There is a domino effect that is impacting labor shortages and it begins with lack of child care services. Because of a lack of child care services, a potential worker, man or woman but often women, end up having to give up working to take care of their kids. And because someone is staying home taking care of kids it means there is one less person to fill labor shortages. In Minnesota this is a core problem and an article in the Owattona has some insight:
“People don’t seek to work at a child care center, because it doesn’t pay well,” said Kate Anderson, Director of the Anders Early Learning Center in Cleveland.
She continued, “I don’t know how many people are out there that want to care for others, and so they get jobs at Starbucks or Target where they have perks maybe or can go to McDonald’s for more money than what a child care center can pay. We still need people to care for others, whether it’s in our industry or the nursing home industry or nursing, and we’re not pulling people into this field anymore.”
Owattona.com
Kate Anderson hits the nail on the head, people don’t want to spend time taking care of other people and that goes for children and the elderly, two groups that are being ignored in favor of other age groups. This particular problem will only grow worse as more and more boomers retire and deplete the labor force over the next 7 years. By 2030, all baby boomers will be over the age of 65 and many will opt to retire or leave the workforce yet still deriving income from social security and getting healthcare benefits from medicare or medicaid.
The Minneapolis Fed recently published an article outlining the core problem in Ninth District states:
The underlying problem is labor force participation, according to the experts. That’s the percentage of the total population that’s working or looking for work. Participation has fallen in every district state since peaking two to three decades ago, a phenomenon linked to aging populations.
Richelle Winkler, a Michigan Tech sociology professor, said the population of Michigan’s Upper Peninsula has been in decline since the 1920s (the U.P. is the only part of the state that’s in the Ninth District). In earlier years, this decline was mostly a result of mines, mills, and military bases closing, which forced residents to find work outside the region. In recent times, however, the main culprit has been deaths outnumbering births.
“In the last decade, more than half of the region’s population loss was because of natural decrease,” she said. Only one of the region’s 15 counties had more births than deaths in that time, she said. With the population aging, labor force participation among U.P. counties has fallen as low as 40 percent, she said.
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Another way of looking at how aging affects the workforce is by looking at the “prime age” population—those ages 25 to 54—that is the mainstay of the labor force. Tessa Conroy, an economic development expert and assistant professor at the University of Wisconsin–Madison said this population is shrinking and will continue to shrink for the next several decades, especially in rural areas.
Some employers are asking how they might open a child care center themselves, and some are offering space for a child care provider, Conroy said. In particular, major institutions such as hospitals and school districts are coming to the table, she said.
“With an issue like child care, we used to think of that as a household issue or a family issue or even a women’s issue,” she said. “Now we’re starting to see it as an economic issue, as a labor force issue. And employers are thinking about ways that they can be part of the solution.”
Minneapolis Fed
According to NAR, Minnesota lost 19,400 people in 2022 and that’s a number of people the state can’t afford to lose. Couple lost of people to migration, lack of child care and dwindling labor participation and the future doesn’t bode well for Minnesota or the companies based there.
Stay tuned, stay profitable, and stay solvent…