Before we begin, a thought on Juneteenth. Because it’s been on my mind all week – and through this past weekend. And now, of course, this historic date is a federally recognized holiday. On June 19, 1865, the last remaining slaves in the United States were freed. A day we all should honor as a country, yes? I appreciate AG Ellison’s comments from Saturday: “The arc of the moral universe bends towards justice, but it doesn’t happen on its own. It happens through us and the work we do together to build a better future.” Juneteenth is important for all of us, and reminds us of both the sacrifices behind us and the need to recommit ourselves to the struggle for true liberty and justice for all.
Let’s start today where we finished last week: how far and how quickly will inflation increase? I quoted CNBC’s Jeff Fox: “If the Federal Reserve’s benign view on inflation prevails, employment will be key.” The bottom line? Nationally we have 10M potential workers still considered unemployed and 9.3M open jobs (the highest number ever recorded). Not everyone is in a hurry to come back to the office, which is an indication of a longer-than-desired ramp up to full employment levels. The longer it takes to get back to full employment, the more it will cost employers in the form of wages. Higher wages trigger longer term inflationary pressures that the Fed is trying to avoid.
The challenges with labor participation are many: childcare shortage, transportation concerns, a host of worries related to health, basic inefficiencies in the job search process, and the benefits cliff. And, of course, the growing desire for a more flexible work environment. Lots of people simply don’t want to “go back;” employees are pushing for continued flexible work environments. On that final note, DEED Commissioner Steve Grove offered good commentary: “You’ve pinpointed a huge trend in the future of work that has only been accelerated by the pandemic. This is a moment in our nation’s economy of extraordinary power for workers. Workers are in the driver’s seat. Employers who are nimble and flexible will have the best opportunity to succeed.”
Grove went on to talk about several long-term priorities for DEED to maximize long term growth in our workforce and participation rate (this was in discussion format, I’m summarizing here):
1. Assist people in finding work, getting back into the market. There are a whole host of factors that impact a successful search; our job is to eliminate as many hurdles as possible, and work with businesses to identify their needs;
2) Match the skills we need over next 3-5 years (and promote training programs);
3) Develop a strategy to attract workers to MN;
4) Track and promote the jobs in our state where hybrid can be possible, especially as we recruit from outside MN; and
5) Encourage more to start their own businesses. Historically, economic turmoil translates to more business start-ups. And Minnesota has the highest business survivability rate in the country.
The June 2021 issue of Minnesota Economic Trends offers a look at Minnesota’s labor market and employment trends. Why can’t employers find workers?
It is clear that there is a lack of alignment of job seekers with the right interests, skills, scheduling availability, and other requirements with the types of openings that employers need to hire for now. Employers will need to reach out in new ways, perhaps expand eligibility criteria and provide on-site training.
Finally, the “benefits cliff.” Some people “can’t afford” to go back to work. This is real, people, and is inordinately impactful for single mothers and People of Color, who carefully balance public assistance with income. Because any increase in income might subsequently reduce benefits – and actually reduce their income. The Fed – Richmond recorded a podcast in January discussing this.
As I review economic and workforce forecasts, they are largely very optimistic. But I remain concerned about alignment between the workforce and the jobs available. My encouragement? The best successes I have seen come from companies who are following the “hire for talent, train for skill” approach.
See you in the trenches.
MDH reported on Friday that the positivity rate has dropped to 1.8%.
As of Saturday, 45.4% of the U.S. population is fully vaccinated. For Minnesota, we are at 50.2%. And the slog continues, as weekly vaccination number continue to decline. It’s increasingly unlikely that Minnesota – or the U.S. – will meet its July 70% vaccination goal. As of Friday, approximately 65%^ of Americans have received at least 1 dose.
CDC: Delta variant now 10% of US COVID-19 cases. This variant first was identified in India, and is sweeping through the UK now. Is highly transmissible, with a risk of more severe illness.
Nearly all new MN COVID cases, hospitalizations and deaths were unvaccinated. State and federal data shows the chances of contracting the coronavirus after being fully vaccinated are miniscule and getting a severe case or dying are even smaller.
