MINNEAPOLIS SHOWS THE WAY
Last Sunday's Minneapolis Star Tribune contained some 6,200 help-wanted ads. That's about 50% more ads than there were just four years ago--strong evidence of a booming local economy with a labor market as tight as a vise grip. Unemployment has been below 3% for almost all of this year. The region ranks third in the nation in per capita job growth since 1991, and salaries here are among the best in the nation, at an average of about $31,000.
Add all this to a relatively strong education system and a tradition of government-business partnerships, and you have as good a laboratory for sharing prosperity as there is across the 50 states. If any American city can reverse the growing wage inequality of the past two decades, Minneapolis should be it.
BIGGER CHECKS. For workers, the good news revolves around the tight labor market. Not only is unemployment low, but there are few places for employers to turn for new workers since Minnesota has such high labor-force participation rates. In fact, a greater portion of women work here than in any other state. So businesses are wooing employees with better wages. ''It has become very difficult to hire people at less than $7 an hour,'' says Jay Novak, commissioner of the Minnesota Trade & Economic Development Dept.
In the last year alone, Dayton Hudson Corp. has increased wages for sales clerks at its Target stores by about $1, to $6.25. Raises like that are a boost for local workers such as Tom McGill, 44, a telemarketer for Fingerhut Cos., the catalog company. Thanks to new incentives, his pretax weekly paycheck often comes close to $500, or 50% more than it was a year ago. ''That's been very, very good,'' says McGill. He has scheduled his first dental appointment in four years and put more money into his 401(k).
Companies are also introducing more training programs for entry-level employees--to hang on to them longer and create a bigger pool of managers. ''The tight labor market is forcing us to do some things we should be doing,'' says John D. Buck, Fingerhut's senior vice-president for human resources. Dolphin Fast Food Inc., which owns seven local Burger King restaurants, is making a bigger effort to promote its employees to $25,000-a-year assistant-manager jobs. ''We're a lot quicker to bring someone along,'' says Kurt Kiel, Dolphin's director of operations.
Twenty-year-old Alyssa Zachman, who started working at Burger King when she was 16, has been there full-time since graduating from high school. She was recently promoted to hourly manager and now oversees some shifts. She is also in the midst of a seven-week management-training course. ''It used to be a job for money,'' Zachman says. ''Now, it's a responsibility.''
Of course, Zachman still makes only about $16,000 a year and doesn't get benefits. That's why training programs--such as those that could eventually move her into a salaried manager's job--are so important to economic mobility. They're also every politician's favorite program. In January, the state legislature here tripled funding, to $7.5 million, for a skills-training partnership between companies and community colleges. One-fifth of the funding is set aside for the most basic training designed to help people move from welfare to work.
The $7.5 million may not be a huge sum, but the program is just the type that can attack income inequality. Companies typically pick up three-quarters of the cost of any single program. Only those employers that pay about $8 an hour--and at least $10 in the Twin Cities--are eligible for grants.
One example: E.J. Ajax & Sons Inc. and a local technical college run an apprentice program to teach workers a new process for making the metal hinges the company has manufactured for 50 years. Jobs starting at $10 an hour await grads.
The state has taken other steps to improve the business climate. In the past six years, Governor Arne H. Carlson and the legislature have eliminated a $1.8 billion deficit, scrapped a tax on capital equipment replacement, and helped cut workers' compensation costs by 10%.
Of course, the feverish job scene hasn't wiped out inequality yet. Even in the past few expansionist years, the wage gap has continued to grow. Finance workers in the Twin Cities--now pulling down an average of $44,000 a year--saw their incomes rise in real terms by 10% from 1994 to 1996. Meanwhile, service employees--averaging $23,000 a year--got a 6% raise.
That's nothing to sniff at, but it's also not nearly enough to reverse the trends of the past 20 years. Should a slowdown come at any point before 2000, many economists and executives--even in a boomtown such as this one--are skeptical the gains will last. That's why the more infrastructure Minneapolis puts in place in the good times, the better off its working folks will be down the road.
By David Leonhardt in Minneapolis
Updated Aug. 21, 1997 by bwwebmaster
Copyright 1997, Bloomberg L.P.