Record hot labor market has Minnesota scrambling for workers

MANKATO, Minn. — A construction company needs workers so badly, they’re flying them in from Puerto Rico and Texas and paying $20 an hour to install roofs. An online Halloween costume retailer booked hundreds of hotel rooms across the city to house its seasonal workforce.

Welcome to Mankato, Minn., home to one the tightest labor markets in the nation. The unemployment rate in this metro area of 103,000 is even lower than the state average of 1.8 percent — a record low since federal labor statistics began tracking data, and far below the national average of 3.7 percent.

The U.S. labor market is in its 20th month of eye-popping job creation, as worker shortages, abundant job growth and mass resignations have become a hallmark of the recovery after the pandemic downturn, helping blunt the pain of widespread inflation.

Minnesota is weathering an extreme version of the tight labor market and low unemployment, which is playing out in fierce battles for workers in manufacturing hubs like Mankato. Jones Metal, a family-owned metal parts factory, is scrambling to hire enough welders to build battery boxes and generators. It pays a starting wage of $23.50 an hour, while trying to automate more jobs to keep the plant running.

“When we were trying to hire last year, just like everybody else, we’d get a candidate in, make a great offer, and then their employer would counter with some ridiculous amount,” said Valerie Bentdahl, director of human resources at Jones Metal.

And outside the manufacturing sector, the going rate for service sector jobs can run well above $15 an hour, according to job postings, state data and interviews with more than 12 restaurants and shops.

“This is the best job I’ve ever had,” said Tate Witty, a senior at Minnesota State University who scoops ice cream at Mom & Pop’s on Riverfront Drive in Mankato, often making more than $17 an hour with tips.

The tight labor market has created an entirely new wage floor, far above the state’s minimum of $8.42 an hour, said Ryan Vesey, economic development specialist at Greater Mankato Growth, the local chamber of commerce.

“Even in fast food. If you’re working full-time at McDonald’s, you can make $15 an hour,” Vesey said. “This is a community where if the minimum wage were to go up, I don’t think it would be noticed.”

Wages have grown so much in leisure and hospitality throughout Minnesota that they have outpaced inflation these past two years, according to the Minnesota Department of Employment and Economic Development, at a time when national inflation rates are wiping out wage gains for most workers.

Even before the pandemic began, Minnesota had long benefited from a red-hot labor market in which employers compete aggressively for workers despite a comparatively plentiful labor force, with a participation rate that’s far higher than the national average.

The state has a fast-growing immigrant population, particularly from Mexico, Somalia and Laos, with large numbers of workers in the labor force. Eighty percent of the state’s Hispanic residents held jobs as of July. Minnesota also boasts one of the nation’s highest high school completion rates, and the 14th-highest college graduation rate.

The state is home to more than a dozen blue-chip companies, ranging from manufacturing to health care, including Target, Best Buy, 3M, UnitedHealth Group and General Mills. The diversity in companies has helped the Minnesota economy weather the pandemic, including the 2020 shutdowns, far better than other states, said Steve Grove, commissioner of the Minnesota Department of Employment and Economic Development.

“Workers have an extraordinary amount of choice right now in Minnesota,” Grove said on a recent press call. “Companies are desperate for workers. Labor is such a prized asset right now in any given firm.”

Signs that employers of all stripes are itching for workers are everywhere in Mankato. Main thoroughfares are dotted with “now hiring” and “help wanted” signs at fast food joints, supermarkets, bars, manufacturing outlets, a barbershop, carwash, shoe store, and smoothie shack.

The KFC on Madison Avenue pays a starting wage of $15 an hour and advertises scholarships and GED opportunities. Hosts and hostesses at Tav on the Ave, a sports bar that is packed during lunch hour, start at $15 or $16 an hour.

Food court concessions and retail stores shut down early or for days on end because no one is willing to work, according to shoppers and other employees at the River Hills Mall.

The labor market has gotten so tight in recent years that employers say raising wages and increasing benefits is not enough and that they are turning to […]

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