December 2014

The Future of Work in Minnesota

Summary and introductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The growth in poverty wage jobs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Paid time off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
The increase of insecurity and instability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Involuntary part-time hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
The rise of the fissured workplace . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Sub-contracting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Misclassifying workers as independent contractors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Franchisee arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
The impact of poverty wage jobs on women and people of color . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Women . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
People of color . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

For press inquiries or more information about this report, contact

Jordan Ash
Minnesotans for a Fair Economy
jash@mnfaireconomy.org

This work is licensed under a Creative Commons AttributionNon-CommercialNo Derivatives 4.0 International License.

Summary and introductions

By many accounts, Minnesotas economy is in better shape than many other states.
Even at the peak of the recession, the states unemployment never hit double digit rates the nation as a whole experienced. Since
then, Minnesotas unemployment rate has continued to steadily decrease, dropping to 4.5 percent in August of 2014, well below
the national average of 6.2 percent.1
In the spring of 2014, the Minnesota legislature approved a bill to incrementally raise the state minimum wage to $9.50 an hour
by 2016. Almost 100,000 Minnesota workers got a raise during the summer of 2014 when the minimum wage increased to $8 an
hour, the first step building towards 2016.2
Despite these and other positive developments, there are major national trends that continue to negatively affect Minnesota
workers. These trends, which are discussed in this report, have shaped the states current economic situation and are likely to
continue to impact the future of work in Minnesota.
uuMinnesota households have lost real income over the last ten years. After accounting for inflation, the

incomes of most workers in Minnesota declined, while only the wealthiest saw an increase in their incomes and living
standards.3

uuMost of the jobs lost during the recession were middle class jobs that paid decent wages with good

benefits, but the jobs that have been added in the recovery have been low-paying service sector jobs.4
There are still 40,000 fewer factory workers in Minnesota than in 2008 and 18,000 fewer construction workers.5
Meanwhile, there are 27,000 more home care aides and personal care aides than in 2007.6

uuToo many Minnesotans are living in poverty even though they are working. The two occupations with the most

jobs in the state both pay poverty wages. Retail salespeople have a median hourly wage of $9.75, and food service and
preparation positions pay even lower, $8.64/hour.7

uuThe occupations that are projected to have the most new job growth in Minnesota pay poverty wages. By 2022

there are expected to be almost 33,000 new personal care aide and home health aide positions in the state jobs that
pay on average less than $11 per hour.

uuThe occupations that are seeing the most growth in Minnesota not only pay poverty wages, but also have the

least benefits. For example, just 35 percent of service workers in Minnesota have access to earned sick and safe time.8

uuA growing number of workers have had to adapt to employment arrangements that are unstable and

unpredictable. Jobs that used to be full-time, salaried positions have increasingly become contingent, part-time, and
more unpredictable.9

uuLarge companies have shifted from employing their workers directly, to outsourcing the work to smaller

companies through subcontracting, using temporary employment agencies, and misclassifying workers
as independent contractors. The smaller companies compete against each other, driving down wages and benefits
and leading to unsafe and unhealthy working conditions.

This report will examine three trends that are shaping workplaces in Minnesota and their consequences for those people most
adversely affected by them. The three trends are:
uuThe Growth of Poverty Wage Jobs
uuThe Increase of Insecurity and Instability
uuThe Rise of the Fissured Workplace

Each trend has already had profound impacts on the working lives of women and people of color in Minnesota. Increasingly
their experiences are becoming the norm even for those who identify as white and middle class. For many, these conditions
have been their working reality for generations. For others, these trends are the future of work in Minnesota.

The Future of Work in Minnesota

The growth in poverty wage jobs

Minnesotas economy is on a collision course. The occupations that are growing the fastest are amongst the lowest paying. These twin trends, the growth of
jobs in low-paying industries and the decline of these jobs already low levels of
compensation, risk leaving a million Minnesotans behind even while the states
economy grows. More and more of Minnesotas working people are employed in
jobs that do not provide the pay and benefits their families need to survive. These
hardships have tough consequences for the health, stability, and quality of life
that every working person should expect. These consequences, however, extend
beyond the individual worker and her family. When work fails to provide a route
into the middle class the whole state suffers. When the basic deal gets broken,
when work no longer equals opportunity, the states economy is also broken.
This crisis, the possible future of work in Minnesota, demands immediate attention. This report will begin by describing the challenges the state faces. First,
the growth of low-wage jobs and the decline in employer-provided benefits (like
paid time off and retirement savings) are evidence that our basic economic deal
is badly in need of repair.

I make $8 an hour and

struggle every month to pay
the $800 rent for me and
my 2-year-old son. I feel like
its just not right, the work
that I put in to try to make my
income. Every time I get paid
its like my whole check is gone
I have nothing to show for it.
Nakia Joseph,
McDonalds worker

Wages
After decades of progress, poverty rates in Minnesota have been rising rapidly.
One in nine Minnesotans (622,000 people) live below the poverty line. This is due
not just to job loss, but also to decreasing wages and an increase in the number of
jobs that pay poverty wages. Most poor Minnesotans are working or seeking work.
Sixty-nine percent of Minnesota households in poverty have one or more members in the workforce.10
Minnesotas working poor who must rely on public assistance to make ends meet
are concentrated in four industries: retail, hospitality (including food service),
temporary office work, and health care.11 These are also the industries that employ the largest number of Minnesotans.12
These jobs are also the ones that are projected to see the most growth, meaning
even more jobs that pay poverty wages and cost taxpayers through providing
public assistance.13

