Minnesota’s Economic News — W/E 9/24/21
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Yesterday, I wrote about the new data from the Job Vacancy Survey. Besides shedding light on the state’s labor shortage, it also offered insight on the debate around Minnesota’s legally mandated minimum wage. The numbers were a severe blow to the case for a state minimum wage of $15 per hour.
There are already lots of jobs available paying at least $15 an hour
The median wage offer in these jobs across Minnesota was already $15 an hour in the second quarter of 2019, the level that some activists are pushing for the state government to impose legally. In 15 of 24 occupations covering 67,824 of the available jobs – 46.3% of the total – the median wage offered was at least $15ph, ranging from $15ph in Production Occupations to $40.42ph in Management Occupations.
The same goes for the Twin Cities, where ordinances are already in force to hike the minimum wage to $15ph. There, 17 of 24 occupations covering 50,296 of the available jobs – 58.5% of the total – were offering a median wage of at least $15ph, ranging from $15.22ph in Transportation and Material Moving Occupations to $42.84ph in Management Occupations.
Put simply, there already jobs out there offering $15ph or more. If you feel you are underpaid, apply for one of these jobs. If you’re successful, you’ll get a pay rise. The government doesn’t need to legislate one for you.
Higher pay is related to higher skills
Statewide, 84% of available jobs in Management Occupations required post-secondary education. By contrast, in Food Preparation and Serving Related Occupations, which, at $11.94ph, had the lowest median wage offer except Internships, only 2% of available jobs required post-secondary education. Again, the same was seen in the Twin Cities. There, 88% of jobs available in Management Occupations required post-secondary education while only 1% did in Food Preparation and Serving Related Occupations (median wage offered – $12.08ph).
Here, we see a link between pay (as measured by the median offered wage) and skills (as measured by the requirement for post-secondary education). This is what you would expect to see. But it means that hiking wages without a commensurate increase in productivity, which is driven by skills, is dangerous. If an employer judges a worker’s contribution to revenue to be $13ph, but the law says that worker has to be paid $13.50ph, then the employer will be adding more to costs (wages) than revenues from the hire. They won’t do this if they want to stay in business.
These numbers are good news for our state’s workers, but not, perhaps, for its activists.
John Phelan is an economist at the Center of the American Experiment.