minnesota cost of living study annual report 2016

Department of Employment and Economic Development 1st National Bank Building █ 332 Minnesota Street █ Suite E200 █ Saint Paul █ Minnesota 55101-1351

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An Equal Opportunity Employer and Service Provider

Minnesota Cost of Living Study

Annual Report 2016 Report to the Legislature

as required by MinnesotaStatutes2013,chapter116J,section13

May 2016

Author: John Clay, LMI analyst, principal study author

Steve Hine, LMI director

Oriane Casale, LMI assistant director, director of publications

Amanda Rohrer, LMI database administrator

Minnesota Department of Employment and Economic Development

Total cost of salaries, printing, and supplies in developing/preparing this report is $1,424.07.

(reported as required by Minn. Stat. 3.197).

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Introduction.................................................................................................................................................3StudyMissionandPurpose......................................................................................................................3TypicalUsesoftheCostofLivingData.....................................................................................................3ATypicalMinnesotaFamily?....................................................................................................................4ImprovingtheStudy.................................................................................................................................4

ResultsandAnalysisStatewideandbyRegion............................................................................................5MinnesotaStatewide...............................................................................................................................6EconomicDevelopmentRegion1-Northwest........................................................................................7EconomicDevelopmentRegion2-Headwaters......................................................................................8EconomicDevelopmentRegion3-Arrowhead.......................................................................................9EconomicDevelopmentRegion4–WestCentral..................................................................................10EconomicDevelopmentRegion5–NorthCentral.................................................................................11EconomicDevelopmentRegion6E–SouthwestCentral.......................................................................12EconomicDevelopmentRegion6W–UpperMinnesotaValley............................................................13EconomicDevelopmentRegion7E–EastCentral.................................................................................14EconomicDevelopmentRegion7W-Central........................................................................................15EconomicDevelopmentRegion8-Southwest......................................................................................16EconomicDevelopmentRegion9–SouthCentral.................................................................................17EconomicDevelopmentRegion10-Southeast.....................................................................................18EconomicDevelopmentRegion11-TwinCitiesMetro.........................................................................19

FurtherAnalysisandRecommendations....................................................................................................20MedianWageasaShareoftheCostofLiving.......................................................................................20JobVacancyMedianWageOfferasaShareoftheCostofLiving.........................................................21ImpactonEmploymentRecruitmentandRetention.............................................................................21ImpactonMinorityCommunities..........................................................................................................21

Allindustriesaveragebyrace............................................................................................................22Lowwageindustriesaveragebyrace.................................................................................................22

ImpactonConsumerExpenditures........................................................................................................23ImpactonDemandforSocialServiceSubsidies.....................................................................................24

Sources.......................................................................................................................................................25StatutoryMandate.................................................................................................................................25

AppendixB.................................................................................................................................................26CostofLivingStudyDataSources..........................................................................................................26

AppendixC.................................................................................................................................................26MinnesotaEconomicDevelopmentRegions..........................................................................................26

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IntroductionTheCostofLivingStudyprovidesanestimateofabasic-needscostoflivinginMinnesotaforindividualsandforvariousfamilysizes,bycounty,region,andstatewide.Thestudyexamineslivingcostsinsevencostcategories:food,housing,healthcare,transportation,childcare,othernecessities,andnettaxes.[1]

TheLaborMarketInformation(LMI)officeoftheDepartmentofEmploymentandEconomicDevelopment(DEED)ismandatedbyMinnesotaStatutes2013,chapter116J,section13toreporteveryFebruaryontheyear’supdatedCostofLivingStudyresultsandtoprovideanalysisandrecommendationstoaidintheassessmentofemploymentandeconomicdevelopmentplanningneedsthroughoutthestate.

StudyMissionandPurpose

ThemissionoftheCostofLivingStudyistoestimateabasic-needscostoflivinginMinnesotaforindividualsandfamilies,bycounty,region,andstatewide.Thestudyexamineslivingcostsinsevencostcategories:food,housing,healthcare,transportation,childcare,othernecessities,andnettaxes.TheCostofLivingrepresentsneitherapovertylivingnoramiddle-classlivingbutratherasimplelivingthatmeetsbasicneedsforhealthandsafety.Therefore,thefollowingcostsareexcluded,eventhoughtheymaybecommonexpenses:savings,vacations,entertainment,eatingout,tobacco,andalcohol.