Median wage of occupations with most workers in Minnesota

Retail salespersons $9.75/hr
Food prep/service, incl. fast food $8.64/hr
Registered nurses $33.92/hr
Cashiers $9.04/hr
Office clerks $14.40/hr
Personal care aides $10.80/hr
Customer service reps $16.56/hr

Number of workers
2

The Future of Work in Minnesota

Most of the 150,000 jobs lost during the recession were middle class jobs that paid
decent wages with good benefits, but the jobs that have been added in the recovery have been low-paying service sector jobs. For example, there are still 40,000
fewer workers in Minnesota factories than in 2008 and 18,000 fewer construction workers.14 Meanwhile, there are 27,000 more home care aides and personal
care aides than in 2007.15

Five fastest growing jobs in Minnesota with median hourly wage

Food prep/service, incl. fast food $8.64/hr
Retail salespersons $9.75/hr
Registered nurses $33.92/hr
Home health aides $11.09/hr
Personal care aides $10.80/hr

Number of projected new jobs added, 20122022

Data: U.S. Department of Labor Bureau of Labor Statistics

There are expected to be almost 33,000 new personal care aide and home health
aide positions created in Minnesota by 2022. These jobs pay on average around
$11 or less an hour in Minnesota.16
After health care, the areas which will see the next largest job growth are retail
and food preparation and service, which includes fast food. These occupations,
which have a median hourly wage in Minnesota of less than $10, are projected to
have over 12,000 new jobs this decade.17

The Future of Work in Minnesota

PCAs are paid low wages

with no benefits, no sick days,
and no vacations. Many live in
poverty and others have not
had a day off in years. Some
have seen their own health
fail while they spend all of
their energy taking care of
someone else. I love the work
I do but do not believe that
anyone who offers his or her
hard work should be relegated
to a life of poverty.
Sumer Spika

Benefits
In addition to stagnant wages, the traditional model of employer-based benefits
has also been steadily eroded. Fewer employers are offering health care,18 retirement, and savings benefits and when they are, they are offering smaller (or no)
contribution from the employer. Fewer and fewer jobs in low-wage industries are
providing paid time off including sick leave, vacation, or paid family leave.
Elizabeth Carroll, of Brooklyn Park, loves
her job as a pediatric nurse, taking care
of children and families. Despite the fact
that she cares for sick people all day, she
does not earn paid sick leave. As an hourly
employee, she earns one week of paid
vacation, but those vacation days cannot
be used for sick leave without the approval
of a manager. Even with managerial
approval, hourly employees may only use
three vacation days as sick leave each year.
Workers, who call in sick more than three
days per year, receive a verbal warning
and can have the leave counted against
them in their annual review.

2014 Minnesota workers with access

to retirement plan through employer

No
39%

Yes
61%

2001 Minnesota workers with access

to retirement plan through employer

Paid time off

The occupations that are seeing the most growth in Minnesota not only pay poverty wages, but also have the least benefits.
uuJust 35 percent of service workers in Minnesota have access to paid sick

days.19

uuThirty-four percent of the lowest-paid full-time workers in Minnesota

(those making less than $15,000 a year), have access to paid sick days,
compared to 85 percent of Minnesota workers who earn over $65,000.20

uuOnly 12 percent of employees in the United States have access to

extended paid leave for newborns, adopted children, or ill children,

adults, or any other family members.21

uuFor those low-wage workers, the situation is even worse: only four percent

of them have access to paid family leave. This is a stark contrast to the 22
percent of high-wage workers who do have the benefit.22

Retirement
Nearly one million Minnesota workers do not have access to a retirement savings
option through their employer. As a result, hundreds of thousands of Minnesota
households nearing or at retirement age (55+) have no retirement savings and
face the prospect of living in or near poverty on nothing but Social Security, or
continuing to work indefinitely into their retirement years.23
Nationally, only 15 percent of private-sector workers are in an employer-sponsored retirement plan, compared to 30 percent three decades ago.24 There has
been a dramatic increase in the number of people earning $25,000$100,000 a
year who say they will have to work until they are at least 80 because they will not
have saved enough for retirement. In 2011, it was 25 percent, rising to 30 percent
in 2012, and then up to 34 percent in 2013.25
In 2001, 71 percent of workers in Minnesota had access to a retirement plan
through work. Today, that figure has dropped to 61 percent.26

No
29%
Yes
71%

The situation is even worse for people of color. A large racial divide in retirement
savings has been documented nationally, with 63 percent of white households
having some retirement savings, compared to just 38 percent of African-Americans and 31 percent of Latinos.27

As a working person in a nursing home for 35 years, no one ever offered me any
opportunity to save, ever. And as a representative, we all receive some pittance of
a pension, thats all I have. Most of the workers that I worked with all of my life and
constituents that I represent have nothing,
Representative Patti Fritz (DFLFaribault)
4

The Future of Work in Minnesota

The increase of
insecurity and instability
A growing number of Minnesota workers have had to adapt to employment arrangements that are unstable and unpredictable. Their hours of work are erratic. They are unable to find full-time work. The work they find is temporary. Generations ago,
jobs standards were set with an expectation that families would function by having a single, male breadwinner provide for his
spouse and family by working forty hours a week during business hours. This idea, though never actualized for most, has
long-since been replaced by the reality of two-income households and single-income, single parent households. In both these
scenarios, all the parents are working parents. Most families cannot afford to have an adult remain unemployed and do the
unpaid work of caring for children, elders, or the household.
With this reality in mind, the increasing insecurity and instability of work is a particularly problematic development. As more
and more jobs are temporary, part-time, or have irregular schedules, the families that work them are put under greater and
greater stress. These facts are the second set of evidence that Minnesotans need to renegotiate the basic economic deal that
shapes their working lives.

