Last Friday, Director Monica Haynes virtually attended the fifth annual Regional Economic Conditions Conference, hosted by the Federal Reserve Bank of Minneapolis. The event featured a fireside chat between Minneapolis Fed President Neel Kashkari and Best Buy CEO Corie Barry, as well as presentations and panel discussions with representatives of each state in the Ninth Federal Reserve District (Minnesota, the Dakotas, Montana, northwestern Wisconsin, and Michigan’s Upper Peninsula). Overall, the conference provided an insightful look at the issues affecting workers and businesses in the ninth district. Below are ten takeaways from the conference, paraphrased slightly for clarity and conciseness.
Corie Barry, CEO at Best Buy, on what’s keeping workers on the sidelines: I see five factors at play. One, people are still nervous about the pandemic’s impact on their health. There is still a lot of concern, especially depending on your life situation. The second is childcare. Day cares in particular have been very inconsistent. This inconsistency of care has been really hard on families. The third thing is just flat out burn out—especially in retail. It has been two years of arguing with customers about masks. These are really stressful jobs, and they were not supposed to be stressful. The fourth is people have realized they have different lifestyle expectations. No one traveled for more than a year. People spent much more time at home and with family. I think people are making different career choices as a result. Finally, there is just a lot of optionality right now—a lot of open jobs, in many different industries, many of which can be done remotely. You have the choice to look beyond your city of residence. We’re going to see this labor market churn for quite some time. I don’t see any of these factors evening out in the near term.
Neel Kashkari, president/CEO at the Federal Reserve Bank of Minneapolis, on businesses’ current hiring difficulties: I recently spoke to a local convenience store owner, who had a “Help Wanted” sign in his store’s window. He mentioned his hiring difficulties, and I asked him how he normally recruited for open positions. He said, in the past, he would put the sign in the window, and later that day, he would have a line of qualified people to choose from. And I understand why he’s frustrated, but it also opened my eyes… Why is that what we call normal—to have the pendulum so far in favor of business? Sure, right now the pendulum has swung too far in the opposite direction. But in my mind, we’re not trying to go back to that old world. A place where workers have choices is better for everyone.
Corie Barry, on recruitment and retention: Yes, pay is imperative. But what else can I provide as an employer? Benefits? Paid caregiver leave? PTO for part-time employees? Tuition reimbursement? There needs to be a creative approach to recruiting. You have to have a real environment of engagement and involvement at a company. Just because you can get someone in doesn’t mean they’ll want to stay and go the extra mile.
Corie Barry, on inflation: Consumer electronics was one of the first industries impacted by supply chain shortages, but we now have a good supply position. Similarly, meat inflation has started to wane because supply has caught up. Inflation will be inconsistent by industry. The wild card is Omicron—what will that do to inventory and shipping worldwide?
Ron Wirtz, regional outreach director at the Federal Reserve Bank of Minneapolis, on minority and women-owned business enterprises: During the pandemic, minority-owned businesses reported being less likely to find lenders and less likely to report positive earnings. But minority-owned businesses were also less likely to say labor availability was among their top two operational challenges, perhaps due to lower revenue trends. Overall, minority and women-owned businesses’ performance has lagged that of businesses overall, and that has a lot of spillover effects.
Maysee Herr, executive director of the Hmong Wisconsin Chamber of Commerce, on what it will take for BIPOC businesses to survive the economic recovery: Technical support will be huge. Micro businesses in particular struggle with having the official financial statements necessary to receive funds that should be easy to receive. These businesses need support for things like putting data into Quickbooks or moving aspects of their business online. In the end, it all goes back to use of technology.
Mike Mabin, owner/president of Agency MABU, on BIPOC-owned businesses: At this moment, there are a lot of funds available in the system, so this is a great opportunity for a small business—like minority and women-owned businesses—to step in and find a source of viability. But we need to position ourselves for the long term. I see the next phase in the pandemic being “how do you invest these dollars in a way that can be sustainable and can grow and contribute rather than one-and-done.”
Erick Garcia Luna, director of Regional Outreach at Federal Reserve Bank of Minneapolis, on the current willingness among workers to make career changes: The pandemic has made people more comfortable with failure. Workers want to be productive, and they are more willing to take risks.
Joe Hobot, president and CEO of American Indian OIC, on current labor market forces: I am going to disagree with some of the other speakers today because I believe that this [current labor market tightness] is going to be the new normal, extending five years or longer. In fact, I don’t really believe this to be an anomaly brought on by pandemic but rather an acceleration of trends that began before the pandemic. The combination of suppressed wages, a skills gap, and the breakdown in K-12 career training have all created this problem. Until we start addressing those issues, we’ll continue to see a labor shortage/labor hesitancy. The good news is that we have an untapped reservoir of resources [i.e. workers] among non-white participants. Historically, the American Indian population has been working multiple jobs at suppressed wages. Folks want to make a living wage with one job.
Scott Eychner, administrator Workforce Services Division, Montana Department of Labor and Industry on the rapid pace of change in business conditions: Ten years ago, when we were looking at the future of work—AI, the automation revolution, working remotely—we talked about 2030 being the time when things would come to head. In reality, those things actually happened overnight. Rather than having ten years to come to terms with these changes, we have had less than two. That trickles into all aspects of the economy and the labor force. It makes for an interesting day.