TheCostofLivingstudyisanimportanttoolbecauseratherthandescribingwhatfamiliesarespending(aswiththeConsumerExpenditureSurvey)itexaminesthecostofbasicneeds.TheCostofLivingstudyalsolooksatdollarcosts,ratherthanlookingattherateofchangeovertime(aswiththeConsumerPriceIndex).

TheCostofLivingstudyresultsconstituteanadditionaleconomicindicatorwhichmaybeusedbypublicandprivateinstitutionsandbyindividuals.Findthemethodologyatmn.gov/deed/data/data-tools/col/method-col.jsp.

TypicalUsesoftheCostofLivingData

Employerswanttosetwagesthatattractandretaingoodworkers.TheCostofLivingToolcanhelpgaugewhetherawageinacertaincountywillpaythebillsandkeepworkersafloat.Jobseekerswanttoknowwhichkindsofworkwillcoverfamilycostsintheircounty.Workforcedevelopmentserviceproviderswanttoknowwhatwages,ifmet,arelikelytosecureaself-supportingcareerfortheclientjobseeker,thusreducingtheneedforre-entryintoservices.Policymakersandplannerswanttoknowiftheneedforpublicsubsidiesislikelytoriseorfall.Regionalwagesthatmeetorexceedthecostoflivingcansignalreducedneedforsubsidies.Policymakersandplannersalsowanttomonitorthepotentialforconsumerexpenditureswhichcandrivefutureeconomicgrowth.Regionalwagesthatmeetorexceedthecostoflivingcansignalapotentialforstrongerconsumerexpenditures.

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ATypicalMinnesotaFamily?

BasedontheAmericanCommunitySurvey(DP02,5-YearSeries,2014),CurrentPopulationSurvey(C3,LivingArrangementsofChildrenUnder18Years,2015),andCurrentEmploymentStatistics(TotalPrivateSector,2015),aselectionof“Partnered,1full-timeand1part-timeworker,1child”intheonlineCostofLivingtoolbestrepresentsatypicalMinnesotafamily.Thisselectiongivesresultsforafamilyoftwoadultsworkingacombined60hoursperweek(oranaverageof30hoursperworker),andonechildunderschoolage.

TheaveragefamilysizeinMinnesotais3.1personsandtheaveragehouseholdsizeis2.5persons.Themajorityofthestate’shouseholds—65percent—arefamilyhouseholds.Marriedcouplesare79percentoffamilyhouseholds.

Althoughjustunderhalf--45.4percent--offamilyhouseholdshavechildrenoftheirown(bybirth,marriage,oradoption)underage18,DEEDselectedthe“Partnered,1full-timeand1part-timeworker,1child”asastandardbecauseoftheimportanceofmaintainingastateeconomywhichsupportsfamilieswithchildren.

AmongallU.S.childrenunderage18livingwithbothparents,60percenthavebothparentsinthelaborforceand73percentareage12orunder.TheaverageweeklyhoursperworkerinMinnesotais34hours.[2,3,4]

Foradditionalfamilycompositions,seetheonlineCostofLivingtoolatmn.gov/deed/data/data-tools/col/.

ImprovingtheStudy

DEEDmadeseveralimprovementstothewaythestudycalculatescostsforthisyear’sreport.Asaresultsomecostswillbehigherandsomelowerthaninpreviousversionsofthestudy.

Inthisreportallfamilycompositionsaregender-neutral.Thischangestrengthensthequalityofthedatabyallowingustoaveragetogethermaleandfemaledatasetsforalargertotalsample.Largersamplestendtoprovidemorereliableinformation.DEEDmadealong-overduereformoftheOtherNecessitiescostcategorybyaddingtelephoneservices,housekeepingsupplies,andhouseholdfurnishingstothetotalratherthanusingasmall“miscellaneous”sumtocoverthesenecessarycosts.ThehighercostnowassignedtoOtherNecessitiesisbothmoreexplicitlydefinedandmorerealisticthaninpreviousversionsofthestudy.Foranexplanationofthepreviousyears’methodology,pleaseseethe2015CostofLivingAnnualReport.

DEEDrevisedthetransportationmethodologytoapplyanaverageVehicleMilesofTravelbyhouseholdsizeratherthanbreakingoutnumberofadults,adultworkers,orchildren.Again,thischangeisintendedtostrengthenthequalityofthedatabyusingalargersample.

Finally,DEEDexaminedtheprospectsforbreakingoutthetransportationcostsofMinnesotanswhoworkinthesamecountywheretheyliveversusthecostsofthosewhocommutetoanothercountyforwork.Whilethisbreakoutwasnotimplementedinthe2016study,itcouldbeusedinthefuturetohelpemployerscomparethewagecostsofrecruitinglaborfromothercountiesversuslocally.

