Minnesota Workers Get a Raise

While Minnesota’s labor market has been getting tighter for several years, one expected outcome of that trend has been late to emerge – wage growth. 

But a story by Dave Senf in the latest issue of Trends magazine documents that wage growth is finally occurring in many industries in the state. For the first time in years, Minnesota workers have bargaining power for pay increases or opportunities to switch to jobs offering fatter paychecks. 

Senf conducted an analysis that found median annual earnings were up 8.3 percent between 2013 and 2016 in Minnesota – significantly higher than the 1.6 percent gain reported nationwide. While median annual earnings for Minnesota workers in 2016 were still 1.3 percent below their 2001 level, that was significantly better than nationally. U.S. median earnings in 2016 were 5.3 percent lower than in 2001. 

Workers in lower-wage jobs seemed to be doing particularly well. Workers in the 10th percentile of annual wages (that is, 10 percent of the workforce makes less, while 90 percent makes more) saw their pay climb 4.8 percent between 2014 and 2016. That compares with a 4 percent wage increase during the same period for the 25th percentile, 2.6 percent for the 50th percentile, 2 percent at the 75thpercentile, and 2.3 percent for the 90th percentile. 

In theory, wage growth could be a drag on employment growth, as Minnesota employers become less competitive in national and international markets due to higher payroll costs. But higher wages could also boost immigration to Minnesota by workers seeking higher pay. A faster-growing labor force would be welcomed by Minnesota employers, even if the boost is fueled by higher wages. 

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