A year ago, the Twin Cities were rapidly climbing out of the doldrums of the COVID-19 pandemic. Unemployment rates were falling, and jobs were opening up. But in the last 12 months, something changed. The landscape of unemployment in the Twin Cities is now vastly different than it was just a year ago. In 2021, there were more job openings than there were workers to fill them. And competition for employees in entry-level positions was fierce.
In 2022, the unemployment rate in the Twin Cities is lower than it was in 2021. While it is still true that there are more jobs than employees to fill them, that’s not because more people are working. In fact, the workforce has shrunk. Therefore, the number of people who are unemployed has also fallen, but not as quickly as the number of job openings.
Consequently, because of the shrinking workforce, there are fewer unemployed people and more available positions. And that has led to increased competition for entry-level positions. In the past, employers would usually give preference to candidates who had experience in the field. But now, with so many job openings and so few candidates, employers are giving preference to those who have the skills they need, regardless of experience.
So what does this all mean for employers in the Twin Cities?
In this blog article, we will explore the changing landscape of unemployment in the Twin Cities and how it is affecting employers. We will also provide some tips on how employers can adapt to this new reality.
Understanding Unemployment and Labor Force Participation Rates
One of the most common questions we get asked about or for is a more detailed understanding of both the unemployment and labor force participation rate. How are these two numbers different? Do they both matter when considering the strength of the economy and job market? Let’s break it down.
The Bureau of Labor Statistics (BLS) is the government agency responsible for tracking unemployment rates in the United States. The BLS releases monthly reports on unemployment rates, which are calculated using a survey of 60,000 households. The BLS defines unemployed people as those who are not working but are actively looking for work.
The first thing to understand is that the unemployment rate is not a perfect measure of the health of the labor market. The unemployment rate only counts those who are actively looking for work. It does not count those who have given up looking or those who are working part-time but would prefer to be working full-time.
Labor Force Participation Rate
The labor force participation rate is a key economic indicator that measures the proportion of the population that is actively working or looking for work, including both employed and unemployed people. The civilian non-institutional population includes people who are 16 years old or older and are not in the military, prison, or an institution such as a nursing home.
This ratio is important because it can provide insights into the overall health of the economy and the level of unemployment. When the economy is strong, the labor force participation rate typically increases as more people are able to find jobs. However, during periods of recession, the labor force participation rate usually decreases as people become discouraged and stop looking for work.
The labor force participation rate is calculated by dividing the number of people in the labor force by the total population. It counts both the unemployed and those who are employed, regardless of whether they are working part-time or full-time.
The labor force participation rate can be analyzed further by breaking it down by age, gender, and education level. This can help to identify trends and understand how different groups are faring in the labor market. For example, if the labor force participation rate for men is declining while the rate for women is increasing, this could be a sign that women are gaining ground in the workforce. Ultimately, the labor force participation rate is a valuable tool for understanding the state of the economy and tracking changes over time.
The labor force participation rate rose steadily in the United States from the 1940s through the late 1990s, primarily due to the increased participation of women in the workforce. Since then, however, the rate has been on a downward trend, largely due to the aging of the population and other structural factors. The decline has been exacerbated by the COVID-19 pandemic, which led many workers to leave the labor force permanently.
Despite the recent decline, the labor force participation rate remains high by historical standards. In fact, it is still well above rates seen in other developed countries. This is due in part to the fact that many Americans are reluctant to retire, even when they have the opportunity to do so. As a result, the United States continues to have one of the highest rates of labor force participation in the world.
Together, these unemployment and labor force participation rates provide a clear picture of the health of the labor market. A low unemployment rate and a high labor force participation rate indicate a strong economy with plenty of job opportunities. By contrast, a high unemployment rate and a low labor force participation rate suggest a weak economy with few job prospects. Thus, the unemployment and labor force participation rates work together to tell us how competitive the labor market is.
The Historical Unemployment and Labor Force Participation Rate Trends
In order to better understand how the unemployment and labor force participation rates have changed over time, let’s take a look at some historical data for 7-county Twin Cities metro area.
