(2014) The Future of Work of Minnesota

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December 2014


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Summary and inroducions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

The growh in povery wage jobs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Benefis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Paid ime off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Reiremen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

The increase of insecuriy and insabiliy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Involunary par-ime hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

The rise of he fissured workplace . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Sub-conracing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Misclassifying workers as independen conracors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

Franchisee arrangemens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

The impac of povery wage jobs on women and people of color. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Women . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

People of color . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Noes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

The Future of Work in Minnesota


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This work is licensed under a Creaive Commons Atribuion–Non-Commercial–No Derivaives 4.0 Inernaional License.

For press inquiries or more inormation about this report, contact

Jordan Ash

Minnesoans or a Fair Economy

[email protected]


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Summary and introductionsBy many accouns, Minnesoa’s economy is in beter shape han many oher saes.

Even a he peak o he recession, he sae’s unemploymen never hi double digi raes he naion as a whole experienced. Sincehen, Minnesoa’s unemploymen rae has coninued o seadily decrease, dropping o 4.5 percen in Augus o 2014, well belowhe naional average o 6.2 percen.1

In he spring o 2014, he Minnesoa legislaure approved a bill o incremenally raise he sae minimum wage o $9.50 an hourby 2016. Almos 100,000 Minnesoa workers go a raise during he summer o 2014 when he minimum wage increased o $8 anhour, he firs sep building owards 2016.2

Despie hese and oher posiive developmens, here are major naional rends ha coninue o negaively affec Minnesoworkers. Tese rends, which are discussed in his repor, have shaped he sae’s curren economic siuaion and are likely oconinue o impac he uure o work in Minnesoa.

u Minnesoa households have los real income over he las en years. Afer accouning or inflaion, heincomes o mos workers in Minnesoa declined, while only he wealhies saw an increase in heir incomes and livingsandards.3

u Mos of he jobs los during he recession were middle class jobs ha paid decen wages wih goodbenefis, bu he jobs ha have been added in he recovery have been low-paying service secor jobs. 4

Tere are sill 40,000 ewer acory workers in Minnesoa han in 2008 and 18,000 ewer consrucion workers.5

Meanwhile, here are 27,000 more home care aides and personal care aides han in 2007.6

u Too many Minnesoans are living in povery even hough hey are working. Te wo occupaions wih he mos jobs in he sae boh pay povery wages. Reail salespeople have a median hourly wage o $9.75, and ood service andpreparaion posiions pay even lower, $8.64/hour.7

u The occupaions ha are projeced o have he mos new job growh in Minnesoa pay povery wages. By 2022here are expeced o be almos 33,000 new personal care aide and home healh aide posiions in he sae — jobs hapay on average less han $11 per hour.

u The occupaions ha are seeing he mos growh in Minnesoa no only pay povery wages, bu also have heleas benefis. For example, jus 35 percen o service workers in Minnesoa have access o earned sick and sae ime.8

u A growing number of workers have had o adap o employmen arrangemens ha are unsable andunpredicable. Jobs ha used o be ull-ime, salaried posiions have increasingly become coningen, par-ime, andmore unpredicable.9

u Large companies have shifed from employing heir workers direcly, o ousourcing he work o smallercompanies hrough subconracing, using emporary employmen agencies, and misclassifying workersas independen conracors. Te smaller companies compee agains each oher, driving down wages and benefisand leading o unsae and unhealhy working condiions.

Tis repor will examine hree rends ha are shaping workplaces in Minnesoa and heir consequences or hose people mosadversely affeced by hem. Te hree rends are:

u

Te Growh o Povery Wage Jobs u Te Increase o Insecuriy and Insabiliy

u Te Rise o he Fissured Workplace

Each rend has already had proound impacs on he working lives o women and people o color in Minnesoa. Increasinglyheir experiences are becoming he norm even or hose who ideniy as whie and middle class. For many, hese condiionshave been heir working realiy or generaions. For ohers, hese rends are he uure o work in Minnesoa.