Scheduling
The challenge of balancing work and family responsibilities
can be difficult for any working person. They are particularly acute for workers whose schedules change with little notice, are set with limited employee input, or fluctuate widely
week to week. Known for years to be a problem by workers,
it is only recently being systematically studied by academics.
In 2014, University of Chicago researchers provided the
first-ever estimates of problematic scheduling practices
amongst early career adults. What the study confirmed is
what low-wage workers have known to be true: bad scheduling practices are widespread. These researchers found that:
uu41 percent of surveyed hourly workers know their

Table: Percent of hourly workers by industry facing

difficult scheduling practices
Any
fluctuation
in weekly
hours

1 week or less
notice of weekly
schedule

Employer
decides
timing of
schedule

Janitors and
housekeepers

66%

40%

50%

Food service
workers

90%

64%

39%

Retail workers

87%

50%

44%

Home care
workers

71%

55%

37%

uu50 percent of surveyed hourly workers report that

These practices have become a very common feature of work

in these industries and have far-reaching consequences for
working families. The use of just-in-time scheduling in the
retail industry is instructive.

uu74 percent of surveyed workers experience some

There is a growing use by large employers of just-in-time

computerized scheduling systems, which are designed to
cut costs by figuring out the exact number of workers needed at each hour based on customer traffic.

schedule one week or less in advance of their

workweek.28

their employer decides the timing of their work,

while only 32 percent say their employer allows
them some input into their work schedule.29

fluctuation in weekly hours over the course of a

month. They commonly experienced fluctuations of
as much as one full eight-hour day more or less each
week.30

While these challenges seem to be more and more common

across both industries and income, it is particularly tough
in some industries: janitorial and housekeeping, food service, retail, and homecare. The table below describes how
frequently hourly workers in these industries experience
fluctuating schedules, one week or less notice of a schedule
or employer-decided timing.31
The Future of Work in Minnesota

This creates schedules that vary from week to week and even
day to day. As a result, workers often do not know how many
hours they will work per week or month or how much money they will make. This also makes it difficult for workers to
plan a budget, arrange child care, enroll in higher education,
or take on a second job for additional income.32
This also results in more part-time workers since it saves
money to bring different workers in for short shifts rather
than keeping a full-time worker on the clock during slow
times. For instance, over half of the cashiers and sales associates at Walmart are part-time.33
5

Just-in-time scheduling has been embraced by the retail industry.34 There are

almost 90,000 retail sales positions in Minnesota, making it the most common
job in the state. There are an additional 57,000 cashiers.35 Women disproportionately hold these positions.36 Retail is one of the industries expected to see continued future job growth, meaning that the use of just-in-time scheduling will
likely continue to increase.37

Taken together a clear picture emerges. In some of Minnesotas fastest growing

occupations workers a) receive little advance notice of their schedule, b) have
widely fluctuating hours week to week, and c) have too little say on what hours
they are scheduled for.

Involuntary part-time hours

If Walmart gave me a consistent schedule
and number of hours I would be able to pay
all of my bills on time. Right now I choose
what is more important. Every payday Im
left with a budget that leaves me paying
for rent on time and not being able to
afford food for two weeks. It also leaves
me stressed with trying to afford a reliable
form of transportation and paying student
loans but I shouldnt have to choose
between buying food, and not being able to
pay rent on time.

The number of workers in Minnesota working part-time involuntarily almost

tripled from 56,000 in 2007 just before the recession to 133,000 in 2010. The figure declined slightly to 112,000 in 2012, but is still more than double what it was
pre-recession.38
The high level of involuntary part-time work and the fact that it has not fallen significantly during the economic recovery indicates that this may now be a standard feature of the labor market.

Involuntary part-time workers in Minnesota

Number of workers

Cantare Davunt

During the recession there was a significant increase in involuntary part-time

work workers who would prefer full-time work but are working part-time either because they cant find full-time employment or their employer has limited
the workers hours.

Ive been looking for full-time work since

2008. A job that can support me. I find the
wages today are the same as they were in
the 1980s. I also notice what jobs are out
there are only part-time, which do not pay
a living wage and do not have any benefits,
vacation nor personal leave and sick leave.
And many of us have had to take on several
part-time jobs to barely get by. Gasoline,
utilities, food, rent have all skyrocketed
in price. But wages do not match the cost
of living. I find the American dream has
turned into a nightmare for most.

Levels of involuntary part-time work are especially high among people of color. Over 40 percent of African-American part-time workers in Minnesota are
working fewer hours than they would prefer, as are 38 percent of Latino parttime workers and 30 percent of Asian part-time workers. In contrast, 17 percent
of white part-time workers in Minnesota are involuntary part-time.39

Gretchen Gubbins,
cook at a daycare center
6

The Future of Work in Minnesota

Temporary and contingent workforce

The trend toward hiring temporary and contingent workers instead of permanent workers has been growing since the 1980s and has accelerated during the
recent recession.
The number of temporary jobs in Minnesota has more than doubled since 1990,
rising to 68,000 in 2013, an all-time high.40
This trend in Minnesota is consistent with national trends.
uuIn the last three decades, the total share of jobs created by the