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ResultsandAnalysisStatewideandbyRegionCostsforaMinnesotafamilyofthreeareshownforthestateasawholeandforeachofMinnesota’sthirteenEconomicDevelopmentRegions(EDRs).Resultsforthestateandforeachregionarecalculatedasapopulation-weightedaverageofresultsforeachcounty.Calculatingaweightedaveragehelpscorrectforanybiasesinthedatathatmightresultfromdifferencesbetweenthoseincludedinthestudysampleandtheactualpopulation.Thethirteenregionsare:

EconomicDevelopmentRegion1-NorthwestEconomicDevelopmentRegion2-HeadwatersEconomicDevelopmentRegion3-ArrowheadEconomicDevelopmentRegion4–WestCentralEconomicDevelopmentRegion5–NorthCentralEconomicDevelopmentRegion6E–SouthwestCentralEconomicDevelopmentRegion6W–UpperMinnesotaValleyEconomicDevelopmentRegion7E–EastCentralEconomicDevelopmentRegion7W-CentralEconomicDevelopmentRegion8-SouthwestEconomicDevelopmentRegion9–SouthCentralEconomicDevelopmentRegion10-SoutheastEconomicDevelopmentRegion11-TwinCitiesMetro

Thestudyexpressesthecostoflivingasayearlysumandanhourlyrate,inadditiontobreakingoutmonthlycostsineachofthesevencostcategories.

ThehourlywageanalysiscomparesdatafromtheCostofLivingStudywithemploymentdatafromtheOccupationalEmploymentStatistics(OES)programandjobvacancydatafromtheJobVacancySurvey(JVS).[5,6]

Forconvenientuseasareferenceorhand-out,eachregionispresentedonaseparatepageofthereport.

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MinnesotaStatewide

AnnualCosts:$54,804

HourlyRate:$17.57

LookingatthestateofMinnesotaasawhole,atypicalfamilyoftwoadultsandonechild,withoneadultworkingfull-timeandonepart-timeforacombined60workhoursperweek,needtoearnanestimatedfamilyincomeof$54,804peryearand$17.57perhourperworkertomaintainasimplelivingthatmeetsbasicneedsforhealthandsafety.

Theestimatedmonthlycostsarechildcare$462,food$771,healthcare$408,housing$916,transportation$805,othernecessities$528,andtaxes$667.

ThemedianwagepaidtoworkersacrossalloccupationsinMinnesotais106percentofthecostofliving,whilethemedian

wageofferforjobvacanciesis74percentofthecostofliving.

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EconomicDevelopmentRegion1-Northwest

AnnualCosts:$44,940

HourlyRate:$14.40

InNorthwesternMinnesota,atypicalfamilyoftwoadultsandonechild,oneadultworkingfull-timeandonepart-timeforacombined60workhoursperweek,needtoearnanestimatedfamilyincomeof$44,940peryearand$14.40perhourperworkertomaintainasimplelivingthatmeetsbasicneedsforhealthandsafety.


ThemedianwagepaidtoworkersacrossalloccupationsinNorthwestMinnesotais114

percentofthecostofliving,whilethemedianwageofferforjobvacanciesis82percentofthecostofliving.

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EconomicDevelopmentRegion2-Headwaters

AnnualCosts:$46,740

HourlyRate:$14.98

IntheHeadwatersregionofMinnesota,atypicalfamilyoftwoadultsandonechild,oneadultworkingfull-timeandonepart-timeforacombined60workhoursperweek,needtoearnanestimatedfamilyincomeof$46,740peryearand$14.98perhourperworkertomaintainasimplelivingthatmeetsbasicneedsforhealthandsafety.


ThemedianwagepaidtoworkersacrossalloccupationsintheHeadwatersregionis105


9

EconomicDevelopmentRegion3-Arrowhead

AnnualCosts:$46,812

HourlyRate:$15.00

IntheArrowheadregionofMinnesota,atypicalfamilyoftwoadultsandonechild,oneadultworkingfull-timeandonepart-timeforacombined60workhoursperweek,needtoearnanestimatedfamilyincomeof$46,812peryearand$15.00perhourperworkertomaintainasimplelivingthatmeetsbasicneedsforhealthandsafety.


