Report: Minnesota’s Wage Gap Is Shrinking

Report: Minnesota’s Wage Gap Is Shrinking

The gap between the highest- and lowest-paid Minnesotans has fallen since 2017, according to recent state data.

Minnesota’s wage gap has declined over the last five years, though inflation is still taking a bite out of workers’ paychecks.

That’s one of the main takeaways from a recent series of wage reports by the Minnesota Department of Employment and Economic Development (DEED).

There are several reasons for the decline in wage inequality. DEED researchers noted that the state has seen faster rates of wage growth in lower-paying jobs, for one.

Still, the reports noted that the top one-tenth of workers in Minnesota make 32.2% of the total wage earnings compared to the bottom half making 21.3%. What’s more, inflation is “eroding growth in real wages,” DEED researchers said.

While Minnesota’s wage gap has narrowed, pay increases implemented by employers are still not enough to keep up with inflation. Over the past two years, real wages have taken a down turn due to rising prices.

Current wages may not be adequate to the rate of inflation, but the state still has higher pay compared to others. Four out of the five last years, Minnesota has ranked eighth nationwide for the highest average hourly private sector wages. In 2021, that figure was $32.81 in Minnesota.

Different job sectors have seen different wage trends. Over the past three years, the construction industry in Minnesota has seen the largest wage increase, despite recent job loss in the field. The leisure and hospitality industry also saw a significant wage increase of 13% between 2021 and 2022 after many people began to go out again after months of quarantine.

Oriane Casale, assistant director of DEED’s labor market information office, said the data pleasantly surprised her. During the last few years of rising inflation and work force shortages, the office wanted to research a topic that would show employers and the public how wages and rising prices run parallel to one another, according to Casale. They landed on the trajectory of wages in relation to inflation.

“Wages are growing the fastest than I have seen in my career,” Casale said.