Of the 2.81 million jobs in Minnesota, approximately 1.24 million—or 44 percent—do not pay enough to meet the basic needs of a typical Minnesota family. Jobs with wages insufficient to meet basic needs are prevalent statewide. In each of the state’s thirteen economic development regions (EDRs), over a third of all jobs fail to provide wages sufficient to meet the typical family’s basic needs; in one region, over half of jobs fail to meet this minimal standard.
The “typical family’s basic needs hourly wage”—as defined by the Minnesota Department of Employment and Economic Development in the 2017 Minnesota Cost of Living Study—is the average wage that a “typical family” must make to satisfy a set of “basic needs.” A “typical family” consists of two adults and one child, with one adult working full-time and the other part-time, for a combined sixty-hour work week. “Basic needs” represent neither poverty nor a typical middle-class lifestyle, but rather a basic living standard that meets essential health and safety needs. Excluded from “basic needs” are several common categories of household expenditures, including retirement and education savings, vacations, entertainment, eating out, alcohol, and tobacco.
The percentage of jobs with wages that fail to meet the typical family’s basic needs ranges from a low of 34 percent in Northwest Minnesota (EDR 1) to a high of 53 percent in East Central Minnesota (EDR 7E). In the seven-county metropolitan area (EDR 11)—home to 55 percent of the state’s population and 62 percent of its jobs—44 percent of jobs do not pay enough to meet basic needs.
While many low wage jobs do not offer benefits, some do. Due to a lack of information, we cannot estimate with precision the impact of benefits on the number of jobs capable of meeting basic needs. However, an approximation based on statistical inferences indicates that 38 percent of jobs in Minnesota fail to meet the typical family’s basic needs, even if we include both wages and benefits.
Minnesota’s median income and median wage surpass the national average, yet the state’s cost-of-living is below average. While Minnesota does well relative to most other states, our analysis suggests that Minnesota cannot rest on its laurels. The widespread presence of jobs that do not pay enough to meet the basic needs of a typical Minnesota family underscores the larger problem of wage stagnation that has plagued the U.S. economy for decades. Stagnant and declining wages erode consumer purchasing power. This erosion both reduces demand for goods and services, and retards job creation and economic growth. More severe recessions and lackluster recoveries follow.
The prevalence of jobs in Minnesota that fail to pay enough to make ends meet demands a public policy response. Strategies to enhance the wages and purchasing power of Minnesota workers, especially those jobs that do not pay enough to meet basic needs, is the best way—indeed, the only way—to stimulate widespread economic growth and prosperity.