ThemedianwagepaidtoworkersacrossalloccupationsintheArrowheadregionis111 percent

ofthecostofliving,whilethemedianwageofferforjobvacanciesis77percentofthecostofliving.

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EconomicDevelopmentRegion4–WestCentral

AnnualCosts:$45,672

HourlyRate:$14.64

InWestCentralMinnesota,atypicalfamilyoftwoadultsandonechild,oneadultworkingfull-timeandonepart-timeforacombined60workhoursperweek,needtoearnanestimatedfamilyincomeof$45,672peryearand$14.64perhourperworkertomaintainasimplelivingthatmeetsbasicneedsforhealthandsafety.


ThemedianwagepaidtoworkersacrossalloccupationsinWestCentralMinnesotais107


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EconomicDevelopmentRegion5–NorthCentral

AnnualCosts:$48,048

HourlyRate:$15.40

InNorthCentralMinnesota,atypicalfamilyoftwoadultsandonechild,oneadultworkingfull-timeandonepart-timeforacombined60workhoursperweek,needtoearnanestimatedfamilyincomeof$48,048peryearand$15.40perhourperworkertomaintainasimplelivingthatmeetsbasicneedsforhealthandsafety.


ThemedianwagepaidtoworkersacrossalloccupationsinNorthCentralMinnesotais93


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EconomicDevelopmentRegion6E–SouthwestCentral

AnnualCosts:$46,248

HourlyRate:$14.82

InSouthwestCentralMinnesota,atypicalfamilyoftwoadultsandonechild,oneadultworkingfull-timeandonepart-timeforacombined60workhoursperweek,needtoearnanestimatedfamilyincomeof$46,248peryearand$14.82perhourperworkertomaintainasimplelivingthatmeetsbasicneedsforhealthandsafety.


ThemedianwagepaidtoworkersacrossalloccupationsinSouthwestCentralMinnesotais111


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EconomicDevelopmentRegion6W–UpperMinnesotaValley

AnnualCosts:$43,788

HourlyRate:$14.03

IntheUpperMinnesotaValley,atypicalfamilyoftwoadultsandonechild,oneadultworkingfull-timeandonepart-timeforacombined60workhoursperweek,needtoearnanestimatedfamilyincomeof$43,788peryearand$14.03perhourperworkertomaintainasimplelivingthatmeetsbasicneedsforhealthandsafety.


ThemedianwagepaidtoworkersacrossalloccupationsintheUpperMinnesotaValleyis109


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EconomicDevelopmentRegion7E–EastCentral

AnnualCosts:$57,588

HourlyRate:$18.46

InEastCentralMinnesota,atypicalfamilyoftwoadultsandonechild,oneadultworkingfull-timeandonepart-timeforacombined60workhoursperweek,needtoearnanestimatedfamilyincomeof$57,588peryearand$18.46perhourperworkertomaintainasimplelivingthatmeetsbasicneedsforhealthandsafety.

Theestimatedmonthlycostsarechildcare$394,food$749,healthcare$408,housing$921,transportation$1,058,othernecessities$523,andtaxes$746.

ThemedianwagepaidtoworkersacrossalloccupationsinEastCentralMinnesotais89


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EconomicDevelopmentRegion7W-Central

AnnualCosts:$52,404

HourlyRate:$16.80

InCentralMinnesota,atypicalfamilyoftwoadultsandonechild,oneadultworkingfull-timeandonepart-timeforacombined60workhoursperweek,needtoearnanestimatedfamilyincomeof$52,404peryearand$16.80perhourperworkertomaintainasimplelivingthatmeetsbasicneedsforhealthandsafety.


ThemedianwagepaidtoworkersacrossalloccupationsinCentralMinnesotais100percentof

thecostofliving,whilethemedianwageofferforjobvacanciesis71percentofthecostofliving.

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EconomicDevelopmentRegion8-Southwest

AnnualCosts:$43,524

HourlyRate:$13.95

InSouthwestMinnesota,atypicalfamilyoftwoadultsandonechild,oneadultworkingfull-timeandonepart-timeforacombined60workhoursperweek,needtoearnanestimatedfamilyincomeof$43,524peryearand$13.95perhourperworkertomaintainasimplelivingthatmeetsbasicneedsforhealthandsafety.