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2 The Future of Work in Minnesota

Minnesoa’s economy is on a collision course. Te occupaions ha are growing he ases are amongs he lowes paying. Tese win rends, he growh o

jobs in low-paying indusries and he decline o hese jobs’ already low levels ocompensaion, risk leaving a million Minnesoans behind even while he sae’economy grows. More and more o Minnesoa’s working people are employed in

jobs ha do no provide he pay and benefis heir amilies need o survive. Tesehardships have ough consequences or he healh, sabiliy, and qualiy o lieha every working person should expec. Tese consequences, however, exendbeyond he individual worker and her amily. When work ails o provide a roueino he middle class he whole sae suffers. When he basic deal ges brokenwhen work no longer equals opporuniy, he sae’s economy is also broken.

Tis crisis, he possible uure o work in Minnesoa, demands immediae aenion. Tis repor will begin by describing he challenges he sae aces. Firshe growh o low-wage jobs and he decline in employer-provided benefis (likepaid ime off and reiremen savings) are evidence ha our basic economic deais badly in need o repair.

WagesAfer decades o progress, povery raes in Minnesoa have been rising rapidlyOne in nine Minnesoans (622,000 people) live below he povery line. Tis is dueno jus o job loss, bu also o decreasing wages and an increase in he number o

jobs ha pay povery wages. Mos poor Minnesoans are working or seeking workSixy-nine percen o Minnesoa households in povery have one or more members in he workorce.10

Minnesoa’s working poor who mus rely on public assisance o make ends meeare concenraed in our indusries: reail, hospialiy (including ood service)emporary office work, and healh care.11 Tese are also he indusries ha employ he larges number o Minnesoans.12

Tese jobs are also he ones ha are projeced o see he mos growh, meaningeven more jobs ha pay povery wages and cos axpayers hrough providingpublic assisance.13

“I make $8 an hour and

sruggle every monh o pay

he $800 ren for me and

my 2-year-old son. I feel like

i’s jus no righ, he work

ha I pu in o ry o make my

income. Every ime I ge paid

i’s like my whole check is gone— I have nohing o show for i.”

—Nakia Joseph,

McDonalds worker

The growth in poverty wage jobs

Reail salespersons $9.75/hr

Personal care aides $10.80/hr

Food prep/service, incl. fas food $8.64/hr

Regisered nurses $33.92/hr

Cashiers $9.04/hr

Office clerks $14.40/hr

Cusomer service reps $16.56/hr

Median wage of occupaions wih mos workers in Minnesoa

Number of workers


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“PCAs are paid low wages

wih no benefis, no sick days,

and no vacaions. Many live in

povery and ohers have no

had a day off in years. Some

have seen heir own healh

fail while hey spend all of

heir energy aking care of

someone else. I love he work

I do bu do no believe ha

anyone who offers his or her

hard work should be relegaed

o a life of povery.”

—Sumer Spika

Mos o he 150,000 jobs los during he recession were middle class jobs ha paiddecen wages wih good benefis, bu he jobs ha have been added in he recov-ery have been low-paying service secor jobs. For example, here are sill 40,000ewer workers in Minnesoa acories han in 2008 and 18,000 ewer consruc-ion workers.14 Meanwhile, here are 27,000 more home care aides and personal

care aides han in 2007.15

Tere are expeced o be almos 33,000 new personal care aide and home healhaide posiions creaed in Minnesoa by 2022. Tese jobs pay on average around$11 or less an hour in Minnesoa.16

Afer healh care, he areas which will see he nex larges job growh are reailand ood preparaion and service, which includes as ood. Tese occupaions,which have a median hourly wage in Minnesoa o less han $10, are projeced ohave over 12,000 new jobs his decade.17

Five fases growing jobs in Minnesoa wih median hourly wage

Food prep/service, incl. fas food $8.64/hr

Reail salespersons $9.75/hr

Regisered nurses $33.92/hr

Personal care aides $10.80/hr

Home healh aides $11.09/hr

Number of projected new jobs added, 2012–2022

Daa: U.S. Deparmen of Labor Bureau of Labor Saisics


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“As a working person in a nursing home for 35 years, no one ever offered me any

opporuniy o save, ever. And as a represenaive, we all receive some pitance of

a pension, ha’s all I have. Mos of he workers ha I worked wih all of my life and

consiuens ha I represen have nohing,”

– Represenaive Pati Friz (DFL – Faribaul)

BenefitsIn addiion o sagnan wages, he radiional model o employer-based benefishas also been seadily eroded. Fewer employers are offering healh care,18 reiremen, and savings benefis and when hey are, hey are offering smaller (or noconribuion rom he employer. Fewer and ewer jobs in low-wage indusries areproviding paid ime off including sick leave, vacaion, or paid amily leave.