Employment Services industry has nearly doubled, from 1.4 percent of

all U.S. jobs in 1990 to 2.5 percent of all U.S. jobs in 2014.41

uuDuring the recent recession the average share of a U.S. companys

contingent workforce grew from 12 percent in 2009 to 16 percent in 2012.42

uuWhen surveyed in 2011, 34 percent of human resource professionals

indicated they are increasing or planning to increase their companys

use of contingent workers.43

uuOnce primarily a problem for office and clerical workers, the use of

temporary services has become the model in more industries like

production, transportation, and customer service.44

We are hired
one semester at
a time, with no
promise of future
classes, and
zero job security.
While tuition has increased
at Hamline by 50 percent
since 2006, adjuncts have not
gotten a raise, not even a costof-living increase, in that time.
This means that many things
have been getting worse for
us. Many adjuncts struggle to
make a living, much less save.

uuAs it has spread, it has become a part of the business model of most of

Swati Avasthi

the most powerful corporations in the U.S. Seventy-seven percent of

Fortune 500 Companies now use temporary services permanently.45

The institutionalization of temporary hiring has begun to

affect more and more jobs that were once considered stable,
career track positions. One example of how widespread this
practice has become is the increasing use by Minnesota colleges and universities of adjunct teachers in roles previously
occupied by full-time faculty.
Adjunct professors are not salaried employees, but are
instead, paid per course. They typically make $18,000 to
$30,000 a year for the equivalent of full-time work, compared to tenure track professors who earn $68,000 to
$116,000, plus benefits.46 As contingent workers, adjuncts
usually do not receive health or retirement insurance and
do not have job security, since they rarely know if they will
be re-hired to work.

The Future of Work in Minnesota

The number of adjuncts and temporary instructors has:

uuIncreased from 37 percent to 44 percent of the total

faculty at the University of Minnesota in the last ten

years.47

uuNearly tripled since 1999 from 570 to 1,500 at the

seven Minnesota state universities.48

uuGrown to outnumber full-timers, 195 to 184, at

Hamline University.49

The expansion of temporary and contingent hiring has multiple, negative consequences for Minnesotans. Too many
workers are forced to rely on temporary employment as their
primary source of income, going from one placement to the
next, not knowing where their next job will be or when it
will come. They rarely get benefits, such as health insurance,
earned sick days or vacation, and often do not qualify for unemployment benefits. The devolution of regular, full-time
work into temporary, part-time, undercompensated work is
a growing challenge for Minnesotans.

The rise of the fissured workplace

Delta Airline employees used to clean the insides of planes at the Minneapolis-St. Paul International Airport until
Delta outsourced this work. About four years ago, the subcontractor paid cabin cleaners $9-$11 an hour. Delta
brought in a new contractor that cut wages to $7.25 an hour.
Over the last thirty years, an increasing number of large companies in the U.S. have shifted from employing their workers directly, to outsourcing the work to smaller companies through subcontracting, using temporary employment agencies, creating
franchise arrangements, and misclassifying workers as independent contractors. These radical shifts in the basic employment
relationship have had far-reaching consequences for employers and employees alike. An increasing number of Minnesotans
are working in arrangements in which their legal employer is not their actual boss. For example, they are employed by a temp
agency that operates at the mercy of its clients or they work for a franchisee that is controlled by the home office.
The fissured workplace, once a novelty, is now the standard in some low-paying industries. For example, in the U.S. janitorial,
fast food, and agriculture workers are outsourced at an alarming rate:50

Percentage of workers in contracted work

Janitorial workers

No
63%

Yes
37%

There are 2.1 million

janitorial workers in the U.S.

Agricultural workers

No
20%

Yes
80%
There are approximately 2 million
agricultural workers in the U.S.

Fast food workers in franchise stores

No
24%

Yes
76%
There are 3.8 million
fast food workers in the U.S.

The consequences for employers are also profound. Those with the economic power to change the wages and working conditions of Minnesotans are increasingly at a remove from the lives of their employees. Without the direct legal responsibility for
and an actual direct relationship with workers, absentee employers create less safe workplaces, lower paying jobs, and more
dismal work environments. This new reality of the fissured workplace is the third body of evidence that working Minnesotans
need a new bargain with those who actually employ them.
8

The Future of Work in Minnesota

Sub-contracting
Subcontracting occurs when an outside person or company is hired to perform a
certain piece of work. Long a practice in industries like garment manufacturing,
construction, day labor, and agricultural work, It has become commonplace in
more and more industries.51 The airline industry provides a strong example.
The airline industry has seen a substantial increase in subcontracting which has
transformed what were once good-paying middle class jobs to poverty wage jobs
that force many workers to rely on public assistance in order to support themselves and their families. This has been particularly dramatic in certain airport
positions such as baggage porters, wheelchair attendants, and workers who
clean the insides of planes.
uuTen years ago, 25 percent of baggage porter jobs and 40 percent of

vehicle and equipment cleaning jobs were outsourced to outside

contractors. Today, 84 percent of the jobs in both occupations are
outsourced.52

uuNationally, the average hourly wages for baggage porters fell from the

equivalent of over $19 an hour to $10.60, a 45 percent drop. For vehicle

and equipment cleaners, average hourly real wage decreased 25 percent,
from over $15 an hour to $11.40 (in 2012 dollars).53

Subcontracting is also prevalent in the janitorial industry, where there is now

fierce competition among the janitorial companies, with each contractor trying
to underbid the other. Since labor is by far the largest expense, the company with
the lowest labor costs often wins the contract. In some cases, janitorial companies try to reduce their labor costs with practices such as paying below minimum
wage or not paying overtime. The company that hired the subcontractor is not
liable for any of these violations because they are not the direct employer.
Workers employed by subcontractors also have little job security since their jobs
are dependent on their employer winning future bids to continue its contract
with the larger company.

