Larry Sillanpa

The Minnesota Council of Non-Profits’ Budget News and Tool’s (mnbudgetproject.org) new report says despite increased productivity, wages for American and Minnesota workers are lagging. Many workers don’t earn enough to support a family of three, and struggle to pay for basic needs like housing, childcare and transportation.

"For Many, Hard Work is Not Enough: The State of Working Minnesota 2015” draws on research from the Economic Policy Institute. Even though unemployment is back to pre-recession levels, workers wages aren’t keeping up with the cost of living. Even six years into the economic recovery, too many Minnesotans still lack the quality jobs to allow them to support their families: 

  • Wages are lower than in 2000, when adjusted for the impact of inflation.
  • Many workers, including over half without a college degree, earn less than what it takes to support a family.
  • People of color are more likely than other residents to be underemployed/unemployed. "

Policymakers can ensure that Minnesotans’ hard work pays off and build a strong economic future for all by improving job quality standards, ensuring Minnesotans can get good jobs, and supporting low wage workers as they climb into the middle class. Specific steps in this direction include expanding access to earned sick time, making child care affordable, boosting family incomes through an increased Working Family Credit, and ensuring access to driver’s licenses, regardless of immigration status.

Low-wage workers’ wages haven’t gotten back to 2007 levels, the year before the Great Recession hit. And wages for all wage groups are still hovering around 2000 levels, the year before the previous recession hit. In fact, in 2014 low-wage workers were still making less than they did in 1998 when inflation is taken into account, and median-wage workers’ wages were around the same as in 1999.

High-wage workers are making about the same as they did in 2000. This lack of wage growth has occurred despite rising U.S. productivity, which has increased by 6.6 percent since the recession, and by 21.6 percent since 2000.

Over a longer time span, high-wage workers have seen the fastest wage growth. Their wages grew by 21.3 percent from 1979 to 2014, while median-wage workers’ wages grew by 13.0 percent and low wage workers’ wages only increased by 5.4 percent, after adjusting for inflation. Again, wage growth has lagged substantially behind national productivity growth, which rose by 62.7 percent since 1979.

The fact that high-wage workers have seen much stronger wage growth has contributed to worsening wage inequality in Minnesota.

In 1979, the median wage of high-wage workers was 2.4 times higher than the median wage of low-wage workers. That gap has increased, and in 2014, high-wage workers’ wages were 2.8 times higher than low-wage workers’. Hard work should pay off, but the benefits of economic growth haven’t been broadly shared.

The Minnesota Department of Employment and Economic Development calculates that both parents in a family of three need to earn $16.34 per hour to afford their basic needs. However, there are not enough jobs that pay these wages, especially for workers with less education. In 2014, more than half of all Minnesotans without a college degree made less than this wage.

This living wage only covers a basic needs budget. The living wage standard varies across the state, from $11.59 in Stevens County to $19.05 in Isanti County.

Low-wage workers are important to the state’s economy. They work at grocery stores and take care of Minnesota’s children, and they spend their paychecks at local businesses. These workers are integral to our state’s economy, yet today too many of them don’t earn enough to support a family.