Paid ime off Te occupaions ha are seeing he mos growh in Minnesoa no only pay povery wages, bu also have he leas benefis.

u Jus 35 percen o service workers in Minnesoa have access o paid sickdays.19

u Tiry-our percen o he lowes-paid ull-ime workers in Minnesoa(hose making less han $15,000 a year), have access o paid sick days,compared o 85 percen o Minnesoa workers who earn over $65,000.20

u Only 12 percen o employees in he Unied Saes have access oexended paid leave or newborns, adoped children, or ill children,

aduls, or any oher amily members.21

u For hose low-wage workers, he siuaion is even worse: only our perceno hem have access o paid amily leave. Tis is a sark conras o he 22percen o high-wage workers who do have he benefi.22

Reiremen

Nearly one million Minnesoa workers do no have access o a reiremen savingsopion hrough heir employer. As a resul, hundreds o housands o Minnesoahouseholds nearing or a reiremen age (55+) have no reiremen savings andace he prospec o living in or near povery on nohing bu Social Securiy, oconinuing o work indefiniely ino heir reiremen years.23

Naionally, only 15 percen o privae-secor workers are in an employer-sponsored reiremen plan, compared o 30 percen hree decades ago.24 Tere hasbeen a dramaic increase in he number o people earning $25,000–$100,000 ayear who say hey will have o work unil hey are a leas 80 because hey will nohave saved enough or reiremen. In 2011, i was 25 percen, rising o 30 percenin 2012, and hen up o 34 percen in 2013.25

In 2001, 71 percen o workers in Minnesoa had access o a reiremen planhrough work. oday, ha figure has dropped o 61 percen.26

Te siuaion is even worse or people o color. A large racial divide in reiremensavings has been documened naionally, wih 63 percen o whie households

having some reiremen savings, compared o jus 38 percen o Arican-Americans and 31 percen o Lainos.27

Elizabeth Carroll, of Brooklyn Park, lovesher 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 threedays per year, receive a verbal warning

and can have the leave counted against

them in their annual review.

No39% Yes

61%

No29%

Yes71%

2014 Minnesoa workers wih accesso reiremen plan hrough employer

2001 Minnesoa workers wih accesso reiremen plan hrough employer


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The increase ofinsecurity and instabilityA growing number o Minnesoa workers have had o adap o employmen arrangemens ha are unsable and unpredicable. Teir hours o work are erraic. Tey are unable o find ull-ime work. Te work hey find is emporary. Generaions ago

jobs sandards were se wih an expecaion ha amilies would uncion by having a single, male breadwinner provide or hi

spouse and amily by working ory hours a week during “business hours.” Tis idea, hough never acualized or mos, haslong-since been replaced by he realiy o wo-income households and single-income, single paren households. In boh hesescenarios, all he parens are working parens. Mos amilies canno afford o have an adul remain unemployed and do heunpaid work o caring or children, elders, or he household.

Wih his realiy in mind, he increasing insecuriy and insabiliy o work is a paricularly problemaic developmen. As moreand more jobs are emporary, par-ime, or have irregular schedules, he amilies ha work hem are pu under greaer andgreaer sress. Tese acs are he second se o evidence ha Minnesoans need o renegoiae he basic economic deal hashapes heir working lives.

Scheduling

Te challenge o balancing work and amily responsibiliiescan be difficul or any working person. Tey are paricular-ly acue or workers’ whose schedules change wih litle no-ice, are se wih limied employee inpu, or flucuae widelyweek o week. Known or years o be a problem by workers,i is only recenly being sysemaically sudied by academics.