The table below shows the unemployment rate and labor force participation rate for the 7-county Twin Cities metro area from 2018 to July 2022.
As we can see, the unemployment rate (blue) increased sharply in 2020 due to the pandemic. The labor force participation rate (orange) also declined during this time as people left the workforce. However, both rates have not had the same level of recovery.
The unemployment rate for the Twin Cities area has hit an unprecedented low. In July 2020, the unemployment rate was 3.8%. In July 2021, it declined further to 2.5%. And as of July 2022, the unemployment rate is an incredibly low 1.8%. This was the lowest unemployment rate ever recorded ever by the Bureau of Labor Statistics since they started recording this data in 1976.
The labor force participation rate, on the other hand, has not recovered as quickly. In July 2020, the labor force participation rate was 70.8%. In July 2021, it declined to 69.4%. As of July 2022, the labor force participation rate is still below where it was pre-pandemic, at 68.3%.
This is primarily due to the fact that many workers have been forced to stay home to care for children or other family members. In addition, many workers have simply chosen to retire early or take a break from the workforce altogether. As a result, the labor force participation rate is currently at its lowest level since 1978. While it is still too early to tell what long-term impact this will have on the economy, it is clear that the pandemic has had a major impact on employment in the United States.
Ultimately this has translated to a labor market where there are more job openings than there are people looking for work, let alone enough physical people to fill those roles. To be exact, there are almost 3 job openings for every 1 individual looking for work. This is a remarkable shift from just a few years ago and one that is having a profound impact on the labor market.
The most obvious consequence of full employment is that it becomes much harder for employers to fill open positions. With more job openings than there are people looking for work, employers have to offer higher wages and better benefits in order to attract and retain employees. This, in turn, puts upward pressure on inflation. Additionally, this can lead to bottlenecks in certain industries as employers struggle to find workers with the necessary skills.
The Future Landscape of Unemployment in the Twin Cities
The low unemployment rate and high labor force participation rate have created a very different landscape for unemployment in the Twin Cities. In the past, when the unemployment rate was high, there were many people looking for work and few job openings. This made it difficult to find a job, even if you were qualified.
Now, with the low unemployment rate and high labor force participation rate, the situation is reversed. There are more job openings than there are people looking for work. This means that employers are competing for workers instead of workers competing for jobs.
This shift will continue to cause issues in the three following areas:
1. Increasing Wages and Job Competition
The Minneapolis-St. Paul metropolitan area has long been known for its strong economy, and in recent years the Twin Cities have enjoyed low unemployment rates. Currently, the unemployment rate in the Twin Cities is just 2%, down from 3.1% a year ago. This tight labor market has led to increased competition for workers, and as a result, wages have begun to rise. Average hourly earnings in the Twin Cities for an entry-level warehouse worker have increased by 15% over the past year bringing the average hourly rate to $19 per hour.
The news that wages are finally starting to rise after years of stagnation is certainly welcome news for workers. However, it is important to keep in mind that this increase can put a strain on businesses. Many businesses have been operating on slim margins in recent years, and higher wages will eat into their profits. Additionally, higher wages are leading to inflation as businesses pass on their increased costs to consumers. This is particularly true for essential items like food and gasoline.
As a result, the increased cost of living is squeezing many households’ budgets. Nevertheless, the increased wages are helping to boost consumer spending, which is helping to offset some of the negative impacts of inflation. Overall, the recent increase in wages is having a mixed impact on the economy.
2. A Leaner Workforce
Minnesota’s workforce is projected to shrink in the coming years as baby boomers retire and fewer people enter the workforce. This shrinking workforce will make it even harder for employers to find qualified workers. The combination of an aging population and a declining birthrate means that there will be fewer people of prime working age in the future.
Already, there are more job openings than there are unemployed workers to fill them. The situation is only going to get worse as the baby boomers continue to retire. The shrinking workforce will have a ripple effect on the economy, making it harder for businesses to expand and lead to slower economic growth.