ThemedianwagepaidtoworkersacrossalloccupationsinSouthwestMinnesotais106


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EconomicDevelopmentRegion9–SouthCentral

AnnualCosts:$45,528

HourlyRate:$14.59

InSouthCentralMinnesota,atypicalfamilyoftwoadultsandonechild,oneadultworkingfull-timeandonepart-timeforacombined60workhoursperweek,needtoearnanestimatedfamilyincomeof$45,528peryearand$14.59perhourperworkertomaintainasimplelivingthatmeetsbasicneedsforhealthandsafety.


ThemedianwagepaidtoworkersacrossalloccupationsinSouthCentralMinnesotais110


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EconomicDevelopmentRegion10-Southeast

AnnualCosts:$48,828

HourlyRate:$15.65

InSoutheastMinnesota,atypicalfamilyoftwoadultsandonechild,oneadultworkingfull-timeandonepart-timeforacombined60workhoursperweek,needtoearnanestimatedfamilyincomeof$48,828peryearand$15.65perhourperworkertomaintainasimplelivingthatmeetsbasicneedsforhealthandsafety.


ThemedianwagepaidtoworkersacrossalloccupationsinSoutheastMinnesotais113


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EconomicDevelopmentRegion11-TwinCitiesMetro

AnnualCosts:$60,072

HourlyRate:$19.25

IntheTwinCitiesMetroregionofMinnesota,atypicalfamilyoftwoadultsandonechild,oneadultworkingfull-timeandonepart-timeforacombined60workhoursperweek,needtoearnanestimatedfamilyincomeof$60,072peryearand$19.25perhourperworkertomaintainasimplelivingthatmeetsbasicneedsforhealthandsafety.

Theestimatedmonthlycostsarechildcare$625,food$782,healthcare$408,housing$1,028,transportation$804,othernecessities$566,andtaxes$793.

ThemedianwagepaidtoworkersacrossalloccupationsintheTwinCitiesMetrois106percentof

thecostofliving,whilethemedianwageofferforjobvacanciesis62percentofthecostofliving.

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FurtherAnalysisandRecommendationsAcomparisonofthecostoflivingandtypicalwagesbyregioncanhelpilluminatesomeoftheeconomicchallengesoropportunitiesforemploymentrecruitmentandretention,minoritycommunitywealth-building,consumerexpenditures,andsocialservices.

MedianWageasaShareoftheCostofLiving

Thestatewide$18.65medianwageofexistingjobsis106percentofthe$17.57costofliving.ThismeansthatalittleoverhalfofallworkingMinnesotansarepaidmorethanthefamily-of-threecostofbasicneeds.TheaveragefamilysizeinMinnesotais3.0personsandtheaveragehouseholdsize,forfamilyandnon-familyhouseholdscombined,is2.5persons.

Ifthelabormarketwereinperfectbalancewitheveryonematchedwiththerightjobs,thehalfofworkerspaidmorethanthemedianwagewouldbethefamilieslargerthanthree(whilethehalfofworkerspaidlesswouldbethefamiliessmallerthanthree).Thiswouldmeanthatamedianwageequaltothecostoflivingwasmeetingmostpeople’sbasicneeds.Buteconomistsknowthatnomarketiseverperfectlybalanced.

Thelimitsofavailabledatameanthateconomistsmustevaluatelivingstandardsbylookingatwhetheranarea’smedianwage,foralloccupationstogether,meetsorexceedsthecostofliving.AccordingtoOccupationalEmploymentStatistics,Minnesota’sstatewidemedianwageexceedsthestatewidecostofliving.ThemedianwagesintenofMinnesota’sthirteeneconomicdevelopmentregionsalsoexceedthecostoflivingwithinthosereasons.Herearethemedianwagesbyregionforthoseareasasapercentageofcostofliving:

• Northwestregion,114percent

• Southeastregion,113percent

• Arrowheadregion,111percent

• SouthwestCentralregion,111percent

• SouthCentralregion,110percent

• UpperMinnesotaValleyregion,109percent

• WestCentralregion,107percent

• Southwestregion,106percent

• TwinCitiesMetroregion,106percent

• Headwatersregion,105percent

TheCentralregion’smedianwageisexactly100percentoftheCostofLiving.MedianwagesintheNorthCentralregionareat93percentoftheregionalcostofliving.MedianwagesintheEastCentralregionareat89percentoftheregionalcostofliving.

