Job seekers drop out in Duluth leaving smallest workforce in decades

DULUTH – Thousands of people have stopped looking for work in the Duluth metro area, part of a state and national trend of declining workforce participation as the pandemic continues to hammer the economy.

Even as the unemployment rate in St. Louis, Carlton and Douglas (Wis.) counties improved to 6% in September, there were 8,000 fewer people working or looking for work compared with last year, according to state figures released this week. That's 5.5% of the workforce dropping out in the state's second-largest metro area.

Across northeastern Minnesota as a whole, the labor force is the smallest it has been since about 1996.

"It's the largest decline in the labor force we've seen in the region in the last 30 years," said Carson Gorecki, regional labor market analyst with the Minnesota Department of Employment and Economic Development.

He said the drop-off is likely due to some retirements, parents staying at home to care for out-of-school children or folks not looking for work over COVID-19 concerns.

The largest job losses in the area have been in leisure and hospitality. There were nearly 30% fewer jobs in hotels, restaurants, bars and other accommodations compared with last year.

"A lot of it is just because we have such an industry mix that is more reliant on food service and accommodations and the timing of when the pandemic was hitting — peak tourism season," Gorecki said.

Retail was one of the few sectors that added jobs year over year in the region.

In Duluth city limits the unemployment rate hit 5.9% last month as the labor force shrank to its lowest level in 15 years.

"The folks we're talking to, their main challenges are really child care or they're older and feel at risk," said Elena Foshay, the city's workforce development director. "What happens with schools is a big issue, and it's very possible schools will have to move to 100% virtual."

That could pull more parents out of the workforce even as some employers are having trouble filling jobs. Foshay said she is getting calls especially from long-term care, trucking and manufacturing firms who say they can't find enough applicants.

"It almost feels like a workforce shortage, like we had before the pandemic," she said. "Yet we have higher unemployment and people exiting the workforce."

Foshay said now is the time to enroll in training — much of which can be done virtually — to "find those career tracks that are in demand."

"A big part of this is it's just been a waiting game," Foshay said. "It's always felt temporary and we just need to wait it out — but you can't just sit around and wait for things to get better. This is the new normal, a new reality, and you just have to take control and come up with a plan."

With thousands returning to work as Iron Range taconite operations resumed late this summer, Hibbing and Virginia workforce rates remained fairly steady. Still, about a thousand jobs have yet to be recovered in those cities compared with last year — a 10% decline.

"We have had more of a relative loss of employment in this region compared to some of the other metro areas," Gorecki said.