Inflation is eating away at wages in the post-COVID era, especially among Minnesotans who have stuck with 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), “actual” or inflation-adjusted median wages fell 1% for those who remained in their jobs and rose 6% for those who changed jobs last year.
In comparison – looking 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 switched ( 6.1%) from employers.
“What has changed the most is the gap in wage growth between those who stay and those who change, which has widened in the post-COVID period,” said Alessia Leibert, senior research analyst. in the Minnesota labor market. “If this gap continues to grow, more workers will have an economic incentive to switch, and Minnesota employers could face higher than usual turnover in the months ahead.”
Young workers, ages 18 to 25, and those earning less money tended to change jobs at higher rates and received the biggest pay rises.
Industries with the highest employee turnover rates include the accommodation, restaurant, nursing home, home healthcare and retail sectors.
Raising wages due to changing employers increases “the economic incentive for workers to change,” Leibert said. In most cases, workers who stayed in their current jobs “did not get enough pay rise to offset inflation.”
The financial advantages and disadvantages of maintaining a job varied widely from industry to industry. Workers who kept their jobs in the education, government, hospital/clinic and factory sectors saw their median real wages decline post-pandemic by 3.3%, 2.1%, 1% and 0 .9%, respectively. Statewide, these four industries had the highest worker retention rates.
The percentage of people who kept their jobs – which the researchers call “stayers” – between the fourth quarter of 2018 and the fourth quarter of 2019 was 72.6%. This figure fell to 70.3% between the first quarter of 2021 and the first quarter of this year.
While job changers — who the researchers call “changers” — remained relatively flat at 18.3%, the number of Minnesotans leaving their jobs for good rose from 9 to 11.5% during the same period. .
The cry for higher wages, among other issues, has sparked new rounds of union activity at Minnesota hospitals and clinics, as well as at retail stores such as Half Price Books, Starbucks and Trader Joes. More recently, workers from the United FC Soccer Franchise video team and some Guthrie workers voted to join the unions.
Meanwhile, employers say they are struggling to fill positions. The state has nearly 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 biggest companies, said its members are all grappling with a shortage of workers.
Part of the problem, he said, is simply that businesses are growing and need more workers. The other part of the equation is the departure of workers, whether for new, better paying jobs or to retire.
“I guess it’s 50/50,” Weaver said. In conversations with executives from Digi-Key, Polaris, Marvin Windows, Andersen Windows and other companies, inflation and labor shortages are “a challenge… It’s huge.”
Some businesses operating in rural areas “lose money every day because they don’t have enough workers”, he said.
The combination of inflation and labor shortages prompted companies to reevaluate benefits and wages, step up recruitment efforts and, in some cases, reconsider plant expansions. Some companies are exploring immigrant worker programs while others are working with young people to attract new employees they can train from within, Weaver said.