January, 2019

By Paul Cerkvenik
 

To secure Minnesota’s future economic vitality, our state needs to help more students earn postsecondary degrees after high school. We’re facing slowing growth in our workforce, while at the same time the demand for college-educated employees is increasing. Workforce shortages are already here in some fields and will only grow. Our challenges are compounded by Minnesota’s persistent educational attainment gaps — gaps that are tied to income, race and ethnicity.

To meet future workforce needs and close attainment gaps, Minnesota must reduce economic barriers to educational success for lower- and middle-income Minnesotans. State leaders can take an important step this legislative session to address these needs by investing in the Minnesota State Grant program, which lowers the cost of college by providing need-based grants to one out of four Minnesota college students. (View details on the legislative request.)

Slowing workforce growth

Between the 1980s and the 2000s, Minnesota’s workforce grew on average by more than 31,000 workers per year. According to Minnesota’s state demographer, our labor force growth will dramatically slow in the next three decades, due to a combination of an increasing number of workers reaching retirement age and little to no growth in the number of younger people entering the workforce. The result is an average growth rate of only 8,000 workers per year in the 2010s, dropping to 4,000 per year in the 2020s.

Minnesota Chamber of Commerce President Doug Loon said recently that “the mounting challenge of filling job vacancies is a common thread in our business benchmarks.” There is already a worker shortfall, with 5.7 percent of job vacancies unfilled in Greater Minnesota and 4.8 percent unfilled in the seven-county metro area. The worker shortfall affects both new businesses and those that want to expand. The shortfall between the supply of and demand for our workforce in the broader Twin Cities region alone is expected to reach 100,000 in a few years, according to a Peter Frosch, senior vice president, Greater MSP. And according to the Center for Rural Policy and Development, this is a big hurdle for employers in Greater Minnesota as well.

The state’s employers need communities with an abundant supply of well-educated citizens who can bring knowledge, talent and creativity to the business challenges of our globalized economy. With a workforce that is growing slowly, it will be increasingly difficult for Minnesota employers to find and hire the employees they need.

The expanding need for skilled workers

In order for Minnesota’s economy to prosper, we must increase the level of educational attainment of our young people and graduate more individuals with degrees and credentials to capture future employment opportunities and to meet the needs of our business community.

Economists predict that the rapid pace of technological innovation and globalization means that the jobs of the future will require a more highly educated workforce. According to Janet Yellen, former chair of the Federal Reserve, “economists are not certain about many things, but we are quite certain that a college diploma or an advanced degree is a key to economic success.”

According to the Georgetown University Center for the Study of Education and the Workforce, Minnesota will need 74 percent of its workforce to have at least some college education by 2020, and more than half of those workers will require a bachelor’s degree or higher. According to data from Greater MSP, the Twin Cities ranks only 6th among 12 peer markets for the percentage of our population holding a bachelor’s degree or higher.

Addressing educational attainment gaps

Against the backdrop of a labor force that is barely growing, it is clear that our economy needs every worker to be fully prepared. If we are to remain competitive, Minnesota simply cannot afford to waste the potential of anyone in our state. For all of Minnesota to continue to compete economically in the next decades, we must further boost our level of educational attainment.

That’s why Minnesota — like many states around the country — established a statewide postsecondary education attainment goal: by 2025, 70 percent of Minnesotans age 25 to 44 should have some form of postsecondary degree or certificate. We are substantially short of and not on track to meet our attainment goal: today only about 60 percent of Minnesotans have some form of postsecondary credential.

At the same time that Minnesota’s labor force growth is slowing and the economy needs more skilled workers, too many Minnesotans — particularly those from disadvantaged families — are faced with many barriers to achieving their full educational and economic potential.

Minnesota students from lower-income families tend to have lower academic attainment than their classmates from higher-income families, resulting in increased barriers to college access and degree attainment. Nationally, only 11 percent of students from the lowest income quartile and only 20 percent from the second income quartile earn a four-year degree by age 25. In contrast, 58 percent of students from the highest income quartile earn a four-year degree by age 25.

And these students are disproportionately students of color and from families where they are the first to go on to college. Minnesota’s education attainment gaps are among the worst in the nation. An estimated 66 percent of white and Asian Minnesotans ages 25-44 have a certificate or higher credential, while other racial and ethnic groups have far lower attainment rates.

 

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We can look at differences tied to economic status as well: In Minnesota only 20 percent of high school graduates eligible for free or reduced price lunch earned a bachelor’s degree within eight years, compared to 46 percent of students not eligible for these programs. Clearly, all colleges need to do better, both public and private.

These attainment gaps represent a major challenge to preparing students to enter the workforce with the skills necessary to meet the state’s current and future needs. The educational success of all students is essential to meeting Minnesota’s future workforce needs. It’s simply not possible for Minnesota to meet its 70 percent attainment goal without closing these attainment gaps.

Minnesota must reduce economic barriers to educational success for lower- and middle-income Minnesotans. When more students succeed, Minnesota will have a stronger economy and stronger communities.

The Council’s 2019 Legislative Request asks Gov. Tim Walz and the Legislature to prioritize investment in the State Grant program. This will help higher education institutions across the state — both public and private —significantly contribute to closing attainment gaps and strengthening our future workforce. View more background and details.