I am a single mother trying

to get by on the $8 an hour I
am paid to clean a store. Low
wages deeply affects my
health and the health of my
family. Sometimes we cant
even afford to buy milk. I am
always tired and I cant take
my children out to play or get
exercise.
Maricela Flores,
Carlson Building Maintenance

The Future of Work in Minnesota

Misclassifying workers as
independent contractors
A growing number of employers are mislabeling their employees as independent contractors in order to avoid having to comply with employment-related
laws such as paying minimum wage or overtime, workers compensation, payroll
taxes, or unemployment insurance.54
When the Minnesotas Office of the Legislative Auditor studied the matter in
2007, they found that at least 1 in 7 employers who paid unemployment insurance in 2005 misclassified independent contractors. The report concluded that
number of misclassifying employers would likely grow if employers who do not
pay unemployment insurance were also included.55
A significant percentage of employers misclassified workers in a number of the
fastest-growing, lowest paying industries in Minnesota. These include : 56
16% of health care and social assistance
16% of manufacturing
15% of construction
14% of retail trade
12% of administrative support, waste management, and remediation services
8% of accommodation and food service
An example of the consequences of this misclassification can be found with retail
janitors.

I worked for two months cleaning

a Marshalls store in Maple Grove
for a subcontractor hired by KBS. I
was told I would be paid $8.50 per
hour but was never paid anything.
Then I cleaned the same store for a
month for a different subcontractor
who also was supposed to pay me
$8.50 an hour. He ended up paying
me for only some of the hours I
worked.

Kellermeyer Bergensons Services (KBS) is the largest janitorial company serving

retail stores in the U.S.57 and has contracts to clean PetSmart, Sears, TJ Maxx,
Marshalls, Michaels, JC Penney, and Walgreens.58 KBS operates under the model of hiring subcontractors who hire janitors as independent contractors. There
have been numerous reports from workers in the Twin Cities about not being
paid their full wages from the subcontractors.59

I was owed a total of $1,630. I

called KBS, the company that had
subcontracted the work. KBS told
me there was nothing they could
do for me because I had not been
employed by KBS.
Antonio Torrealva

10

The Future of Work in Minnesota

Franchisee arrangements
Franchisee arrangements have become another way to separate employees from the economic decision-makers who
shape their workplaces. These arrangements most frequently take one of two forms. The first is a requirement that an
individual worker become a franchisee of an individual employer. This practice (which is becoming more common in
industries like construction, delivery, janitorial, and port
trucking companies) is a way to evade providing basic benefits and opportunities that employees might expect. In a
May 2014 report, the National Employment Law Project describes the problem well:
Classic definitions of employment under applicable
workplace protection laws do not capture enough
of these often-convoluted structures, and allow
companies to evade responsibility for workers
who historically were considered to be in the
businesses domain. Outsourced workers can
lose out on protections under core wage and
hour, discrimination, and health and safety laws.
They may have no safety-net compensation for
on-the-job injuries or layoffs. They may lose
access to career ladders, health care coverage, and
retirement benefits available to direct employees.
Many of the workers in these jobs are immigrants
who are afraid to come forward to complain of
unfair treatment. And unfortunately, there is a
close correlation between contracted occupations
and those with the highest numbers of workplace
violations.60

The Future of Work in Minnesota

The second, more common, form of franchisee arrangements is the model developed in the fast-food industry. In
this model a lead company sells franchise rights to individual operators while retaining control of significant parts
of the business including its brand, marketing, advertising,
and, in some cases, its actual day-to-day operations. In its
recent report on the issue, the National Employment Law
Project writes:
Recent news reports say that McDonalds
computers keep track of data on sales, inventory,
and labor costs, calculate the labor needs of the
franchisees, set and police their work schedules,
track franchisee wage reviews, and track how
long it takes for employees to fill every customer
order. Dominos Pizza tracks the delivery times
of its franchisees employees, holding them to the
brands standards. McDonalds reportedly acts as
a labor broker for its franchisees, via a website that
screens applicants. Fast-food workers say that on
occasion, McDonalds has fired employees of its
franchises, exercising a right commonly associated
with employer status.61
The franchise model has become the standard in the fast
food industry. A survey of the 2007 Economic Census revealed that approximately 76.3 percent of fast food employees work in franchisee-owned restaurants.62
The power of lead companies to set terms and conditions for
both franchisees and employees has become so overt that,
in some states, both franchisees and employees are finding
common cause to better regulate the franchise model itself.
The California legislature in 2014 amended the California
Franchise Relations Act to offer franchisees greater protections and more freedom to operate their businesses independently. (The bill, however, was vetoed by Governor Jerry
Brown.) Many of the largest franchisors use both their scale
and their legal and geographic distance from their franchisees to their advantage. These franchisors have too much
power over and too little responsibility for the workers who
wear their uniforms.

11

The impact of poverty wage jobs

on women and people of color
Women
Women make up more than two-thirds (68 percent) of Minnesota workers in poverty-wage jobs, although they make
up less than half of the Minnesota workforce as a whole.63
This concentration of women in poverty-wage jobs has been
on the rise in recent years and is likely to continue to increase since many of the occupations in which women are
concentrated (food service, home health care, and retail) are
also those areas which are projected to have the largest job
growth.64

Retirement security: Women are doubly disadvantaged

when planning for retirement. They are likely to live longer and less likely to have adequate retirement savings. A
2005 report by the State Health Access Data Assistance Center estimated the adequacy of retirement savings for those
born between 1936 and 1965, or, roughly speaking, the baby
boomers. They found that 38 percent of these single females
had insufficient retirement resources compared to 22 percent of Minnesotans overall.67

Four of the five jobs projected to add the largest number of

workers in Minnesota by 2022 are low-wage, typically paying around $11 or less per hour, and three of these low-wage
jobs are female dominated.65

After a lifetime of lower pay, women receive smaller benefits from their Social Security and pension savings. In 2012,
womens retirement income in Minnesota was only 50 percent of mens.68 Beyond benefits, low-wage employers often
institute other employment practices that make it very difficult for women to meet their familys needs. Single mothers
in particular face enormous challenges.

