The recent news about the big sandwich maker E.A. Sween Co. of Eden Prairie having to boost starting wages up to $12 an hour to keep fully staffed wasn’t really news for other employers in the Twin Cities.
In checking with some of them, they confirmed that the labor market has tightened to the point that the state’s minimum wage of $9 isn’t something really worth talking about. The real minimum wage, even for unskilled workers, is more like $11 per hour.
At first blush this seems like hopeful news for low-wage workers, that the tightening labor market has boosted wages well above what our state thinks is the minimum a Minnesotan should get paid.
Looking further into it, however, and there doesn’t seem to be much reason to celebrate. Even $11 per hour isn’t a real minimum wage for most workers, at least if by minimum we mean being able to afford much of a life.
But it’s certainly true that there are chances for workers now making a $9 an hour minimum wage to move up, as a lot of employers are looking for help and willing to pay $11 or more.
A quick scan of some job boards for light assembly, warehouse picking-and-packing and similar occupations turned up opportunities like a promising sounding warehouse assistant job in Plymouth that pays $14 an hour with first shift hours available. Applicants need a high school diploma or GED and need to be able to lift up to 50 pounds.
There’s a $12 per hour light assembly job available in Savage, posted a week ago, also for the day shift. A second-shift medical assembly job in Plymouth will pay $11 an hour, although this one looks to need at least six months of experience in the field.
There were $11.50 per hour jobs advertised last week in Somerset, Wis., also in assembly. Workers would get a $0.25 per hour raise at three months. There’s no prior experience necessary with this job, either, and it’s not a long drive. Somerset is just across the St. Croix River from Stillwater and still part of the Twin Cities.
If there is a job that doesn’t pay at least $11 per hour in the Twin Cities, it’s not easily found on the employment websites. Of course, employers hoping to pay less may be advertising for workers while just not advertising the intent to pay less.
“Eleven dollars is the prevailing wage,” said Judy Stolley, director of talent acquisition for Atterro, Inc., a Minneapolis-based parent of a number of employment firms. “In this market, those that are paying $10 are having a very difficult time hiring. For anyone asking for generally six months [of experience], it has to be near the $12 per-hour range to get anyone to work for them.”
Why isn’t this good news for low-wage workers? One reason is that there’s a segment of workers that seem to be lagging behind, and that’s the estimated 176,000 workers in the leisure and hospitality segment, nearly one in 10 of all jobs in the metro area.
As of the state’s most recent report from earlier this year, employers paid half of these workers $9.49 per hour or less.
The other issue is how much a worker has to make to be able to pay their bills living here in the metro area. The state has data on that for the entire state, in a cost-of-living calculator that’s been on the Department of Employment and Economic Development website for about a year.
A single person under the age of 50, living alone in suburban Washington County, could expect to spend nearly $800 per month for housing, about $360 per month for food and more than $120 per month for healthcare. The other big expense is transportation, at $473 per month.
By including payroll and other taxes, the state shows that the monthly expenses this worker would come to more than $2,100. The full-time wage needed to meet all of those basic needs works out to about $12.50 per hour.
It might be cheaper to live than the state estimates, maybe by living on a transit line and not owning a car, but this calculator points out the problem for low-wage workers. The $11.50 per hour job in Somerset? It doesn’t pay enough.
It’s a bigger problem for a single parent looking at a $11.50 job, say in Washington County where a single worker with one child would need to make just under $25 an hour.
In reading through the methodology the state used when putting together this calculator, one aspect that stood out is that it didn’t come up with some sort of typical household budget. There was nothing allocated for savings. The study excluded entertainment, so things like paying for movie tickets or any money set aside for a fishing trip weren’t included. Even money for things like a 12-pack of beer hadn’t been counted.
Most people likely spend at least a few dollars in a month for things like that.
In the metro, the only household that could really cover the basics with workers being paid the state minimum wage of $9 per hour is one with two full-timers and no kids. And of course, that’s still a life without beer or movie tickets.
As for what employers call the real minimum wage, that $11 per hour wage, it’s important to place that number in the long history of government-mandated minimum wages that goes back to when they first appeared in the latter years of the Great Depression.
The federal minimum wage hasn’t been raised for six years and stands at $7.25 an hour, but it’s been a lot higher when adjusted for inflation. The 1968 minimum wage turns out to be almost $11 per hour, when adjusted into 2015 dollars.
So while a job at $11 an hour beats the Minnesota minimum wage and is miles ahead of the federal minimum wage, it’s still no better than the lowest wage grandpa and grandma could have been paid 47 years ago.