by Mark Schultz and Luke Greiner
September 2016
Southwest Minnesota is home to prominent employers, vast troves of fertile agriculture land, and a widespread network of higher education institutions. Yet many conversations in the region about job opportunities focus on the abundance of low paying jobs. Economies rely on low paying jobs for everything from caring for the elderly to getting a beer.
Of course low paying occupations such as fast food cooks, cashiers, and child care workers exist in every region in the state, but does Southwest Minnesota have a disproportionate supply? Are low wage occupations expected to grow more than high wage occupations? Furthermore, has the region a short supply of the typical high paying occupations? Conversations about this issue are generally very broad and offer only subjective insight about the economy and opportunity in Southwest Minnesota.
The simple answer is yes. The median annual wage for all occupations in Southwest Minnesota is $33,234 or $15.98 an hour. Only Northwest Minnesota is lower at $33,055 or $15.90 an hour. However, the cost of living in Southwest Minnesota is the lowest in the state at $44,736 a year for the typical family of three. The next most affordable region to live in is Northwest Minnesota at $46,416 according to DEED's Cost of Living calculator.
Examining wage data further shows a much more complex answer, one that isn't as simple as yes or no. DEED's Occupational Employment Statistics tool provides detailed wage and employment data that span 176,530 jobs and nearly 500 different occupations in Southwest Minnesota. Ten percent of the jobs in the region pay $67,605 or more a year, while 10 percent pay less than $18,825. An important note on low paying jobs is that many are very part-time or seasonal and provide opportunity for students, workers new to the labor force, or extra income in the form of a second job.
Pinning down how much money is considered a "good wage" is difficult and nearly entirely subjective. However, it's reasonable to use the 75th percentile for the region. At $48,129, it is $3,393 above the basic cost to live for a typical family of three. There are 201 different occupations in Southwest Minnesota that have a median wage above the 75th percentile for all jobs in the region.
On the bottom end of the wage statistics, the 25th percentile presents itself as a useful benchmark. At $23,014, it's lower than the minimum cost for a single worker with no children to live in Southwest Minnesota – $25,860. There are only 46 occupations that have a median annual wage less than $23,014, but there are numerous occupations that do not have employment or wage estimates because of data confidentiality restrictions. Although there are suppressed employment data for both high and low paying occupations, the highest paying jobs provide many different occupations with small pockets of employment, averaging 225 jobs per occupation. Conversely, lower paying jobs consist of larger employment, with an average of 750 jobs in fewer occupations.
A closer look at the most common occupations with median annual wages above the 75th percentile and below the 25th percentile provides a unique look at employment in Southwest Minnesota. The most common occupation that provides a median wage above the 75th percentile for all jobs in the region is registered nurse. With an annual median wage of $57,939 and about 3,290 jobs in Southwest Minnesota, the occupation is an excellent example of a high quality job. In fact, a registered nurse earning the median wage in the region should be able to cover the basic needs cost of $48,780 for a spouse and two children.
Although high wages often come with limited employment opportunities, the 10 occupations with high median wages in the Table 1 offer both good wages and bountiful employment throughout the entire region.
The most common occupation with low median wages is cashier with more than 5,600 jobs paying an annual median wage of $19,045. Although the median wage for cashiers would most likely be unable to sustain a person with no spouse or children – $25,860 – in Southwest Minnesota, the occupation is important for high school students and others new to the labor force. As an entry level occupation it provides a fantastic environment to learn customer service skills, workplace dynamics, and etiquette.
A location quotient or LQ provides a way to understand how concentrated an occupation is in a particular region compared to a larger geography, the state of Minnesota in this case. An LQ of 1 means there is the exact same concentration of a particular occupation in the southwest as there is in Minnesota. Four of the top 10 largest high paying occupations have LQ's above 1. For instance police and sheriff's patrol officer jobs are 1.8 times more common in Southwest Minnesota than the state.
Meanwhile seven of the 10 most common low paying occupations in Southwest Minnesota have LQs higher than 1. Cashiers, hand packagers, and food preparation and serving workers (fast food workers) are all at least one-and-a-half times more common in southwest Minnesota than in the state.