Women workers and the fastest growing occupations

Occupation
All occupations

Median hourly
wage in
Minnesota

Percentage of
Minnesota workforce
that is female

$18.15

48%

Home health aide

$11.09

86%

Personal care aide

$10.80

80%

Food preparation
and service

$8.64

68%

In addition to the low pay, many poverty wage jobs have substandard (or no) benefits.

Earned sick and safe time: For example, 40 percent of

Minnesotas working women lack access to earned sick and
safe time benefits at work. The situation is even worse if they
are working part-time or for less than $15,000 per year. Sixty-six percent of the states lowest paid workers lack access; 74
percent of Minnesotas part-time workers lack access.66

12

uuThey may lack the resources needed to pay for

support services like child care.

uuTheir jobs often involve working evenings,

weekends, and even overnights.69

uuTheir schedules may be erratic and their hours

insufficient, posing additional obstacles for women

trying to work their way out of poverty.70

These challenges create enormous problems for women and

for single parents in particular, who are unable to plan a
budget due to uncertain income and are unable to arrange
childcare due to uncertain work hours. The increase of
low-paying, female-dominated jobs as a share of Minnesotas economy is a trend that will shape whats possible for
generations of women and their families in Minnesota.

The Future of Work in Minnesota

People of color
Poverty wage jobs: In Minnesota, poverty-wage jobs have
the largest concentration of workers of color.
Jobs held by largest number
of people of color in Minnesota71
Median hourly
wage in Minnesota

Number of
workers of color

Home health aide

$11.09

10,341

Cashiers

$9.04

10,016

Janitors

$11.37

9,288

Occupation

As noted above for women workers, the low-paying jobs that

are projected to have the most growth over the next ten years,
such as home health aides, personal care aides, and food service and preparation positions, are also the ones where people of color make up a large share of the workforce.72
While people of color hold about 16 percent of all jobs in the
Twin Cities metro area, they make up 38 percent of the home
health aide and personal care aide jobs and over 30 percent
of food service jobs the occupations that are expected to
have the most new jobs in Minnesota.73 In contrast, people of
color hold a small percentage of the jobs in the fastest-growing high-wage occupations.
Twin Cities
metro area
median hourly wage74

% of positions in
Twin Cities metro held
by people of color75

All occupations

$19.40

15.7%

Registered nurse

$34.94

10.0%

Carpenter

$26.25

8.4%

General operations
manager

$46.30

7.6%

Market research
analysts/marketing
specialists

$31.06

10.4%

Occupation

One result of the overconcentration of women and people of

color in low-wage jobs (and their exclusion from high-wage
jobs) is the creation of stark disparities in pay between both
men and women and whites and people of color. Across the
U.S. in 2011, workers made the following hourly median
wages:

2011 national median hourly wage

by race/ethnicity and gender76
White men $19.76
White women $15.89
African-American men $14.26
African-American women $13.13
Latino men $12.74
Latino women $11.77
Source: State of Working America

In addition to disproportionately experiencing low rates of

pay, people of color also receive fewer and poorer benefits
while working at less stable, less predictable jobs.

Earned sick and safe time: For example, people of color

across the board are less likely to have access to earned sick
and safe time benefits. The following are the earned sick and
safe time access rates by racial demographics in Minnesota.77
White: 61%
Asian: 58%
African-American: 53%
Latino: 40%

Retirement security: Similarly, fewer people of color in

the U.S. have retirement savings when compared to whites.78
Whites: 63%
African-Americans: 38%
Latinos: 31%

The Future of Work in Minnesota

13

Scheduling: Early career people of color are more likely

than early career whites to experience schedule changes
of one week or less and employer control over their work
schedules. The chart below illustrates these disparities: 79
Table: Percent of hourly workers by race
facing difficult scheduling practices
Any fluctuation
in weekly hours

1 week or less
notice of weekly
schedule

Employer
decides timing of
schedule

White

74%

39%

47%

AfricanAmerican

73%

49%

55%

Latino

73%

46%

58%

Temporary and Contingent Work: People of color are

over-represented in temporary jobs. For example, the percentage of African Americans and Latinos working in Employment Serves is greater than the percentage of them
working overall.80
African-American and Latino workers
are over-represented in temporary jobs

20%

20%
16%

11%

African-Americans

Involuntary part time: Finally, people of color in Minnesota are disproportionately stuck in involuntary part-time
jobs. The following percentages of part-time workers report
that they are working fewer hours than they would like: 81
White: 17%
Asian: 30%
Latino: 38%
African-American: 40%
These practices have real consequences for tens of thousands
of people of color in Minnesota. A snapshot of just one big
box retailer can illustrate how.
Nationally, people of color make up 40 percent of the total
workforce at Walmart.82 One of the largest employers in
Minnesota, Walmart has 22,000 associates in the state.83
With an average hourly wage of a Walmart sales associate at
just $8.86 and even lower, $8.51, for a cashier, Walmart is the
largest poverty wage employer in the U.S.84
A full-time worker at these wages earns less than $18,500
well below the poverty line and not nearly enough to provide food, housing, health care, transportation and other
basic needs for their families.85 However, over half of the
workers in these positions at Walmart dont even earn this
much because they are involuntarily part-time.86
When joined with the challenges many employees face like
a lack of benefits, unstable employment, and a broken relationship with their boss, many people of color working in
retail are experiencing some of the worst our economy has
to offer.