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JobVacancyMedianWageOfferasaShareoftheCostofLiving

Themedianwageofferedtoworkersintheprocessofhiringforjobvacancies,accordingtotheJobVacancySurvey,is74percentofthecostoflivingatthestatelevel.NoneofMinnesota’sthirteeneconomicdevelopmentregionsshowsamedianwageofferforvacancieswhichmeetstheregion’scostofliving.TheSoutheastandtheUpperMinnesotaValleyregionsarethehighestinthiscategory,withmedianwagesofferedtoworkerstofilljobvacanciesat88percentoftheregion’scostofliving.TheWestCentralregionis85percent,theSouthwestregionis84percent,theNorthwestandtheSouthCentralregionsbothare82percent,theArrowheadregionis77percent,theCentralregionis71percent,theHeadwatersregionis69percent,theSouthwestCentralregionis67percent,theNorthCentralregionis66percent,the7-CountyMetrois62percent,andtheEastCentralregionis54percentoftheregion’scostofliving.

Althoughthemedianwagelevelofferedtoworkerstofilljobvacanciesishistoricallylowerthanmedianwagesforfilledpositions—lower-wagejobsmighthavehigherturnoverandbecapturedmorefrequentlybytheJobVacancySurvey—aregionalmedianwageofferbelowtheregionalcostoflivingmaysignaleconomicchallengesaheadforemploymentrecruitmentandretention,minoritycommunitywell-being,andlocalconsumerexpenditures.

ImpactonEmploymentRecruitmentandRetention

AccordingtoemployersinterviewedforDEED’s2013HiringDifficultiesSurvey,demand-sideconditions,includingunsatisfactorywages,havecontributedtohiringdifficultiesintheproduction,industrialengineering,informationtechnology,andnursingoccupations.[7]Ifthesameholdstrueforotherindustries,thenregionswithamedianwageormedianwageofferbelowtheregionalcostoflivingmighttrytoimprovewagesinexistingoccupationsorexpandhigher-payingjobs.

Regionsmostinneedofemployee-retentionstrategiesincludetheNorthCentralandtheEastCentralregions,wherethemedianwageisbelowtheregionalcostofliving,andtheCentralregion,wherethemedianisexactlyequaltotheregionalcostofliving.

AllthirteenMinnesotaeconomicdevelopmentregions,includingtheMetro,showmedianwageoffersforvacantjobsbelowtheregionalcostofliving.Oneoptiontoimproveemployeerecruitmentmightbetoengageindemand-sidestrategies.RegionsthatwouldbenefitmostfromthesestrategiesincludetheCentral,theHeadwaters,theSouthwestCentral,theNorthCentral,the7-CountyMetro,andtheEastCentralregions,wherethejobvacancymedianwageofferasapercentoftheregionalcostoflivingfallsbelowthestatewideaverage.

ImpactonMinorityCommunities

DatashowsthattheaverageannualwageinMinnesotacandifferconsiderablyfromoneraceorethniccommunitytoanother.[8]DEEDusesdatafromtheU.S.CensusLongitudinalEmployer-HouseholdDynamics(LEHD)programtoexaminethesedifferences.WhilethereareafewdifferencesbetweenLEHDdataandtheCostofLivingstudydata,usingthesetwodatasetsprovidestheclosestapples-to-applescomparisonthatwecanget.ItisworthnotingthattheLEHDdataisfrom2014,whiletheCostofLivingStudydataisfrom2015.

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Allindustriesaveragebyrace

ThestatewideannualcostofbasicneedsforaMinnesotafamilyofthree,acrossallindustries,is$45,864.Theaverageannualwageperworkerregardlessofraceorethnicityis$48,733or106percentofthecostofbasicneeds.

TheaverageannualwageforWhiteNon-Hispanicworkersisthehighestinthestate,at$50,200or109%.ThisisalsothelargestpopulationgroupinMinnesota.Theaveragewageforallworkersofcolorcombinedis$36,524or80percentofthecostofbasicneeds.

AmongminorityracialandethnicgroupsinMinnesota,thehighestwageisforAsianworkersat$49,028or107percent,followedbyWhiteHispanicworkersat$34,042or74percent,andAmericanIndian/AlaskaNativeworkersat$31,171or68percent,andfinallyBlack/AfricanAmericanworkersat$30,116or66percentofthecostofbasicneeds.

Lowwageindustriesaveragebyrace

Anotherwaytoexaminedisparitiesistocomparetheaveragewageinthe10largestlow-wageindustriestothestatewideannualcostofbasicneedsforafamilyofthree($45,846),withaspecificfocusondifferencesbetweenracialandethnicgroups.ThisgivesusasenseofhowMinnesota’slowest-wageworkersarefaring.