The shrinking workforce will also put pressure on the state’s social safety net programs. As the number of people paying into these programs decreases, the burden on those who remain will increase. This could lead to higher taxes or cuts in benefits. The shrinking workforce is a major challenge that the Twin Cities will need to address in the coming years.
3. An Ever-Widening Skills Gap
To no one’s chagrin, the current state of the economy has led to a situation in which there are more job openings than there are people looking for work. This shift has caused issues for employers by making it more difficult to fill current job openings.
The issue is exacerbated by the fact that many individuals in the workforce are not qualified for the jobs that are available. The result is that employers are forced to choose from a smaller pool of applicants, which often leads to them hiring less qualified employees. This can have a negative impact on the quality of work, as well as employee morale. In order to address this issue, employers need to be willing to invest in training and development programs that will help unemployed individuals gain the skills necessary to fill current job openings.
The skills gap is a major challenge facing the Twin Cities workforce. In order to address this issue, employers and employees will need to be willing to invest time and resources into training and development programs. Only then will the Twin Cities be able to close the skills gap and ensure that its workforce is prepared for the future.
The labor market has undergone a major shift in recent years and will continue to become more exasperated in the years to come. This means that there will continue to be more job openings than there are people looking for work. In effect, employers will continue to compete for workers instead of workers competing for jobs. The trend is being driven by a number of factors, including an aging population and declining birth rates.
As a result, the pool of potential workers is shrinking, even as the demand for labor remains high. This shift will have major implications for businesses and workers alike. For businesses, it will become increasingly important to offer competitive wages and benefits in order to attract and retain talent. For workers, it will be increasingly important to develop skills that are in high demand. The labor market is undergoing a major shift, and those who are able to adapt will be well-positioned for success.
Preparing for the Future of Hiring in the Twin Cities
According to a recent study by Lightcast, the Twin Cities workforce is facing a number of challenges in the coming years. The study found that the number of workers in the region is expected to decline by nearly 10 percent by 2030. At the same time, the number of job openings is expected to increase by less than 5 percent. As a result, competition for jobs is expected to become more intense.
In order to prepare for the future of hiring in the Twin Cities, employers need to be aware of the challenges that they will face. They also need to be willing to invest in hiring strategies that will help attract and retain employees in a competitive market.
Despite these impending challenges, there are five key activities that any organization can do to prepare for the future of hiring in the Twin Cities:
1. Target Candidates That are Already Working
When it comes to recruiting new employees, many businesses focus on targeting those who are unemployed. While this may seem like a logical solution, it can actually lead to a number of problems. First of all, unemployed individuals may not be the most qualified candidates. After all, they may have lost their previous job due to poor performance or a lack of skills. In addition, unemployed individuals may also be more likely to be a poor fit for your company’s culture. After all, they may not have the same commitment to the organization and may be more likely to job-hop.
By contrast, if you’re looking for the best candidates, you need to look for those who are already employed. Many of the individuals you are looking for may not even be actively searching for a new job. To find these individuals, you will need to use a targeted recruiting strategy. This may include attending industry events or using a recruiter who specializes in your industry. By targeting those who are already employed, you can be sure that you are finding the most qualified candidates. Not only will these individuals be more likely to have the skills you are looking for, but they will also be more likely to be a good fit for your company culture. As a result, using a targeted recruiting strategy is the best way to find qualified candidates who are already employed.
2. Sell Meaning and Satisfaction Beyond Pay
Contrary to popular belief, pay is not the number one priority for most job seekers. Studies have shown that money is only the fifth most important factor when it comes to job satisfaction. We’ve found that the hourly pay rate serves as an invitation to get a prospective candidate to listen and entertain an opportunity but does not determine whether or not they will accept an offer.
So, what are the most important factors when it comes to job satisfaction? We’ve found that the two important factors are: meaning and satisfaction.