It appears the most common low paying jobs are more concentrated in Southwest Minnesota, and there are more low paying occupations than high paying ones. The top paying occupations in Table 1 represent a cumulative 17,500 jobs while the low paying occupations from the table amount to 25,680 jobs.
| Table 1: Most Common Occupations With Median Wages Above the 75th Percentile and Below the 25th Percentile, Southwest Minnesota | |||||
|---|---|---|---|---|---|
| Occupational Title | Employment | LQ | Median Wage | Share of Total Employment | |
| Common Occupations With High Median Wages | Registered Nurses | 3,290 | 0.9 | $57,939 | 1.86% |
| Elementary School Teachers, Except Special Education | 2,590 | 1.5 | $48,484 | 1.47% | |
| General and Operations Managers | 2,290 | 0.9 | $70,970 | 1.30% | |
| Secondary School Teachers, Except Special and Vocational Education | 1,910 | 1.5 | $52,910 | 1.08% | |
| Sales Representatives, Wholesale and Manufacturing, Except Technical and Scientific | 1,860 | 0.9 | $52,007 | 1.05% | |
| First-Line Supervisors/Managers of Office and Administrative Support Workers | 1,380 | 0.9 | $49,909 | 0.78% | |
| First-Line Supervisors/Managers of Production and Operating Workers | 1,290 | 1.7 | $51,596 | 0.73% | |
| Accountants and Auditors | 1,070 | 0.6 | $57,412 | 0.61% | |
| Police and Sheriff's Patrol Officers | 990 | 1.8 | $48,953 | 0.56% | |
| Business Operations Specialists, All Other | 830 | 0.5 | $50,109 | 0.47% | |
| Common Occupations With Low Median Wages | Cashiers | 5,650 | 1.5 | $19,045 | 3.20% |
| Retail Salespersons | 5,100 | 0.9 | $20,133 | 2.89% | |
| Combined Food Preparation and Serving Workers, Including Fast Food | 4,550 | 1.1 | $18,942 | 2.58% | |
| Stock Clerks and Order Fillers | 2,850 | 1.4 | $21,818 | 1.61% | |
| Home Health Aides | 2,200 | 1.3 | $22,947 | 1.25% | |
| Packers and Packagers, Hand | 1,440 | 1.7 | $19,645 | 0.82% | |
| Bartenders | 1,250 | 1.1 | $18,886 | 0.71% | |
| Landscaping and Groundskeeping Workers | 950 | 1.0 | $22,220 | 0.54% | |
| Maids and Housekeeping Cleaners | 870 | 0.8 | $20,978 | 0.49% | |
| Food Preparation Workers | 820 | 1.6 | $21,086 | 0.46% | |
| Source: DEED, Occupational Employment Statistics | |||||
Low paying occupations are often flush with opportunity for new workers and the educational requirements provide low barriers. The minimum education needed for the occupations in Table 1 is primarily a high school diploma or less. All of the common low paying occupations and two of the most numerous high paying occupations can be attained with just a high school diploma. A noteworthy nuance is that the three high paying occupations requiring no higher education. First-line supervisors of production and operations workers, first-line supervisors/managers of office workers, and wholesale or manufacturers sales representatives (except scientific and technical products) most likely require experience in lieu of education. Figure 1 illustrates the educational requirements for both the high and low paying occupations.
The number of vacancies in the high and low-paying occupations in the Southwest region shows an interesting and unsettling phenomena. Table 2 shows that the total number of vacancies for the higher paying jobs is at least 264, although given that there was no vacancy data for all sales representatives, wholesale and manufacturing, except technical and scientific or other business and operations specialists it is possible that this number may be higher, while the total for the low-paying jobs is 1,189, which is 350% higher.
