Minnesotans love Boston, but Massachusetts' growth problem is worse than ours

Minnesotans talk about Massachusetts, especially Boston, a lot.

The thought hit me a couple weeks ago at the annual dinner of the Minnesota Business Partnership, when Gov. Tim Walz recalled to the 1,000-person crowd a recent trip he made to a med-tech conference in Boston.

Then I looked up some data and realized something else. If you're doing business in Minnesota and you don't have your eye on Massachusetts, you should.

Massachusetts has greater challenges with a shrinking workforce than Minnesota. Massachusetts is even seeing its overall population decline, while ours is still growing slightly.

The reasons for the workforce shortage are the same in both places: declining birth rates, huge numbers of baby boomers heading into retirement, a steep drop in legal immigration, an out-migration of young adults and the exit of middle-aged ones who, thanks to remote work, can choose prettier or sunnier locations.

"You cannot grow an economy without people. It's just simply impossible," said Jerry Rubin, who co-authored a study on Massachusetts' worker shortage that was published in September by the Harvard Project on Workforce.

Massachusetts has about 98,000 fewer people in its workforce now than it did before the pandemic, a 2.6% drop. Minnesota has about 17,000 fewer, a 0.6% drop, according to the U.S. Bureau of Labor Statistics.

In September, the Business Partnership published a report — with help from a Boston consulting firm — called "Minnesota's Vanishing Workforce" that portrayed how this squeeze will tighten. It said 61% of Minnesota's population will be of working age (ranging from 16 to 64) by 2030, down from 66% in 2010.

I've got no data on Minnesotans' obsession with Massachusetts, however. It's simply my impression that I hear more people around here talking about Boston than I do New York.

I think that stems from there being so many Minnesotans who did some of their college or grad school work in Boston. Add to that parents who have kids going to school there.

There's also the med-tech connection and the nexus of Minnesota companies with sizable offices in Massachusetts, like UnitedHealth Group, or Boston firms with big operations here, like Boston Scientific.

In his speech to the Business Partnership, Walz spoke about biotech and medical innovations and said: "The world is looking and recognizes it's basically Boston and Minneapolis-St. Paul."

The Twin Cities and Boston are both wealthy regions with many colleges, huge employers in finance and health care, a state capital, all the pro sports and a pronounced accent. Massachusetts and Minnesota share many demographic characteristics, though we are smaller in population and workforce, and bigger in area.

We're both in the northern tier of states that are feeling the most pressure as growth in the overall U.S. workforce and population levels off. The fastest growth, as it has for decades, is happening in Southern and Southwestern states. And since the pandemic, Rocky Mountain states like Colorado, Utah and Idaho have also grown sharply.

High taxes and living expenses tend to be a common ingredient in the states where population is falling or leveling — and with acute worker shortages.

The biggest factor, however, is the drop in legal immigration since the Trump administration. As births among white people began dropping decades ago, places like Massachusetts and Minnesota relied on immigration for population growth.

"Immigration was the only source of labor force growth in Massachusetts over the last 30 years," Rubin said. "So once that got choked up, we were done."

There's no sign Congress will engage in immigration reform in the near future. All public discussion on it is overshadowed by problems stemming from the record flow of illegal immigrants at the southern border.

That leaves places like Massachusetts and Minnesota to put more people already in their states to work. Minnesota has a jump on this, with a labor force participation rate of 68.5% while Massachusetts is at 64.4%.

To find more people, employers will need to revamp hiring requirements and software they use to weed out applicants. They'll need to keep up the work-life flexibility that emerged in the pandemic.

Greater MSP, the regional economic development group, is moving in this direction. At a workshop last month, top HR executives discussed ways to expand their recruiting nets.

Walz on Monday signed an executive order eliminating college degree requirements for 75% of state jobs. Rethinking certain state licenses and certifications should be next.

Rubin's report contains similar ideas, with details specific to Massachusetts. When I told him how often I hear Minnesotans talk about Boston, he said his city made huge strides over the last 50 years.

"Many regions would be happy to have half of what we have," Rubin said. "That said, we have major problems fueling a labor shortage, which is going to get worse and will impact our economic growth. The challenges are difficult, but they're not impossible."