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Many Minnesota jobs do not pay enough to meet the basic needs of a typical Minnesota family, according to data from the “Minnesota Cost of Living Study Annual Report 2016” prepared by the Minnesota Department of Employment and Economic Development (DEED). In fact, this report—which was summarized in part 1 of this series—reveals that in parts of the state, a majority of all occupations do not pay enough to meet these basic needs. A deeper dive into the DEED report reveals that in all regions of the state, wages offered for most job vacancies do not meet these basic needs; the state’s minimum wage also comes well short of meeting basic needs.

The “typical Minnesota family” and the “basic needs” of this family as defined in the DEED report were described in part 1 of this series. In addition to providing the hourly wage needed to meet the basic needs of a typical Minnesota family statewide and in each of the state’s thirteen economic development regions (EDRs), the report also gives the median wage offer for job vacancies statewide and in each EDR using data from DEED’s Job Vacancy Survey. (A table and map showing the counties in each EDR appears at the bottom of part 1.) Using this information, it is possible to compare the wage necessary to meet the typical family’s basic needs to the median job vacancy wage offer.

The analysis below will also compare the wage necessary to meet the typical family’s basic needs to the state minimum wage for large and smaller employers. Effective August 1, 2016, the state minimum wage is $9.50 for large employers (i.e., businesses with annual gross volume of sales made or business done of $500,000 or more) and $7.75 for small employers. Lower hourly minimums apply to workers under age 18 and selected “trainees.”

As noted in part 1, the median wage necessary to meet the needs of a typical Minnesota family is $17.57 per hour, substantially greater than the median job vacancy wage offer of $12.99 per hour. In fact, the basic need median wage substantially exceeds the median job vacancy wage offer in every EDR in the state. As noted in the DEED report:

The median wage offered to workers in the process of hiring for job vacancies, according to the Job Vacancy Survey, is 74 percent of the cost of living at the state level. None of Minnesota’s thirteen economic development regions shows a median wage offer for vacancies which meets the region’s cost of living. The Southeast and the Upper Minnesota Valley regions are the highest in this category, with median wages offered to workers to fill job vacancies at 88 percent of the region’s cost of living. The West Central region is 85 percent, the Southwest region is 84 percent, the Northwest and the South Central regions both are 82 percent, the Arrowhead region is 77 percent, the Central region is 71 percent, the Headwaters region is 69 percent, the Southwest Central region is 67 percent, the North Central region is 66 percent, the 7-County Metro is 62 percent, and the East Central region is 54 percent of the region’s cost of living.

WAGE2

By definition, half of the wage offers for job vacancies are below the median. Thus, from the information in the DEED report, we can conclude that well over half of the job vacancies in every region of the state are offering wages below what is needed to meet the basic needs of a typical Minnesota family. In the Twin Cities Metro Region (EDR 11)—home to 55 percent of the state’s population and 62 percent of the state’s employment—half of the job vacancies offer wages that are less than two-thirds of what is needed to meet the typical family’s basic needs.

Throughout Minnesota, the large and small employer minimum wage is significantly less than median wage offered for job vacancies; as a result, the minimum wage falls even further below the wage needed to sustain the typical Minnesota family. On a statewide basis, the larger employer minimum wage pays just over half (54 percent) and the small employer minimum wage pays less than half (44 percent) of what is needed to meet the basic needs of the typical Minnesota family.

While the large and small employer minimum wage is constant throughout the state, the basic needs of the typical family are not. As a result, there is significant variation among EDRs in terms of the extent to which the minimum wage is able to meet basic needs. On the high end, the large employer minimum wage is able to meet about two-thirds of basic needs in the Southwest Region (EDR 8), the Upper Minnesota Valley Region (EDR 6W), the Northwest Region (EDR 1), the West Central Region (EDR 4), and the South Central Region (EDR 9). The large employer minimum wage meets an even smaller portion of the typical family’s basic needs in all other EDRs. In the Twin Cities Metro EDR, the large employer minimum wage pays slightly less than half (49 percent) of what is needed to meet the typical family’s basic needs.

At $1.75 per hour below the large employer minimum wage, the small employer minimum wage meets an even smaller share of the typical family’s basic needs, ranging from a high of 56 percent in the Southwest Region to a low of 40 percent in the Twin Cities Metro Region.

A recent study published by the Economic Policy Institute (EPI) and Oxfam America (which was summarized in an August 4 North Star article) shows that Minnesota is doing better than most states in terms of avoiding extremely low wage jobs. Nonetheless, the DEED report shows that many jobs in Minnesota are paying below what is necessary to meet the basic needs of a typical family. This is particularly true for job vacancy wages and positions that offer the state’s minimum wage. We should not console ourselves with the canard that workers making these low wages are young and do not need to support a family. The EPI/Oxfam report shows that in Minnesota, over half of all workers making $15 per hour or less are between 25 to 54 years of age.

A recent North Star article makes the case that sustained economic growth is dependent upon the ability of working families to purchase the goods and services that the economy is producing. Increasing the portion of jobs in Minnesota that pay wages able to meet a typical family’s basic needs is essential in achieving this goal.

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