Source: DEED Job Vacancy Survey (JVS)| Table 2: Current Vacancies, Southwest Minnesota | ||||||||
|---|---|---|---|---|---|---|---|---|
| - | Occupational Title | Number of Job Vacancies | Percent Part-Time | Percent Temp. or Seasonal | Percent Req. Post-Secondary Education | Percent Req. 1+Yrs. Exp. | Percent Req. Cert. or License | Median Wage Offer |
| Common Occupations With High Median Wages | Registered Nurses | 170 | 46 | 2 | 98 | 35 | 99 | $23.05 |
| Elementary School Teachers, Except Special Education | 4 | N/A | N/A | N/A | N/A | N/A | $16.50 | |
| General and Operations Managers | 7 | 0 | 0 | 100 | 100 | 59 | $30.96 | |
| Secondary School Teachers, Except Special and Care | 6 | 33 | 9 | 79 | 42 | 98 | $16.26 | |
| Sales Representatives, Wholesale and Manufacturing, Except Technical and Scientific | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |
| First-Line Supervisors of Office and Administrative Workers | 24 | 12 | 8 | 65 | 84 | 26 | $17.02 | |
| First-Line Supervisors of Production/Operating Workers | 38 | 0 | 0 | 76 | 55 | 2 | $22.03 | |
| Accountants and Auditors | 11 | 0 | 0 | 100 | 52 | 5 | $22.47 | |
| Police and Sheriff's Patrol Officers | 4 | 25 | 0 | 100 | 25 | 100 | $17.24 | |
| Business and Operations Specialists, All Other | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |
| Common Occupations With Low Median Wages | Cashiers | 432 | 91 | 14 | 0 | 2 | 0 | $9.81 |
| Retail Salespersons | 374 | 89 | 83 | 0 | 54 | 1 | $9.00 | |
| Combined Food Preparation and Serving Workers | 74 | 83 | 2 | 0 | 7 | 2 | $9.83 | |
| Stock Clerks and Order Fillers | 96 | 89 | 1 | 0 | 16 | 28 | $10.75 | |
| Home Health Aides | 96 | 81 | 2 | 2 | 11 | 20 | $9.65 | |
| Packers and Packagers, Hand | 64 | 49 | 0 | 0 | 26 | 0 | $8.72 | |
| Bartenders | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |
| Landscaping and Groundskeeping Workers | 10 | 58 | 14 | 0 | 28 | 52 | $13.36 | |
| Maids and Housekeeping Cleaners | 13 | 85 | 1 | 0 | 16 | 9 | $10.93 | |
| Food Preparation Workers | 30 | 60 | 0 | 0 | 3 | 2 | $10.60 | |
While it is nice to see that there are over 1,400 vacancies in just the 20 occupations in Table 2, the huge number of vacancies in the low-paying jobs compared to the high paying jobs could be cause for concern on both micro and macro levels. First, unemployed individuals may find themselves not able or willing to take the low-paying jobs as they may not meet the pay threshold needed to meet the basic cost of living needs. They then find themselves remaining unemployed. Subsequently, the businesses that have the vacancies for these low paying jobs find themselves not able to fill their openings and may not have the resources to bump up the pay to make them more attractive to job seekers. A cycle ensues when this type of thing happens, as seen in Figure 2. Not being able to find workers could lead to lost productivity and output which then leads to lower profits and further perpetuates the inability of the employer to pay higher wages. If this happens among multiple businesses in an area, the local economy can suffer. Thus, we see not only individuals (micro-level) being impacted but also the broader economy (macro-level).
What is further unsettling is that on average just under 85 percent of the low-paying jobs are part-time, whereas the high-paying jobs average about 22 percent part-time hours. This can also result in unfortunate circumstances for individuals as the combination of fewer hours and low pay result in less net pay. Additionally, many jobs that are part-time fail to offer benefits such as health and dental insurance, forcing individuals either to pay potentially large premiums for coverage or find themselves not able to afford any coverage.
Not all is doom and gloom in these vacancy data though, as it appears that two things are of higher importance when the higher paying jobs are compared to the lower paying – education and experience matter. While data were not available for wholesale and manufacturing sales representatives (except technical and scientific) and all other business and operations specialists, for the remaining eight high-paying occupations between 65 and 100 percent of the vacancies require post-secondary education and between 35 and 100 percent require one or more years of experience. On the contrary, almost none of the openings in the lower paying occupations require education beyond high school, only the 2 percent for home health aides. Additionally, the percentages of those requiring one or more years of experience is much lower than the higher paying counterparts, ranging from a low of 2 percent for cashiers to a high of 54 percent for retail sales vacancies.