Finding Meaningful Work
When it comes to finding a job that is meaningful, many individuals are looking for an opportunity to make a difference. They want to work for an organization that is doing something they are passionate about. In addition, they want to feel like their work is making a difference in the world. However, there are also many people who find meaning in their work without necessarily working for a “cause.” They may derive satisfaction from the challenge of their work, the opportunity to use their skills and talents, or simply the fact that they are helping to support themselves and their families.
Ultimately, the key is to position your job openings in ways that align and speak to the values of your ideal candidates. This means understanding what motivates them and then using that information to sell the opportunity.
Finding Satisfying Work
In addition to finding work that is meaningful, many individuals are also looking for work that is satisfying. To them, this means finding a job that they enjoy doing on a daily basis. It also means finding a job that offers them a good work/life balance. For example, if you are looking for a job in the customer service industry, you may want to find a company that offers flexible hours and the opportunity to work from home.
In order to attract and retain the best employees, you need to offer more than just a paycheck. Employees are looking for meaning and satisfaction in their work. They want to feel like they are part of something larger than themselves. To sell meaning and satisfaction, you need to focus on your organization’s mission and values. Make sure that your employees are aware of the impact they are making on the world.
By selling meaning and satisfaction beyond pay, you can be sure that you are attracting the best candidates. These individuals will not only be more likely to accept your offer, but they will also be more likely to stick around for the long haul.
3. Speeding up the Timeline From the Application to Offer
Companies often underestimate the importance of speed when it comes to hiring new employees. Traditionally the hiring process can be a lengthy one, and it’s not uncommon for openings to remain unfilled for weeks or even months. However, the longer a position remains vacant, the more likely it is that your top candidates will accept another offer. This is especially true in today’s job market, where candidates often receive multiple offers.
For example, the average entry-level candidate in the light industrial spaces has 4 job offers within 48 hours of applying to the original job they found. In order to increase your chances of making an offer that a candidate accepts, you need to speed up the timeline from the application to the offer.
There are a few ways to do this:
Identify the Key Qualifications
When you’re hiring for a new position, it’s important to take the time to identify the key qualifications that are required for the role. This will help you to weed out candidates who are not qualified for the job, and it will also help you to focus your search on those who are more likely to be a good fit. Once you’ve identified the key qualifications, you can use them to develop interview questions that will help you to assess each candidate’s suitability for the role. By taking the time to identify the key qualifications for the position, you can ensure that you hire the best possible candidate for the job.
Don’t Wait for the Perfect Candidate
The second step is to not wait for the perfect candidate. It is important to remember that there is no such thing as a perfect candidate. There will always be some qualifications that are more important than others. Instead, make an offer to a strong contender as soon as possible. This will increase your chances of making an offer that the candidate accepts.
For example, if you are looking for a customer service representative, you may be willing to overlook a lack of experience if the candidate has a pleasant personality. The key is to identify the qualifications that are most important for the position and to make an offer to a strong contender as soon as possible. By doing this, you will increase your chances of making an offer that the candidate accepts before entertaining other opportunities.
Keep the Lines of Communication Open
The third step is to keep the lines of communication open throughout the process so that candidates always know where they stand. The recruitment process can be a lengthy and complex one, with many different stages and touchpoints. Candidates may be interviewed by several members of staff, and their progress through the process can be tracked on various systems.
It is important that all stakeholders are kept up to date with the latest information and that any changes are communicated clearly. Keeping the lines of communication open will help to ensure that candidates feel informed and valued and that they are able to give their best performance at each stage of the process.
By following these three steps, you can be sure that you are making the most of your entry-level talent pool. By speeding up the timeline from application to offer, you will increase your chances of making an offer that a candidate accepts. And by keeping the lines of communication open, you will ensure that candidates feel valued and informed throughout the process.
