Rochester outpaces rest of state in job growth — by a lot

ROCHESTER – Buoyed by strong growth in the health care industry, Minnesota’s third-largest city continues to outpace the rest of the state in job creation.

The Rochester Metropolitan Statistical Area added about 7,000 jobs over the past year, a 6.3% year-to-year increase, according to the September jobs report from the Minnesota Department of Employment and Economic Development (DEED). By comparison, Minnesota as a whole was up 1.2% during the same period. The next-closest region to Rochester was Mankato, which grew 1.6% year to year.

Much of the growth in Rochester MSA, which includes Dodge, Fillmore, Olmsted and Wabasha counties, was driven by a 15% year-to-year increase in the education and health services sector. The sector employed 62,435 people in the region in September, nearly half the overall workforce.

The strong job numbers come as Mayo Clinic breaks ground on the first phases of “Bold. Forward. Unbound. In Rochester.” The $5 billion project — the largest investment in Minnesota history — is expected to bring about 2,000 construction workers to Rochester in the coming years.

While Mayo has not said how many employees it plans to hire once the new facilities open, local economic development officials expect the effects of the expansion to reverberate across the region.

“As their growth goes up, the rest of the economy grows as well,” said John Wade, president of Rochester Area Economic Development Inc. (RAEDI). “If you think about neighboring communities, too, there will be more housing opportunities and job opportunities and businesses looking to expand.”

One area where demand will be the strongest is housing. A study from 2020, before the Mayo expansion was announced, found Rochester will need about 14,000 new housing units by 2030 to keep up with the growing population. Last year, the city issued permits for 953 new housing units, the second highest in the state behind Minneapolis but short of the threshold needed to meet the goal.

Wade said he also sees potential for growth in other sectors tied to Mayo, such as hospitality, which makes up more than 8% of the region’s workforce. Precision manufacturing and medical technology were also identified as potential growth sectors.

“Medtech is one of those areas of the economy that may not get much attention today, but I am very bullish about it in the future,” Wade said, pointing to the recent success of Mayo spinoffs like Vyriad and Rion, both of which have spent millions of dollars in recent years building out lab and manufacturing spaces on the former IBM campus.

Wade said while it is unlikely the region will sustain the rate of job growth seen in the past year, he expects job creation to continue to grow at a rate of about 2% to 3% a year. That’s in part because the region’s economy has proven to be remarkably resilient. Over the past three decades, the workforce has grown by more than 50% while consistently bouncing back from economic downturns faster than the state as a whole.

“Our highs are never as high and our lows are never as low,” Wade said of Rochester’s workforce, which returned to prepandemic levels in fall 2023. “We generally have good, steady growth.”