ST. PAUL LEGAL LEDGER CAPITOL REPORT
If you are wondering whether Minnesota really needed both a sharp increase in the minimum wage AND a Women’s Economic Security Act AND various measures to reduce racial disparities, there is a brand new 50-page report that deserves your attention.
“Making Work Pay in Minnesota,’’ a comprehensive study issued at the end of the legislative session by the House Select Committee on Living Wage Jobs, provides a solid factual framework for understanding the stagnation of the middle class, gender and racial inequality, and the widening of the overall economic divide.
The report lays out sobering perspectives about the decline of livable wage jobs in Minnesota and offers strategic advice on specific policies to reverse the trend, some of which have already been enacted by the 2013-14 Legislature.
But the real strength of this study is the way it blends the concern for our new low-wage economy with more specific attention to racial and gender imbalance. Too often reformers who worry about a specific kind of inequality will develop tunnel vision and tend to devalue other aspects.
Here’s what the report shows, highlights and lowlights.
Median household income, the exact center point of middle-income Minnesota, declined 9.5 percent, from about $63,000 to about $57,000 from 2000 to 2011. It’s scant comfort, but we’re still 11th highest among the states on that score, our overall inequality is less severe than most states, and our economy is somewhat healthier.
Nationally, long-term average family income growth in the period from 1979 to 2007 stagnated at below 1 percent per year for the bottom four quintiles (80 percent of families), while average growth for those in the top 1 percent soared, rising by almost 4 percent per year over that period.
The official unemployment rate is falling in Minnesota faster than most states, but underneath that statistic, lots of trouble lurks. Adding those who have stopped looking for work, and those who are working part-time but who want full-time jobs, pushes the number of unemployed and under-employed to 350,000 (versus 165,000 officially unemployed). Many also are employed at jobs that pay less than their education and skills warrant.
Despite considerable narrowing of the gender gap since the women’s movement of the late 1960s, women still lag far behind men in pay, especially in the growing ranks of small businesses and self-employed in the private sector. Pay equity is much healthier in the public sector, owing to landmark “comparable worth’’ legislation passed in Minnesota in the 1980s.
Unemployment rates for African-Americans, Latinos and Native Americans in recent years have typically been two to four times higher than for whites, and income levels are dramatically lower as well. African-American families’ average income was $39,400 in 2012, and Latinos $44,000, compared to $67,700 for whites.
One of the most compelling graphics in the report shows a rapid increase just recently in the percentage of working mothers who have become the major income earner in their households. Even among white mothers, that percentage grew from 39 percent to 50 percent between 2008 and 2010. Among Hispanic/Latina mothers, the percentage grew from 39 percent to 53 percent, for Black/African mothers from 59 percent to 80 percent, and for Native Americans, from 61 percent to 83 percent.
The Great Recession was particularly hard on communities of color. Noting the income and employment gap between white workers and people of color, even those with equivalent educational attainment, the report boldly states that: “Discrimination, much of it informal yet pervasive, accounts for much of the difficulty in finding and keeping jobs and for lower pay and poorer working conditions.’’
The report comes down with four broad strategies for making work pay.
One, improving education attainment is not enough by itself to raise overall wages for workers. Many workers have more education than they need for the jobs they hold, and many workers need more or different skills to fill jobs that are available. Thus Minnesota suffers from a “mismatch’’ as much as it needs more attainment. One point of broad agreement is that employers and educators must continue to align demand and supply in a more rational way.
Two, stronger workplace regulations can improve job quality and pay, and will not necessarily harm the overall economy. A higher and indexed minimum wage, and improvements in paid sick leave and family leave for both women and men, can help families achieve greater security and more consistent employment.
Three, reformed business subsidies can improve job quality, especially ending or avoiding tax-break giveaways that show little evidence of producing more livable wage jobs. Wage subsidies that provide incentives to hire new people at higher pay rates, such as the Minnesota Employment and Economic Development (MEED) program in the 1980s, are preferable to so-called “tax expenditures.’’
Four, expansion of union organizing, especially among service, retail, home health care and child-care fields, can improve job quality. Among the eight West North Central States in 2011, Minnesota had both the highest median wage and the highest percentage of union employees. The decline of unions clearly is correlated to the decline of middle-income economic security.
The inevitable put-down regarding 50-page reports is that they likely will sit on a shelf and gather dust. This one already is different, and was having a real impact on Minnesota policy as the Select Committee on Living Wage Jobs was gathering testimony over the last two years.
The committee’s chair, Rep. Ryan Winkler, DFL-Golden Valley, was carrying the legislation that gave Minnesota its largest minimum wage increase in decades. Also in 2014, the Legislature leaped forward with the Women’s Economic Security Act. Dozens of other new laws and policy changes in 2013 and 2014 finally began to address racial inequality and discrimination.
But one two-year legislative session can’t reverse 30 years of middle-class stagnation and the global dynamics that are damaging the middle and bottom rungs while enriching the top echelons of our economy.
Although the minimum wage hike in 2014 will finally lift hundreds of thousands of workers to the $9.50 level, a living wage for all Minnesotans is still a long ways off. According to calculations by the JOBS NOW Coalition, the bare-bones living wage budget for a family of four, with two working adults, was pegged at $58,368 in 2009. This budget includes no restaurant meals, no transportation for recreation or shopping, no educational costs, no vacations, savings or emergencies. And this barely livable wage budget would require each adult to make $14.03 an hour, at 40 hours per week.
A whopping 40 percent of Minnesota jobs in 2009 paid less than that livable wage, and a hugely disproportionate percentage were held by women and people of color. We are making the right first steps, but we have many miles to go.