Employment projections for higher paying occupations in the Southwest region show a similar pattern to the vacancy data with fewer new and replacement openings compared to the much more imposing numbers of openings for the lower paying jobs. The highest numeric change from new jobs for the upper wage jobs is 265 while the highest for the lower ones is 647. However, those higher-end jobs are projected to see less job loss during this projections period with only 106 lost jobs compared to 303 lower paying jobs lost. Replacement hires mimic this pattern with many fewer replacement hires needed in the higher paying jobs than the lower, with a total of 3,260 people needed to fill the void of those who leave the occupation in contrast to 12,060 in the low paying jobs (see Table 3).
Source: DEED Employment Outlook| Table 3: Employment Projections (2012-2022), Southwest Minnesota | |||||||
|---|---|---|---|---|---|---|---|
| Occupational Title | 2012 Estimates | 2022 Projections | Percent Change | Total Change | Replacement Hires | Total Hires | |
| Common Occupations With High Median Wages | Registered Nurses | 3,012 | 3,277 | 8.8% | 265 | 580 | 840 |
| Elementary School Teachers, Except Special Education | 1,760 | 1,704 | -3.2% | -56 | 390 | 390 | |
| General and Operations Managers | 2,327 | 2,426 | 4.3% | 99 | 440 | 540 | |
| Secondary School Teachers, Except Special and Care | 1,261 | 1,221 | -3.2% | -40 | 340 | 340 | |
| Sales Representatives, Wholesale and Manufacturing, Except Technical and Scientific | 1,522 | 1,537 | 1.0% | 15 | 300 | 320 | |
| First-Line Supervisors of Office and Administrative Workers | 1,098 | 1,117 | 1.7% | 19 | 260 | 280 | |
| First-Line Supervisors of Production and Operating Workers | 1,292 | 1,322 | 2.3% | 30 | 180 | 210 | |
| Accountants and Auditors | 1,296 | 1,345 | 3.8% | 49 | 380 | 430 | |
| Police and Sheriff's Patrol Officers | 834 | 824 | -1.2% | -10 | 260 | 260 | |
| Business Operations Specialists, All Other | 753 | 754 | 0.1% | 1 | 100 | 100 | |
| Common Occupations With Low Median Wages | Cashiers | 5,426 | 5,298 | -2.4% | -128 | 2,350 | 2,350 |
| Retail Salespersons | 5,846 | 6,037 | 3.3% | 191 | 2,000 | 2,190 | |
| Combined Food Preparation and Serving Workers, Including Fast Food | 3,683 | 3,953 | 7.3% | 270 | 1,410 | 1,680 | |
| Stock Clerks and Order Fillers | 2,067 | 1,942 | -6.0% | -125 | 620 | 620 | |
| Home Health Aides | 3,769 | 4,416 | 17.2% | 647 | 720 | 1370 | |
| Packers and Packagers, Hand | 648 | 606 | -6.5% | -42 | 170 | 170 | |
| Bartenders | 1,230 | 1,204 | -2.1 | -26 | 460 | 460 | |
| Landscaping and Groundskeeping Workers | 1,273 | 1,342 | 5.4% | 69 | 320 | 390 | |
| Maids and Housekeeping Cleaners | 1,927 | 2,022 | 4.9% | 95 | 380 | 480 | |
| Food Preparation Workers | 600 | 592 | -1.3% | -8 | 170 | 170 | |
Compared to the state as a whole, Southwest Minnesota is seeing some good news and some bad. Current vacancies in the Southwest region show a lower percent of vacancies in the low paying occupations. But it is also seeing a lower percentage of vacancies in the high paying occupations (see Table 4).
| Table 4: Region to State Vacancies and Projections Comparison | ||||
|---|---|---|---|---|
| Southwest | Minnesota | |||
| High Pay | Low Pay | High Pay | Low Pay | |
| Percent Vacancies | 5.4% | 16.9% | 6.0% | 18.3% |
| Percent Projected New Openings | 6.5% | 16.6% | 11.1% | 19.1% |
| Source: DEED Job Vacancy Survey (JVS) and Employment Outlook | ||||
In addition, the Southwest regions is also seeing a lower percentage of projected new openings for both the high paying and low paying occupations compared to those across the state as a whole. Thus, Southwest Minnesota seems to be doing better about vacancies and projected new openings as well as seeing lower percentages in the low paying occupations. However, the region is behind the state in vacancies and new openings in the high paying occupations.
