A look at the problems facing southern Minnesota businesses

This Wednesday, I attended a workforce forum hosted by the Region Nine Development Commission. The forum was attended by several area leaders representing several cities, from Fairmont to St. James to Le Sueur. There was also someone from South Central College, the Southern Minnesota Workforce Center, the MN Department of Employment and Economic Development and the Minnesota River Area Agency on Aging. All of us had gotten together to discuss one vital question:

What are the biggest workforce problems facing southern Minnesota businesses?

Over the next two hours, the conversation skipped from topic to topic, but some larger points came out.

1. There’s a lack of workers.

After so many years of American workers not being able to find jobs, suddenly there are too many job openings and too few skilled workers. One forum attendee said that he’s posted his latest job opening three times in the hopes of finally finding someone who’s qualified.

“We’re desperate for workers,” said Elaine Spain, of Minnesota River Area Agency on Aging.

And Mark Olchefske, of South Central College, added, “We don’t have enough bodies. If we have them, we can train them.”

A big part of the problem stems from cultural expectations. Parents now expect their children to go to college after high school, and about 65.9 percent do. All through high school, students are taught that you need a college degree to be successful. On the other hand, tech schools are looked down on as something only for losers who couldn’t hack it in “real” college.

But check out these statistics: The Washington Post reported that only about 27 percent of college grads are currently working in jobs related to their major. And the Economic Policy Institute reported that about 8.5 percent college grads are unemployed.

While I couldn’t find firm stats on how many tech school graduates are employed right now, I do know that several businesses and cities have talked to me about the distressing lack of tech workers in the area. And I know that tech grads earn pretty good salaries on average: Plumbers make around $50,000 and carpenters make around $45,000.

Many of the cities represented at the forum are already working on this problem. Fairmont hosts “Area Career Exploration Day” every year, where students have the chance to meet with representatives from several industries. Some schools take students along on “tours of manufacturing” to see what factories really do.

Attendees said it’s important to equip high school teachers with information about the career field so they can share opportunities with their students.

“Teachers need to know what’s out there,” said school board representative Mike Pfeil. “Industries aren’t telling teachers what to teach.”

Attendees also expressed concern about how few high school students are gaining work experience before they graduate. Youth labor force participation rates have steadily declined over the past 15 years (due in no small part to the recent recession). Participation rates for youth 16-19 years old has fallen to 53.3 percent compared to 67 percent in 2000.

If students don’t work in those jobs, they have less exposure to possible careers once they graduate from high school.

2. It’s difficult to attract workers to rural areas.

One of the most popular reasons these attendees thought workers weren’t applying to their jobs was because people tend to be more attracted to big city positions, which often offer larger paychecks. (Of course, those pay checks don’t stretch as far if the city’s cost of living is high.) Another reason mentioned was the fact that people just don’t know what’s out there. If there were more exposure for these rural positions, more people would probably apply.

“There’s a lot of information in our backyard that people don’t know about,” said Heather Gleason, of the Southern MN Workforce Center.

At the same time, Region Nine’s Nicole Griensewic Mickelson said it may be more important to stop focusing on the “brain drain” (local college students moving away after graduation) and turn our attention to “brain gain.” She defined this as letting college grads move away for a few years to get some experience but then attracting them back to their hometowns later on.

To do that, rural areas and small cities need incentives, such as strong networks (maybe alumni networks) and affordable housing. But the latter can be a real problem, which leads us to…

3. Cities are struggling to offer enough housing to new workers.

Some of the forum attendees talked how their cities struggled to offer enough housing for potential workers. If there wasn’t housing available near the work sites, people didn’t want to drive from out of town when they could be driving to the cities just as easily.

One of the reasons it’s harder to offer new housing is because the cost of building these projects has increased exponentially over the years. Contractors can’t find banks willing to finance the projects.

“We have lots of lots,” said Steve Rohlfing, Le Sueur County Commissioner. “How do we encourage people to build on them?”

Judd Schultz, of the Minnesota Valley Action Council, added, “Until property values rise in Mapleton, people can’t build homes.”

It’s gotten to the point where some cities are practically giving their lots away. Gaylord is willing to sell its lots for $1 to buyers who have a plan to construct a home.

Other cities have housing, but it’s aging. Homeowners struggle with problems like outdated furnaces and old plumbing. The question is whether to renovate it or to demolish it and start anew.

Some ideas suggested during the meeting were finding ways that businesses could help fund housing projects in exchange for tax credits, offering a grant program to demolish old housing stock, incorporating more mobile homes, and offering a grant program to assist new workers with housing upgrades and their down payments (similar to an initiative started in northern Minneapolis).

4. Potential workers are stymied by a lack of available transportation.

Not all workers have their own vehicles, which makes intra-city transportation all the more important. While some areas in southern Minnesota have transit systems (such as the Greater Mankato Transit System and the Faribault County Prairie Express), smaller cities are often left out of the loop. That can make it difficult for a person who lives in St. James but works in St. Peter.

Forum attendees discussed the possibility of setting up bigger transit networks that would connect these smaller cities and make it easier for workers to move around. MnDOT is already looking into the possibility of expanding transit systems, particularly through rail. But the question was raised about cities working together to build their own connections.

So there you have it. These are the four biggest concerns facing southern Minnesota cities and businesses right now. The next question is:

What are we going to do about them?

Grace Webb

A former Editor of Connect Business Magazine