By Cameron Macht
October 2020
Economic changes brought about by the coronavirus pandemic in the second quarter of 2020 caused the number of unemployed workers to outpace the number of job vacancies in Minnesota for the first time since 2016. As layoffs mounted, about 275,000 unemployed workers were counted during the summer compared to 111,750 job vacancies, creating a ratio of about 2.4 unemployed workers for each vacancy. That was up from 0.6 jobseekers per vacancy in the second quarter of 2020.
The ratio is still significantly lower than the peak of eight jobseekers per vacancy reached in the midst of the Great Recession in 2009. The number of unemployed was close to 250,000 at the time, but job vacancies dropped to around 30,000 in 2009. Job Vacancies, despite being down 23.7% from the second quarter of 2019, reached 111,750 vacancies in the second quarter of 2020, which is still historically high (see Figure 1).
Regionally 65,879 or 59% of all job vacancies were located in the seven-county Twin Cities metro area, while the remaining 45,874 vacancies or 41% were located in Greater Minnesota. Compared to one year ago, the number of job vacancies decreased by 23.4% in the Twin Cities and 24.1% in Greater Minnesota. The Twin Cities had 2.5 job seekers for each vacancy, and Greater Minnesota had 2.4 job seekers for each vacancy.
Despite being the least impacted by job losses during the pandemic, the biggest and fastest year-over-year decline outside the metro actually occurred in Southwest Minnesota where vacancies dropped 44% compared to the second quarter of 2019. The next largest decline occurred in Southeast, which fell 30% over the year. Central and Northeast both saw about 20% declines over the year although Northeast had been seeing a shrinking number of vacancies since 2017. In contrast, Northwest Minnesota was down just 840 vacancies compared to the second quarter of 2019, a slight 6.5% decline. The number in Northwest was still the third highest ever reported, and all five other regions were also at historically high levels despite the declines (see Figure 2).
Different industries were impacted in different ways with Leisure and Hospitality suffering the biggest job losses. These challenges are also reflected in the declines in job vacancies among industries, with Accommodation and Food Services showing the biggest cut backs in hiring activity. Statewide nearly 10,000 fewer job openings were available in Accommodation and Food Services in the second quarter of 2020 compared to the second quarter of 2019, a 39% decline.
Manufacturing, which has seemingly weathered the pandemic better than other industries in terms of job losses, nonetheless saw a huge drop in job vacancies this summer, slicing nearly 8,000 postings compared to last summer, a 70% decline. While typically thought of as recession-proof, Health Care and Social Assistance also cut more than 4,000 vacancies over the year, a 15% drop. Other industries that saw notable decreases in the number of job postings include Agriculture, Professional and Technical Services, Transportation and Warehousing, Finance and Insurance, and Management of Companies. All those industries were down at least 1,500 job vacancies compared to the year prior.
Even within those industries, however, hiring activity dropped at different rates across the state. For example, Accommodation and Food Services was hit much harder in the Twin Cities than in Greater Minnesota, with over two-thirds of the decline in job vacancies occurring in the metro. In contrast, over three-quarters of the decline in postings in Health Care and Social Assistance and in Agriculture, and just over half of the decline in postings in Manufacturing occurred in Greater Minnesota.
There were also several industries – including Retail Trade, Professional and Technical Services, Educational Services, Other Services, and Public Administration – where the Twin Cities area was seeing declines in job postings while Greater Minnesota saw an increase or vice versa. The Twin Cities, on the other hand, saw heightened demand for employees in Information, Administrative Support and Waste Management Services, Wholesale Trade, and Arts, Entertainment, and Recreation (see Figure 3).
In sum, 16 of the 20 industries saw a year-over-year decline in the number of vacancies posted, with Information seeing the biggest increase over the year – likely from heightened demand for telecommunications and internet services. Statewide, the Health Care and Social Assistance industry still had the most job vacancies even after the decline, followed by Retail Trade and Accommodation and Food Services.
At $15.95, the median hourly wage offer was up 6.3% from one year ago, and is the highest ever reported in the history of the survey. There are many factors influencing the increase in wages, including the decline in lower-paying jobs in Accommodation and Food Services and Agriculture, the shifting share of vacancies in other industries, and, most importantly, the financial incentives being offered to workers in front-line occupations that needed to be filled. For example, wage offers jumped 6% for workers in Accommodation and Food Services, 15% in Retail Trade, 22% in Administrative Support and Waste Management Services, and 44% in Arts, Entertainment, and Recreation. Anecdotally, some retailers, such as grocery stores, offered hazard pay to attract and retain workers throughout the pandemic.
Median wage offers were up in every region of the state, with the biggest increase shown in Southwest Minnesota, where only two of 20 industries offered lower wages in 2020 than 2019. Wages offers climbed 25% in Retail Trade over the year, an increase of nearly $3.00 more per hour. Transportation also offered significantly higher wages to recruit workers for critical positions.
On the other end of the spectrum, the median wage offer increased just 2% in Central Minnesota, where half of the 20 industries saw decreases compared to 2019. However, wage offers were up in Retail Trade, Accommodation and Food Services, and Health Care and Social Assistance, which combined for almost 60% of vacancies in the region.
As noted, median wage offers are higher than they have ever been for vacancies requiring no education ($12.96 per hour) and for a high school diploma ($15.61 per hour). The number of vacancies requiring a high school diploma or less, however, dropped by 26.7% compared to second quarter 2019, the largest drop for any educational group. Over the year the statewide median wage offers rose the most in vacancies requiring an associate’s degree, up 8.0%, followed by a high school diploma, up 6.8%.
These data provide job seekers and counselors with information on occupations showing hiring demand within their region. The information also helps employment, training and education providers understand current labor market conditions in their region and tailor services to meet customer and employer needs better.
