Hospitality passes construction for fastest job growth

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Move over, construction: the building industry is no longer the fastest-growing segment in Minnesota.

In its seasonally adjusted monthly job report Thursday, the Minnesota Department of Employment and Economic Development reported the state added 7,400 jobs in October, with unemployment stable at 3.2%. More than half of those new jobs, 4,900, were in the fields of leisure and hospitality, including restaurants, hotels and resorts.

That brings job gains in leisure and hospitality to 13,825 in the past 12 months, leading all other industry groups with a year-over-year growth rate of 5.1%. It’s the first time construction has not had the top growth rate since August 2018, when it was briefly eclipsed by logging and mining, and before that May 2018 when the top spot was held by education and health services, said Oriane Casale, interim director of DEED’s labor market information office.

Source: Minnesota Department of Employment and Economic Development

Construction, which briefly topped 10% annual growth in April, added 800 jobs in October and now sits at 3.2% annual growth.

“Leisure and hospitality has been increasing, really driving growth for a number of months now,” Casale said in an interview, noting that construction’s rapid growth this year came reflects in part a rebound in the spring of 2018.

The strong leisure and hospitality growth likely reflects a favorable market for both hoteliers and restauranteurs, said Steve Sherf, president of the Excelsior-based Hospitality Consulting Group.

“We’ve seen almost an unprecedented growth in hotels in the last 5 years or so. They are not largely labor-intensive, but each hotel probably employs 20 or 25 people, the limited-service ones,” Sherf said. “I would think there’s probably a bigger growth in the restaurant side of it, just because of the rise of popularity of the quick-serve restaurants, and the rise in people eating breakfast out.”

Hospitality Minnesota, an umbrella trade association for leisure and hospitality businesses, expects that growth to continue, and is investing in training and workforce development initiatives at the high school level and beyond to meet that need, said Ben Wogsland, the group’s director of government relations.

“By some estimates, this industry is expected to need to add tens of thousands of jobs over the next decade in Minnesota,” Wogsland said.

The nearly 14,000 jobs added by leisure and hospitality in the past year exceed total nonfarm job growth of 12,575 over that time, meaning every other industry sector combined actually lost jobs over the past 12 months.

October’s job report, which includes revisions adding 1,500 jobs to the previously lackluster September report, also continues a trend of growing labor force participation. The rate of adults employed or seeking work ticked up a tenth of a percent to 70.3 percent, continuing a slow and steady rise that has lasted nearly a year.

“We weren’t predicting that the labor force participation rate would rise,” Casale said. “Really based on demographics, [even] staying steady would be a really good thing.”

Other industry groups that reported growth in October include trade, transportation and utilities, up 2,500; manufacturing, up 1,300; and government, up 200. Information and financial activities each reported a loss of 1,000 jobs for the month.

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