What rurally-based companies can teach us about shrinking labor pools

Layoffs are on the rise, but odds are America’s post-pandemic tight labor market is here to stay, even after adjusting for the ups and downs in the economy. And thanks to a number of demographic factors, the labor force is projected to grow more slowly than in recent decades.

That tight labor market can mean a changing relationship between management and workers. As we’ve reported before, a remote corner of the U.S. near the Canadian border might offer some insights.

Thief River Falls, Minnesota, a town of only 9,000 people, is the headquarters of Digi-Key Electronics, a privately held global electronics distributor.

“There is a number of successful companies in the area and all competing for a great labor pool,” said David Doherty, president of Digi-Key.

Digi-Key was founded in 1972 by an amateur radio enthusiast, and is now a $5 billion revenue giant with operations around the world, according to the company.

“One of the things that Digi-Key has always done is cross-train folks,” Doherty said.

And there are lots of jobs to train for. Digi-Key’s headquarters is a mega-warehouse with a footprint of more than 22 football fields, and the company says that it invests in its 3,600 workers and their individual needs.

“Digi-Key can be whatever you need it to be,” said Doherty. “For some, it’s a place of stability, their life is crazy, maybe they’re a single parent or, you know, taking care of an elderly parent. And they just want to come some place and do an honest day’s work and be compensated fairly for that. Others don’t want to be doing the same job in six months. They want to continue to be progressed on their career.”

Winters are very long and very cold in Thief River Falls, yet there are a number of large companies in the region. Recruiting workers is an incremental process and retaining workers is key.

So is being flexible and adaptable in staffing solutions.

“Maybe the ideal fit is to have five full-time regular hires, but you can’t find get those five,” said Kellie Roth, head of human resources at the Polaris snowmobile factory.

The Polaris factory has 1,400 workers in Roseau, a Minnesota, town of some 3,000 people that’s even farther north than Thief River Falls.

“So you might have 10 part-time hires to meet that need, and the flexibility there of being able to shift those people into your workforce and to have a more agile and nimble workforce that can move around and to do various roles versus highly specialized and only able to work in this one area,” Roth said.

To cope with slow growth in the area’s labor force while continuing to expand, Digi-Key and Polaris say that they invest in worker skills, encourage employees to change jobs internally, and embrace flexible schedules. The same goes for Marvin Windows in Warroad, Minnesota, a town of 1,800 people. Warroad is home to the 4th generation family-owned company and its headquarters and factory that employ 2,800 workers.

Brigid Tuck, senior economic impact analyst at the University of Minnesota Extension, said management has learned the importance of developing career paths to retain workers and their families.

“To get people from sort of entry-level positions to our more skilled positions and kind of keep them in our communities and moving through that pipeline,” Tuck said.

Sustained low unemployment in these northern towns can boost wages, improve benefits, strengthen job ladders, and extend careers.

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