Doug Loon, president and CEO of the Minnesota Chamber of Commerce, discussed workforce trends in Minnesota during a presentation at the Marshall Area Chamber of Commerce’s annual meeting on Wednesday.
MARSHALL — Minnesota’s economy faces a variety of challenges, but one of the most important will be attracting and retaining a young workforce, said Doug Loon, president and CEO of the Minnesota Chamber of Commerce.
In a presentation at the Marshall Area Chamber of Commerce’s annual meeting on Wednesday, Loon discussed some of the challenges and opportunities facing Minnesota businesses. He also spoke about the impact of the new laws passed this year.
“We need to have a positive attitude, but we also know that our state faces challenges and opportunities.” said Loon. Minnesota needs to increase both its population and productivity to remain strong in the future, he said.
Minnesota’s assets include its history of innovation, industry diversity and workforce, Loon said. “This has truly been the backbone of our state’s success for 100 years and the envy of the rest of the country where there is a hard-working, skilled and well-educated workforce.” he said.
However, Minnesota’s economic and job growth has fallen over the past 20 years. The state also does not attract young workers compared to other states, Loon said.
Minnesota ranked 42nd in net domestic migration this year, he said. “We bleed more (people) than we attract.” especially among younger people, he said.
The 17- to 24-year-old demographic is an area that Minnesota needs to better understand and retain, Loon told the Independent on Wednesday. “That’s an important demographic asset that we want to ensure because those are our future entrepreneurs, future business leaders, future community leaders that we don’t want to lose sight of.” he said. “If this is a trend, we need to stay ahead of it.”
Minnesota must keep factors such as affordability and quality of life in mind to attract and retain new generations of workers, Loon said. Housing costs in the state are becoming increasingly concerning, he said.
Loon said another challenge for Minnesota will be encouraging innovation and business investment in the state.
“I think growth has to come from doubling down on innovation and ensuring the resources are there to invest in innovation.” said Loon.
That would mean addressing issues such as tax competitiveness relative to other states, addressing the cost of operating a business in Minnesota, and streamlining state permitting processes. Loon said the Minnesota Chamber Foundation is working on a study of Minnesota’s environmental permitting process to better understand its impact on businesses.
Loon said Minnesota’s permitting system is viewed as unreliable and inefficient. It will be important to get more data to show whether the system is creating a barrier to businesses entering the state.
“We’re not saying we should lower standards. We want to respect and ensure high standards in protecting our air and water,” Loon told the Independent on Wednesday. But at the same time, he said, the Minnesota Chamber wants to be able to put forward some ideas for reforms to improve the system.
Loon said the study will look at environmental permitting processes “peer states”, including neighboring states and states of similar size and business activity.
“We will publish this report by the end of the year” he said. “And next year we will develop a communication strategy for this.”
Loon also spoke about the impact new state laws could have on Minnesota businesses.
“That’s a lot for companies to digest.” said Loon. Big concerns for companies included compliance with a new law requiring employers to provide earned sick and safety time that goes into effect in 2024, as well as a new paid family and medical leave program that goes into effect in 2026.
“We get questions literally every day, especially from small businesses.” to the Sickness and Safe Time Act, Loon said. “It restricts companies and actually forces them to use resources to comply with regulations, so quite frankly they would rather spend their time doing other things.”
“Companies have historically designed their vacation benefits and their overall benefits based on the uniqueness of their workforce. “This type of one-size-fits-all approach results in companies making changes that are unlikely to be in the best interest of their workforce.” said Loon.
The new legislation also entails costs for companies, said Loon.
“Paid family sick leave has a (payroll) tax associated with it to fund it. So these are direct costs,” he said. “In the case of sick leave and safe leave, which begins in January 2024, there are more hidden costs – companies are spending money where they normally wouldn’t.”
Another hidden cost of the legislation would be what happens to the staffing of the workforce “generous” Leaving plans, Loon said.
Loon said some of the bills passed in the 2023 legislative sessions need to be adjusted or errors corrected. “That could create some opportunities to rethink some of the approaches and also the bills.” he said. “Some of this could happen during the 2024 session. Some may occur later in future sessions. But those clear eyes that look at these laws and say: what can be implemented, what can’t – are there ways to improve them? We hope so.”
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