Minnesota businesses seek solutions for aging rural workforce
ST. PAUL — As the median age of Minnesotans creeps higher, the state's changing demography signals economic struggles for rural communities.
Employers in small towns and rural parts of greater Minnesota face the challenge of replacing a wave of baby boomers approaching retirement as a burgeoning number of younger residents leave rural areas.
A recent study by the State Demographic Center found that the number of deaths in rural counties has exceeded the number of births since 2000, driving down the population in each county by an average of 200 people per year.
Between 2000 and 2015, rural counties and counties with a mixture of remote areas and towns lost more people from migration than they gained.
And the number of people leaving these areas continues to grow.
While the net loss to outmigration in each of these areas totaled about 400 people each year between 2000 and 2010, the number has since increase to about 1,700 out-migrations from 2010 to 2015.
"When we're talking about the change in population in those areas, most of the factors are outside of the conscious control of area residents," said State Demographer Susan Brower. "Most of the growth is being driven by births and deaths. When you have an older population, as we do in our rural areas, it's much harder to grow from births alone."
More than 1 in 20 people who live in rural and small-town counties are older than 80. While people aged 50 and older account for about 32 percent of the population in urban areas, the age group comprises up to 44 percent in rural counties.
"As we look into the coming decades, who will be there as the group enters into retirement?" said Andi Egbert, assistant director of the State Demographic Center and co-author for the study. "Who will be there to keep main street thriving, to maintain a high quality of life, to fulfill all the needs of the community? I think it does raise concern."
Fred Sayler, who works on recruitment at KLN Family Brands in Perham, said the company faces replacing 15 to 20 technically-skilled employees who are retiring in the next five years.
The vacant positions, he said, will be difficult to fill.
"A number of electricians and our controls people have been working here for 40 years, and that's a tremendous amount of talent, education and experience that will be walking out the door," he said. "It's very much a concern, and that's what's got us being proactive in how we're going to approach this."
Hiring has hit a lull throughout the area, but Sayler said the company wants to offer incentives for the vocational degrees needed to replace the "silver tsunami" of retiring employees.
These efforts include internships, tuition aid at technical colleges and partnerships with local high schools to expose students to robotics, automation and programmable logic.
For Digi-Key, a 3,300-employee manufacturer based in Thief River Falls, maintaining a robust workforce means working with the area's demographics.
Rick Trontvet, vice president of human resources with Digi-Key, said the company's part-time positions and flexible scheduling options often attract retirees or people seeking a second job.
"We have a little bit more of a sparse population, so we try to create various types of jobs and schedules and opportunities for people so we attract all kinds of demographics," he said.
Like most rural communities throughout the state, Thief River Falls struggles with a shortage of workforce housing. Trontvet said the company has partnered with the city to encourage development of apartment buildings.
Digi-Key also offers a bus program. About 125 employees are shuttled in from Crookston, Bagley and Grand Forks, N.D.
"It's another labor market for us to tap," Trontvet said. "These cities are just on the edge of a commuting distance for our people. Driving an hour to work in a rural area is kind of challenging for some people, but if we give them a bus ride to work, it makes it a little bit easier."
Taxes a factor
Republican lawmakers agree that taxes will be among factors evaluated as they look to bolster greater Minnesota's workforce.
"We'll look at what is our tax structure like, what kind of grants should we consider trying to do to entice people to come to rural Minnesota," said Senate Leader Paul Gazelka, R-Nisswa.
Rep. Pat Garofalo, R-Farmington, chairs the Job Growth and Energy Affordability Policy and Finance committee. He said he would like to see a more retiree-friendly tax policy to keep Minnesota's population here.
"Those are the workforce trainers of the next generation," he said. "That experience and that knowledge, we want to keep in Minnesota."
Garofalo also said he would support legislation to strengthen vocational training and technical skills.
"Whatever it is we do, we need to be making sure that those seeking post-secondary education are learning skills that the private sector needs, not the ones that benefit a few college professors," he said.
The State Demographic Center study found:
• Entirely urban counties accounted for about 80 percent of the state's population growth from 2000 to 2015. On average, these counties gained about 30,700 per year.
• About 73 percent of Minnesota's population, or 3.9 million people, live in urban areas.
• About 7 percent of Minnesotans, or 390,000 people, live in or near towns with fewer than 10,000 people. About 8 percent of the population, 434,000 people, live in more remote areas.
• Minnesota will increasingly rely on migration, particularly from foreign countries, to grow in the future. Counties with a town/rural mix lost an average of 2,550 people due to net domestic migration, but gained an average of 800 people from net international migration. Counties with an urban/town/rural mix lost 2,700 people from domestic migration and gained 1,050 from international migration. Entirely urban counties gained a whopping 12,600 from international migration and lost about 1,600 to domestic migration.
• Foreign-born residents currently make up about 11 percent of the state's workforce.
• People working full time in rural areas are more than twice as likely to live in poverty as those who live in urban areas. The median income in urban areas is about $10,000 more than any other geography type.