Latinos

% of all employed U.S. workers

% of U.S. temporary workers

14

The Future of Work in Minnesota

Conclusion
The basic economic deal for Minnesotas working people has been broken.
The withdrawal of some employers from this agreement has accelerated
the growth of poverty wage jobs, an increase in unstable and insecure
employment arrangements, and the fissuring of workers from the
economic decision-makers that shape their workplaces.
Facing eroding standards and few safe options for making change at work,
more and more Minnesotans are questioning the basic premise that work
provides opportunity. No one working full-time should have to live in
poverty, yet too many Minnesotans do.
For many, in particular women and people of color, the basic bargain was
never fully realized. They were excluded from many of the New Deals
protections. Now that the deal has eroded for those in the middle class, a
new opportunity has arisen.
Minnesotans across the state, across class, race, and gender, increasingly
find themselves facing the same impossible choices. A million
Minnesotans do not earn a living wage, get sick time to care for loved ones,
or make enough to save for retirement. With more and more Minnesotans
struggling every year, there is a growing recognition that the broken deal
must be fixed.
This report is the first in a series. Subsequent reports will analyze what
caused the crises we face and outline what we can do to solve them. This
report described the future of work in Minnesota. Its an uncertain future
for all us, unless we work to change it.

The Future of Work in Minnesota

15

Notes
1. Nick Woltman, Minnesotas unemployment
rate stays at 4.5 percent, Star Tribune, August
14, 2014.
2. Briana
Bierschbach,Minnesotas
new
minimum wage, explained, MinnPost,
August 1, 2014.
3. Jennifer Tran and Sarah Treuhaft,
Minnesotas Tomorrow: Equity is the
Superior Growth Model, Policy Link, 2014.
4. Ibid.
5. Adam Belz, Minnesota regains jobs lost in
recession, Star Tribune, September 19, 2013.
6. May 2007 State Occupational Employment
and Wage Estimates Minnesota and May
2013 State Occupational Employment and
Wage Estimates Minnesota, United States
Department of Labor, Bureau of Labor
Statistics, May 2007, May 2013.
7. May 2013 State Occupational Employment
and Wage Estimates Minnesota, United
States Department of Labor, Bureau of Labor
Statistics, May 2013.
8. Briefing Paper: Access to Paid Sick Days in
Minnesota, Institute for Womens Policy
Research, September 2014.
9. Amy Traub, Retails Choice: How Raising
Wages and Improving Schedules for Women
in the Retail Industry Would Benefit
America, Demos, June 2, 2014.

41. Rebecca Smith, Claire McKenna, Temped

Out: How the Domestic Outsourcing of
Blue-Collar Jobs Harms Americas Workers,
National Employment Law Project, National
Staffing Workers Alliance, July 2014.

23. Charles Hallman, Alarming retirement

racial divide could leave millions of
Black elders at risk, AARP pushes for state
retirement savings plan to bridge the gap,
Minnesota Spokesman-Recorder, January 22,
2014.

42. Staffing Industry Analysts, 2012 Contingent

Buyers Survey, July 11, 2012.

24. Carol Polsky, Many older workers cant

afford to retire, Newsday, March 31, 2013.

44. Rachel Vilsack, Tracking Minnesotas

Temporary, Self-Employed, and Contract
Workforce, Minnesota Department of
Employment and Economic Development,
September 2013.

25. Middle Class Americans Face a Retirement

Shutdown, Wells Fargo press release,
October 23, 2013.
26. The State of Minnesotas Middle Class,
DEMOS and Growth and Justice, http://www.
demos.org/sites/default/files/publications/
Minnesota_Middle_Class.pdf
(accessed
August 2014).
27. Hallman, January 22, 2014.
28. Susan J. Lambert, Peter J. Fugiel, Julia R.
Henly, Precarious Work Schedules among
Early-Career Employees in the US: A National
Snapshot, EINet at the University of Chicago,
August 27, 2014.
29. Ibid.
30. Ibid.

10. Ryan Winkler, chair, Making Work Pay in

Minnesota: A Report of the Minnesota House
of Representatives Select Committee on
Living Wage Jobs, June 10, 2014.

31. Ibid.

11. Ibid.

33. The Low-Wage Drag on Our Economy: WalMarts low wages and their effect on taxpayers
and economic growth, US House Committee
on Education and the Workforce, May 2013.

12. Bureau of Labor Statistics, May 2013.

13. Minnesota Department of Employment
and Economic Development (MN DEED),
Minnesota Employment Projections, https://
apps.deed.state.mn.us/lmi/projections
(accessed August 2014).
14. Belz, September 19, 2013.
15. May 2013 and May 2007 Bureau of Labor
Statistics.
16. MN DEED Employment
Accessed August 2014.

Projections,

17. Ibid.
18. Rate of employer-based health insurance
keeps dropping, USA Today, April 11, 2013,
Kelly Kennedy.
19. Briefing Paper: Access to Paid Sick Days in
Minnesota, Institute for Womens Policy
Research, September 2014.
20. Institute for Womens Policy Research,
September 2014.
21. Institute for Womens Policy Research,
Maternity, Paternity, and Adoption Leave in
the United States, Briefing Paper, May 2013.

16

22. National Compensation Survey: Employee

Benefits in the United States, March 2013,
Bulletin 2776, United States Department of
Labor Bureau of Labor Statistics, September
2013.

32. Scrambling for Stability: The Challenges

of Job Schedule Volatility and Child Care,
CLASP, March 2014.