Minnesota’s May Jobs Report: Minnesota added 14,800 private sector jobs in May. For the 5th straight month, Minnesota gained jobs. Unemployment rate is now down to 4.0% with labor force participation up to 67.9% (over the long term, Minnesota had carried nation-leading numbers of over 74% pre-pandemic). U.S. unemployment rate is 5.8%, with labor force participation rate at 61.6%. Minnesota lost 416,300 jobs from Feb-Apr 2020, and has since gained 249,700 jobs.
The Small Business Administration recently suffered a court defeat over its ability to prioritize minority- and women-owned businesses in its $28.6 billion Restaurant Revitalization Fund. The Targeted EIDL Advance grant program could be next.
More on The Spector of Inflation, tracking on our conversation from last week’s blog. And the stock market reacts as the Fed indicates the potential for an interest rate increase in late 2022.
This was an interesting read for me: “U.S. Spending Patterns Signal Commitment to Cars and Gas, Brightening Outlook for Suburbs.”
Deal finally struck for businesses damaged by riot, but is it enough? The just-released jobs/economic development bill includes $150M in business relief: $80M for a new “Mainstreet revitalization program” (allowing for loans up to $2M and up to $750K in grants for rebuilding projects), and $70M for COVID losses; makes youth workers eligible for unemployment benefits starting in July of 2022, . The bill also is allowing for businesses that were missed in 2 previous rounds of state aid to enter into a lottery for grants ranging between $10-25K.
Tax cuts prevail over tax hikes at Capitol. A proposed budget agreement will total about $52B, with no new taxes and tax cuts – the bulk of which comes from waived state taxes on federal assistance during COVID-19. It involves forgiven PPP loans for businesses and extra unemployment aid received by workers. Interesting notes in this Pioneer Press article on the “rollercoaster narrative” of the economic impact – worth a read.
We’re still watching: what will a proposed bonding bill include?
Read more updates in our weekly Chamber Advocacy Update.
Want to get some tips on navigating today’s staffing challenges? Join us virtually on July 8.
Would you like to hear how others Dream Big and Wildly Succeed? Join us virtually on July 14 to listen to Ila Borders, a author, coach, scout, and fighter of gender barriers. She’s hosted by Mike Veeck of the St. Paul Saints, and you are sure to be inspired.
Find Your Blue Ocean Strategy. Don’t compete; instead, tap into a whole new market of potential customers by focusing on what’s missing. You might remember the 2005 book, Blue Ocean Strategy, Expanded Edition: How to Create Uncontested Market Space and Make the Competition Irrelevant. Its principles are even more timely today. And it certainly aligns with our philosophy of abundance: “Instead of struggling to survive in the bloody shark-infested ‘Red Oceans’ of vicious competition, why note move to the ‘Blue Oceans’ where there was little or no competition?” Though also a bit dated, this Forbes 2017 article is worth a read. Your Chamber is thinking through how to do this as well.
Flint Hills Resources Pine Bend Refinery in Rosemount has earned the U.S. Environmental Protection Agency’s ENERGY STAR certification for the second year in a row. This certification signifies that the refinery performs in the top 25% of similar facilities nationwide for energy efficiency. In the past five years, Pine Bend has improved its energy efficiency by 10%. The refinery supplies most of the transportation fuels used in Minnesota. Read Flint Hills Resources’ ENERGY STAR certification.
Judge won’t dissolve contract between Ramsey County and Arden Hills over Rice Creek Commons development.
Hillcrest community engagement continues this summer with neighborhood conversations led by the Greater East Side Community Council. Each session will focus on a single topic and be a solution-based conversation. Click here to be directed to their online registration form; you pick or choose the ones you are most interested in attending.
Want to know what’s up with Riverview? Attend a June 23 Virtual Open House to get the latest update. Also, if you would like to participate in the public comment opportunity through June 25, submit through this Online submission form. View the report summary (PDF) here.
James J. Hill Center will sell its historic St. Paul building to developer. Breaking news this past week. The buyer is Peter Remes of the Minneapolis development firm First & First, a specialist in repurposing older properties.