4. Focus On Candidate Skills Rather than Qualifications
When it comes to finding the right candidate for a job, employers often place too much emphasis on qualifications. While it is important to find someone who has the necessary skills for the job, it is also important to consider a candidate’s soft skills and cultural fit. After all, the best candidate is not always the most qualified. Instead, the best candidate is the one who will be most successful in the role. Future success requires more than just the ability to do the job. It requires a good work ethic, the ability to work well with others, and the ability to adapt to new situations. In other words, it requires a candidate who has the right attitude and who will fit in with the company’s culture.
For example, a candidate who is a perfect match for your company’s culture is likely to be more successful and engaged than a highly qualified candidate who doesn’t share your company’s values. One way to assess a candidate’s fit with your company’s culture is to ask behavioral interview questions. These questions ask the candidate to describe how they have behaved in past situations, which can give you insights into how they would behave in similar situations at your company. Another way to gauge cultural fit is to ask the candidates about their hobbies and interests outside of work. Do their interests align with your company’s values? Finally, pay attention to how the candidates interact with you and other members of your team during the interview process. Do they seem like they would be a good fit with your existing team?
So when you’re evaluating candidates, don’t get too caught up in their qualifications. Instead, take a step back and consider whether they have the right personality and attitude for the job. After all, that’s what will ultimately determine whether they are successful in the role.
5. Invest in Training and Development
As the skills gap continues to widen, it is important for employers to invest in training and development programs. This will help ensure that your employees have the skills necessary to succeed in the future. Training and development programs will also help you attract and retain top talent. By investing in your employees, you are sending a message that you are committed to their success. Top talent wants to work for companies that are invested in their future. By offering training and development opportunities, you are making your company more attractive to top talent.
Employees who feel like they are constantly learning and growing are more likely to stay with a company for the long haul. So, not only will training and development programs help you attract top talent, but it will also help you keep them once they’re onboard. A well-designed training program will not only teach new skills and knowledge but will also give employees a chance to try out different roles and develop their careers within the company. There are a number of different ways to design training and development programs, but some common elements include mentorship programs, tuition reimbursement, and professional development workshops. By offering these kinds of opportunities, you’ll show your employees that you invest in their growth and development. And that’s a powerful incentive for anyone considering a job offer.
Winning the War on Talent Today and in the Future
As the Twin Cities continue to grow, so makes the demand for qualified workers. In order to meet this demand, employers will need to stay ahead of the curve when it comes to hiring. To be successful in attracting and retaining talent requires a different approach than in the past. It’s no longer enough to post a job ad and hope for the best. You need to be proactive in your approach. By understanding the changing landscape of unemployment and taking steps to address the skills gap, you can position your company as a leader in the war for talent.
The key is to understand what factors are driving the change and how you can adapt your recruiting strategy accordingly. The first step is to identify the source of your talent shortfall. This can be due to retirements, attrition, or simply not enough people with the right skillset applying for open positions. Once you know where the deficit lies, you can develop a plan to attract and retain top talent. This may involve offering competitive salaries and benefits, providing training and development opportunities, or creating a culture that employees want to be a part of.
Staying ahead of the curve requires continuous effort, but by making smart decisions about your recruiting strategy, you can ensure that your company has the talent it needs to succeed. But with the vast array of recruiting options available today, it can be tough to know where to start. That’s why it’s important to make smart decisions about your recruiting strategy. By focusing on quality over quantity and on building a strong employer brand, you can ensure that your company has the talent it needs to succeed.
Investing in a quality recruitment process is essential if you want to attract top talent. But sifting through resumes and conducting interviews can be time-consuming and expensive. So it’s important to have a clear idea of what you’re looking for before you start the recruitment process. Define the skills and experience that are essential for the role, and make sure that your recruitment team is aware of these criteria. That way, you can avoid spending time and money on candidates who aren’t a good fit for the job.
Building a strong employer brand is another key element of a successful recruiting strategy. Candidates today are bombarded with job offers, so it’s important to make your company stand out from the crowd. promoting your company as a great place to work, and highlighting your unique culture and values, will help you attract top talent and convince them to join your team.
By making smart decisions about your recruiting strategy, you can ensure that your company has the talent it needs to stay ahead of the curve in the war on talent.
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