiers | 2,592 | 4.1 | 10.71 | -25.2 | 8.0 |
| Cooks, Restaurant | 2,562 | 10.0 | 11.82 | 36.3 | 8.5 |
| Registered Nurses | 2,480 | 4.0 | 30.23 | -1.0 | 6.1 |
| Heavy and Tractor-Trailer Truck Drivers | 2,376 | 6.9 | 18.05 | 9.2 | 10.1 |
| First-Line Supervisors of Retail Sales Workers | 2,125 | 9.8 | 15.43 | -10.9 | 17.1 |
| *Change is measured between fourth quarter 2015 and fourth quarter 2017.
Source: Minnesota Job Vacancy Survey |
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The good news here is that employers who can are responding to the tight labor market by raising wage offers, even in low skill, low wage occupations. The bad news is that not all employers are in a position to increase wages if wages are constrained by forces other than the market. For example, only the U.S. Congress, because personal care aides are primarily funded through Medicaid, and Minnesota legislatures, because they fund the other half of personal care aides, have the power to raise wages substantially and wage offers substantially for this occupation. As personal care aide wage offers continue to fall behind wage offers in other occupations, the result is critical labor shortages for individuals and families who rely on these services.
Regionally 68,854 or 60.5 percent of all job vacancies were located in the Twin Cities seven-county area, while the remaining 44,920 vacancies or 39.5 percent were located in Greater Minnesota during fourth quarter 2017. Compared to one year ago, the number of job vacancies increased by 19.3 percent in the Twin Cities and 13.3 percent in Greater Minnesota.
The Twin Cities' job vacancy rate was 4.1 percent, and Greater Minnesota's was 4.3 percent. However, the Twin Cities continues to have a ratio of less than one at 0.6 unemployed persons to each job vacancy, while Greater Minnesota's ratio is 1.0 unemployed persons to each job vacancy. While there is a slightly higher share of unfilled positions in Greater Minnesota, there is also a higher share of unemployed.
The overall median wage offer is higher in the Twin Cities than Greater Minnesota at $14.95 compared to $13.54. One reason for this is that job offers tend to be higher in the Twin Cities for the same occupation. Overall 277 occupations have lower median wage offers in Greater Minnesota than the Twin Cities and 73 have higher median wage offers.
Minnesota's labor market is expected to continue to tighten as more and more Baby Boomers retire. In 2017 we already saw record numbers of job vacancies. These record breaking numbers are likely to be the norm for years to come barring another recession. It will be interesting to watch how employers respond to this new labor market reality.
Job Vacancy Survey MethodologyMinnesota's Labor Market Information Office has run an economy wide Minnesota Job Vacancy Survey during the second and fourth quarters of the year since 2001. We survey about 10,000 firms for each round. Firms are selected based on a sampling procedure that stratifies by Economic Development Region, firm size (one to nine employees, 10 to 49 employees, 50 to 249 employees, and 250 employees or more), and 20 industrial sectors so as to achieve complete coverage of the state's economy. Over half of the firms are sent paper surveys to complete. These tend to be the smaller firms. Data for the other 3,800 firms are collected from each company's website. Overall, a 70 to 75 percent response rate is achieved in each round. Starting this year, a supplemental survey will be mailed to companies in the sample that do not provide wage offers in their on-line job postings. Information about wage offers is not only important to job seekers and employers but is also an important indicator of the overall labor market. We hope through this process to achieve a better representation of wage offers in Minnesota. |