TheaverageannualwageforWhiteNon-Hispanicworkersinthe10largestlow-wageindustriesofemploymentis$28,203or61percentofthecostofbasicneeds.Thelow-wageindustryaverageforallworkersofcolorcombinedis$21,112or46percentofthecostofbasicneeds.

BreakingoutspecificpopulationsamongminorityworkersinMinnesota,thelow-wageindustryaverageforAmericanIndian/AlaskanNativeworkersis$24,063or52percentofthecostofbasicneeds,for

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Asianworkersis$22,760or50percent,forWhiteHispanicworkersis$22,136or48percent,andforBlack/AfricanAmericanworkersis$19,454or42percentofthecostofbasicneeds.

ThedataalsoshowsthatWhiteNon-Hispanicworkersholdadisproportionatelyhighshareofjobsinveryhighwageindustries,whiletheoppositeistrueforworkersofcolor(whoholdadisproportionatelyhighshareofjobsinverylow-wageindustries).

Forexample,whiteworkersheld85.7percentofalljobsin2014but88.6percentofveryhighwagejobsandonly80.6percentofverylowwagejobs.Bycontrast,workersofcolorheld14.2percentofalljobsbutonly11.4percentofveryhighwagejobsand19.4percentofverylowwagejobs.

Manycommunitiesalreadyrecognizethesetrendsandareactivelyworkingtoimprovewageoutcomesforfamiliesofcolor,eitherwithinthemixofexistingoccupationsorbyhelpingworkersenterhigher-payingoccupations.

ImpactonConsumerExpenditures

TheCostofLivingStudyprovidesanestimateofthecostofbasicnecessaryexpenditures.Incomesbelowthecostoflivingmaylimitbasicconsumerexpendituresandsloweconomicgrowth.Iffamilieshavelittlebuyingpoweroutsideofcoveringtheirbasicneeds,theyareunabletocontributesubstantiallytoaregion’seconomy.

Inordertosustainconsumerexpendituresandgrowahealthyeconomy,regionssuchasNorthCentral,EastCentral,andCentralwherethemedianwageisbeloworequaltotheregionalcostofliving,andtheHeadwatersregionwherethemedianwageisslightlyabovetheregionalcostoflivingbutbelowthestatewideshare,mighttrytodiversifythelocaleconomicsinordertoattractnewandhigher-payingjobs,orimproveinfrastructuretoassistwithbusinessexpansionintheirareas.Ultimately,strategies

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thatleadtoimprovedlocalwagesortheexpansionofhigher-payingjobswouldbetteralignbuyingpowerwiththeregionalcostofliving.

ImpactonDemandforSocialServiceSubsidies

Peoplewhodonotearnenoughtomeettheirfamily’sbasicneedsmaybemorelikelytoseekoutsocialservicesorothersubsidies.Inregionswherethereareagreaternumberofpeoplewhodon’tearnthecostofliving,regionaleconomiccentersmayhavedifficultyfindingenoughself-supportingjobopportunitiestomeettheneed.Thisinturncouldleadtomorefrequentre-entryoruseofsupportservices,creatingmorestrainonthesystem.

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Sources1.CostofLivingStudy.LaborMarketInformation,MinnesotaDepartmentofEmploymentandEconomicDevelopment.Seemn.gov/deed/data/data-tools/col/.

2.AmericanCommunitySurvey.U.S.CensusBureau.DP-2,5-YearSeries,2014.

Seefactfinder.census.gov/faces/nav/jsf/pages/index.xhtml.

3.CurrentEmploymentStatistics.TotalPrivateSector,2015.

Seeapps.deed.state.mn.us/lmi/ces/Results.aspx.

4.CurrentPopulationSurvey.U.S.CensusBureau.C3,LivingArrangementsofChildrenUnder18YearsandMaritalStatusofParents,byAge,Sex,Race,andHispanicOriginandSelectedCharacteristicsoftheChildforAllChildren,2015.Seewww.census.gov/hhes/families/data/cps2015.html.

5.OccupationalEmploymentStatistics.LaborMarketInformation,MinnesotaDepartmentofEmploymentandEconomicDevelopment.FirstQuarter,2015.Seemn.gov/deed/data/data-tools/oes/.

6.JobVacancySurvey.LaborMarketInformation,MinnesotaDepartmentofEmploymentandEconomicDevelopment.SecondQuarter,2015.Seemn.gov/deed/data/data-tools/job-vacancy/.