34. Traub, June 2, 2014.

35. Bureau of Labor Statistics, May 2013.
36. Affirmative Action Data Statistics Packet,
compiled from American Community
Survey 5-Year Data 2006 to 2010, Minnesota
Department of Employment and Economic
Development and Minnesota, Department of
Human Rights, http://mn.gov/deed/images/
Data_Definitions.pdf (accessed November
2014).
37. MN DEED Employment
Accessed August 2014.

Projections,

38. Geographic Profile of Employment and

Unemployment, United States Department
of Labor, Bureau of Labor Statistics, 20072012.
39. Geographic Profile of Employment and
Unemployment, United States Department
of Labor, Bureau of Labor Statistics, 2012.
40. Minnesota sees surge in temp jobs, Star
Tribune, Adam Belz, July 21, 2013.

43. Society for Human Resource Management.

Workplace Forecast: The Top Workplace
Trends According to HR Professionals, Feb.
2011.

45. Smith, McKenna, July 2014.

46. Beena Raghavendran, Hamline adjunct
faculty votes for union, Star Tribune, June
20, 2014.
47. Maura Lerner, Adjunct professors say
theyve become the temp workers of college
classrooms, Star Tribune, March 31, 2014.
48. Ibid.
49. Raghavendran, June 20, 2014.
50. Catherine Ruckelshaus, Rebecca Smith,
Sarah Leberstein, Eunice Cho, WHOS THE
BOSS: Restoring Accountability for Labor
Standards in Outsourced Work, National
Employment Law Project, May 2014.
51. Chain of Greed: How Walmarts Domestic
Outsourcing Produces Everyday Low Wages
and Poor Working Conditions for Warehouse
Workers, National Employment Law Project,
June 2012.
52. Miranda Dietz, Peter Hall, and Ken Jacobs.
Course Correction: Reversing Wage Erosion
to Restore Good Jobs at American Airports,
October 2013.
53. Ibid.
54. Independent Contractor Misclassification
and Subcontracting, National Employment
Law Project, http://www.nelp.org/content/
content _issues/categor y/independent _
contrac tor_m isclassif ication _ a nd _
subcontracting (accessed 2014).
55. Misclassification
of
Employees
as
Independent Contractors, Office of the
Legislative Auditor, State of Minnesota,
November 2007.
56. Ibid.
57. Kellermeyer Bergensons Services website
http://www.kbs-clean.com/About-KBS.aspx
(accessed September 2014).
58. Kellermeyer Bergensons Services website
http://www.kbs-clean.com/LatestNews.aspx
(accessed September 2014).
59. Worker interviews by Centro de Trabajadores
Unidos en Lucha (CTUL).

The Future of Work in Minnesota

60. Ruckelshaus, Smith, Leberstein, Cho, May

2014.

72. Joe Rihn, Targeting the Black Jobs Crisis,

Capital and Main, April 14, 2014.

61. Ibid.

73. MN DEED Employment

Accessed August 2014.

62. Ibid.
63. Underpaid and Overloaded: Women in lowwage jobs, National Womens Law Center,
July 30, 2014.
64. MN DEED Employment
Accessed August 2014.

Projections,

65. MN DEED Employment Projections, Accessed

August 2014 and Affirmative Action Data
Statistics Packet, Accessed November 2014.
66. Institute for Womens Policy Research,
September 2014.
67. Lynn A. Blewett, Retirement Security and
Minnesotas Elderly Population, Minnesota
Department of Human Services, September
9, 2005.
68. Womens Economic Security Agenda
website
http://www.mnwesa.org/
t heleg islat ion/2014-leg islat ion/olderwomen/ (accessed November 2014).
69. National Womens Law Center, July 30, 2014.
70. Traub, June 2, 2014.
71. Affirmative Action Data Statistics Packet,
Accessed November 2014.

The Future of Work in Minnesota

Projections,

74. May
2013
Metropolitan
and
NonMetropolitan
Area
Occupational
Employment
and
Wage
Estimates:
Minneapolis-St. Pau-Bloomington, MN-WI,
United States Department of Labor Bureau of
Labor Statistics, May 2013.

82. Walmart 2014 Diversity & Inclusion Report,

http://cdn.corporate.walmart.com/04/50/
c9c4367040029f6b2a4aca089d2c/diversityinclusion.pdf (accessed August 2014).
83. Minneapolis-St. Paul Business Journal,
The List: Largest Employers, http://www.
bizjournals.com/twincities/subscriberonly/2014/07/11/largest-employers.html
(accessed 2014).

75. Affirmative Action Data Statistics Packet,

Accessed November 2014.

84. Natalie OReilly, Why arent Target

employees striking like their cousins at
Walmart? Motley Fool, November 16, 2013.

76. Hourly wage growth by gender and

race/ethnicity 1989-2011 (2001 dolllars),
State
of
Working
America
http://
stateofwork ingamer ica.org/char t/swawages-table-4-21-hourly-wage-growth/
(accessed August 2014).

86. The Low-Wage Drag on Our Economy: WalMarts low wages and their effect on taxpayers
and economic growth, US House Committee
on Education and the Workforce, May 2013.

85. Federal poverty level for a family of four is

$23,550.

77. Institute for Womens Policy Research,

September 2014.
78. Hallman, January 22, 2014.
79. Lambert, Fugiel, Henly, August 27, 2014.
80. Smith, McKenna, July 2014.
81. Geographic Profile of Employment and
Unemployment, 2012 United States
Department of Labor, Bureau of Labor
Statistics.

17

18

The Future of Work in Minnesota

The Future of Work in Minnesota

19