Silver linings among low Twin Ports wages
Say you’ve got two job offers, one in the Twin Cities that pays well, and one in Duluth that pays a bit less. Would you take the lesser pay just to be able to live in the Twin Ports?
Plenty of people already do.
“Sometimes it’s not all about wages — people might decide to work in Northeastern Minnesota, even though they might be paid less, just because of different quality-of-life factors,” said Erik White, the area labor market analyst with the Department of Employment and Economic Development.
Wages in the seven-county Twin Cities metro area are markedly higher than those in Northeastern Minnesota. Data from White’s department put average wages in the Cities above $60,000 and our neck of the northwoods around $41,000 as of last year. Of all industries, only in mining does the northeastern part of the state earn more.
That’s a longstanding disparity and one that may not be as dire as it seems as the Twin Ports competes with the Twin Cities for workers.
“Typically in urban areas you’re going to have much higher-paying jobs and more of them,” White said. “Sometimes it’s not comparing apples to apples.”
Labor markets work on supply-and-demand principles, which means when there are lots of businesses vying for one candidate, wages are going to go up to attract that candidate. Twin Ports businesses are only just starting to compete for workers at that level — and low unemployment in Duluth is a big help.
“We’ve seen the labor market tighten up in the region as well,” White said. “You are seeing businesses raising wages to compete with one another.”
The extreme example of the competitive labor market scenario played out in North Dakota’s Bakken oil patch, where fast-food jobs were starting at $15 an hour just to attract anyone to work there during the boom.
For a more sustainable wage hike, the key is diversity.
“In a more diversified economy, you tend to see higher wages,” White said.
Yet while everyone would benefit from a bump in pay, there may be a hidden advantage to having lower wages in Northeastern Minnesota:
The ability to attract businesses.
“I think it is something businesses look at, especially on the economic development side of things,” White said. “The wages they would have to provide to compete with the market would be attractive.”
Census data released last month showed the Duluth area’s median wage stayed almost the same between 2014 and 2015 even as the country experienced growth not seen since the recession.
Yet the final consideration in whether to take a job for more in the Twin Cities or get paid less to live in the Northland is the cost of living.
State data show the cost of food, housing and taxes are all much lower in St. Louis County than in the Twin Cities. The biggest savings: Child care costs in Ramsey and Hennepin counties are more than double what they are in St. Louis County.