7.“Areskilledworkersscarce?EvidencefromemployersurveysinMinnesota.”HiringDifficultiesSurvey.LaborMarketInformation,MinnesotaDepartmentofEmploymentandEconomicDevelopment.Seemn.gov/deed/images/SecondRoundReportSkillsGap.pdf.

8.“StuckinNeutral.”MinnesotaEconomicTrends,December2015.LaborMarketInformation,MinnesotaDepartmentofEmploymentandEconomicDevelopment.

Seemn.gov/deed/newscenter/publications/trends/december-2015/stuck-in-neutral.jsp.

StatutoryMandate

MinnesotaStatutes2013,chapter116J,section013,mandatesthatthecommissioneroftheDepartmentofEmploymentandEconomicDevelopmentshallconductanannualcost-of-livingstudyinMinnesotaandreportthereonbyFebruary1ofeachyear.

Thestatutereads:

(a)Thecommissionershallconductanannualcost-of-livingstudyinMinnesota.Thestudyshallinclude:

(1)acalculationofthestatewidebasicneedscostofliving,adjustedforfamilysize;

(2)acalculationofthebasicneedscostofliving,adjustedforfamilysize,foreachcounty;

(3)ananalysisofstatewideandcountycost-of-livingdata,employmentdata,andjobvacancydata;and

(4)recommendationstoaidintheassessmentofemploymentandeconomicdevelopmentplanningneedsthroughoutthestate.

(b)Thecommissionershallreportonthecost-of-livingstudyandrecommendationsbyFebruary1ofeachyeartothegovernorandtothechairsofthestandingcommitteesofthehouseofrepresentativesandthesenatehavingjurisdictionoveremploymentandeconomicdevelopmentissues.

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Incompliancewith2013MinnesotaStatutesChapter3,Section195,twocopiesofthisreportalsowillbefiledwiththeLegislativeReferenceLibrary.

AppendixB

CostofLivingStudyDataSources

AgencyforHealthcareResearchandQuality,U.S.DepartmentofHealthandHumanServicesAmericanAutomobileAssociationBureauofLaborStatistics,U.S.DepartmentofLaborCensusBureau,U.S.DepartmentofCommerceCenterforNutritionPolicyandPromotion,U.S.DepartmentofAgricultureFederalHighwayAdministration,U.S.DepartmentofTransportationLaborMarketInformation,MinnesotaDepartmentofEmploymentandEconomicDevelopmentMinnesotaOfficeoftheRevisorofStatutesChildCareAwareofMinnesota,SaintPaul,MinnesotaCouncilforCommunityandEconomicResearch,Arlington,VirginiaNationalBureauofEconomicResearch,Cambridge,MassachusettsU.S.DepartmentofHousingandUrbanDevelopment

AppendixC

MinnesotaEconomicDevelopmentRegions

Region1—Northwest,includesKittson,Marshall,Norman,Pennington,Polk,RedLake,andRoseauCounties.

Region2—Headwaters,includesBeltrami,Clearwater,Hubbard,LakeoftheWoods,andMahnomenCounties.

Region3—Northeast,includesAitkin,Carlton,Cook,Itasca,Koochiching,Lake,andSt.LouisCounties.

Region4—WestCentral,includesBecker,Clay,Douglas,Grant,OtterTail,Pope,Stevens,Traverse,andWilkinCounties.

Region5—NorthCentral,includesCass,CrowWing,Morrison,Todd,andWadenaCounties.

Region6W—UpperMinnesotaValley,includesBigStone,Chippewa,LacQuiParle,Swift,andYellowMedicineCounties.

Region6E—SouthwestCentral,includesKandiyohi,McLeod,Meeker,andRenvilleCounties.

Region7W—Central,includesBenton,Sherburne,Stearns,andWrightCounties.

Region7E—EastCentral,includesChisago,Isanti,Kanabec,MilleLacs,andPineCounties.

Region8—Southwest,includesCottonwood,Jackson,Lincoln,Lyon,Murray,Nobles,Pipestone,Redwood,andRockCounties.

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Region9—SouthCentral,includesBlueEarth,Brown,Faribault,LeSueur,Martin,Nicollet,Sibley,Waseca,andWatonwanCounties.

Region10—Southeast,includesDodge,Fillmore,Freeborn,Goodhue,Houston,Mower,Olmsted,Rice,Steele,Wabasha,andWinonaCounties.

Region11—TwinCitiesMetro,includesAnoka,Carver,Dakota,Hennepin,Ramsey,Scott,andWashingtonCounties.

minnesota cost of living study annual report 2016

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