Switching jobs in Minnesota boosts ‘real’ wages 6%, report finds

Inflation in the post-COVID era is nipping at wages, particularly among Minnesotans who have remained loyal to their current employers, according to a new state study.

According to the report released Thursday by the Minnesota Department of Employment and Economic Development (DEED), median “real,” or inflation-adjusted, wages fell 1% for those who stayed in their jobs and rose 6% for those who stayed in the past year changed jobs.

In comparison, if you look at the fourth quarter of 2018, before the pandemic fueled high inflation rates, real wages rose for those who stayed (1.7%) and those who changed employers (6.1%).

“What has changed most is the wage growth gap between those who stay and those who switch, which widened in the post-COVID era,” said Alessia Leibert, Minnesota-based senior labor market research analyst. “If this gap continues to widen, more workers will have an economic incentive to switch, and Minnesota employers could face above-average turnover in the coming months.”

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Younger workers, ages 18 to 25, and those earning less money, tended to change jobs more frequently and received the largest wage increases.

The industries with the highest rates of employee turnover include lodging, hospitality, nursing home, healthcare and retail sectors.

The increase in wages from changing employers “increases the economic incentive for workers to change jobs,” Leibert said. In most cases, workers who stayed in their current jobs “didn’t get enough raises to offset inflation.”

The financial advantages and disadvantages of keeping a job vary greatly by industry. Workers who kept their education, government, hospital/clinical and factory jobs saw median real wages shrink by 3.3%, 2.1%, 1% and 0.9% respectively after the pandemic. Statewide, these four sectors had the highest rates of employee retention.

The percentage of people who kept their jobs — referred to as “stayers” by the researchers — between Q4 2018 and Q4 2019 was 72.6%. This fell to 70.3% between the first quarter of 2021 and the first quarter of this year.

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While job-changers — what researchers refer to as “changers” — remained relatively stable at 18.3%, the number of Minnesotans who left their jobs for good rose from 9% to 11.5% over the same period.

Calls for higher wages and other issues have sparked fresh rounds of union activity in Minnesota hospitals and clinics and retail outlets like Half Price Books, Starbucks and Trader Joes. Recently, video crew workers at the United FC Soccer franchise and some Guthrie workers voted to join unions.

Meanwhile, employers say they are struggling to fill vacancies. The state has almost 2.5 job openings for every unemployed person in Minnesota.

Charlie Weaver, executive director of the Minnesota Business Partnership, which represents the CEOs and top executives of more than 100 of Minnesota’s largest companies, said its members are all struggling with labor shortages.

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Part of the problem, he said, is simply that businesses are growing and need more workers. The other part of the equation is workers leaving, whether for new, better-paying jobs or for retirement.

“I guess it’s 50/50,” Weaver said. In interviews with executives from Digi-Key, Polaris, Marvin Windows, Andersen Windows, and others, inflation and labor shortages are “a challenge… It’s huge.”

Some rural farm companies “are losing money every day because they don’t have enough workers,” he said.

The combination of inflation and labor shortages has prompted companies to reassess benefits and wages, ramp up recruitment efforts and, in some cases, reconsider factory expansions. Some companies are exploring programs for migrant workers, while others are working with youth to attract new employees who can train them in-house, Weaver said.

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