In 2014, Universiy o Chicago researchers provided hefirs-ever esimaes o problemaic scheduling pracicesamongs early career aduls. Wha he sudy confirmed iswha low-wage workers have known o be rue: bad schedul-ing pracices are widespread. Tese researchers ound ha:

u 41 percen o surveyed hourly workers know heirschedule one week or less in advance o heirworkweek.28

u 50 percen o surveyed hourly workers repor haheir employer decides he iming o heir work,while only 32 percen say heir employer allowshem some inpu ino heir work schedule.29

u 74 percen o surveyed workers experience someflucuaion in weekly hours over he course o amonh. Tey commonly experienced flucuaions oas much as one ull eigh-hour day more or less each

week.30

While hese challenges seem o be more and more commonacross boh indusries and income, i is paricularly oughin some indusries: janiorial and housekeeping, ood ser-vice, reail, and homecare. Te able below describes howrequenly hourly workers in hese indusries experienceflucuaing schedules, one week or less noice o a scheduleor employer-decided iming.31

Table: Percen of hourly workers by indusry facingdifficul scheduling pracices

Anyflucuaion

in weeklyhours

1 week or lessnoice of weekly

schedule

Employerdecides

iming ofschedule

Janiors andhousekeepers 66% 40% 50%

Food serviceworkers 90% 64% 39%

Reail workers 87% 50% 44%

Home careworkers 71% 55% 37%

Tese pracices have become a very common eaure o workin hese indusries and have ar-reaching consequences orworking amilies. Te use o ‘jus-in-ime’ scheduling in hereail indusry is insrucive.

Tere is a growing use by large employers o “jus-in-imecompuerized scheduling sysems, which are designed ocu coss by figuring ou he exac number o workers needed a each hour based on cusomer raffic.

Tis creaes schedules ha vary rom week o week and evenday o day. As a resul, workers ofen do no know how many

hours hey will work per week or monh or how much money hey will make. Tis also makes i difficul or workers oplan a budge, arrange child care, enroll in higher educaionor ake on a second job or addiional income.32

Tis also resuls in more par-ime workers since i savesmoney o bring differen workers in or shor shifs raherhan keeping a ull-ime worker on he clock during slowimes. For insance, over hal o he cashiers and sales associaes a Walmar are par-ime.33


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“I’ve been looking for full-ime work since

2008. A job ha can suppor me. I find he

wages oday are he same as hey were in

he 1980s. I also noice wha jobs are ou

here are only par-ime, which do no pay

a living wage and do no have any benefis,

vacaion nor personal leave and sick leave.And many of us have had o ake on several

par-ime jobs o barely ge by. Gasoline,

uiliies, food, ren have all skyrockeed

in price. Bu wages do no mach he cos

of living. I find he American dream has

urned ino a nighmare for mos.”

—Grechen Gubbins,

cook a a daycare cener

“If Walmar gave me a consisen schedule

and number of hours I would be able o pay

all of my bills on ime. Righ now I choose

wha is more imporan. Every payday I’m

lef wih a budge ha leaves me paying

for ren on ime and no being able o

afford food for wo weeks. I also leaves

me sressed wih rying o afford a reliable

form of ransporaion and paying suden

loans bu I shouldn’ have o choose

beween buying food, and no being able o

pay ren on ime.”

—Canare Davun

“Jus-in-ime” scheduling has been embraced by he reail indusry.34 Tere arealmos 90,000 reail sales posiions in Minnesoa, making i he mos common

job in he sae. Tere are an addiional 57,000 cashiers.35 Women disproporionaely hold hese posiions.36 Reail is one o he indusries expeced o see coninued uure job growh, meaning ha he use o jus-in-ime scheduling willikely coninue o increase.37

aken ogeher a clear picure emerges. In some o Minnesoa’s ases growingoccupaions workers a) receive litle advance noice o heir schedule, b) have

widely flucuaing hours week o week, and c) have oo litle say on wha hourshey are scheduled or.

Involuntary part-time hoursDuring he recession here was a significan increase in “involunary par-imework” — workers who would preer ull-ime work bu are working par-ime eiher because hey can’ find ull-ime employmen or heir employer has limiedhe worker’s hours.

Te number o workers in Minnesoa working par-ime involunarily almosripled rom 56,000 in 2007 jus beore he recession o 133,000 in 2010. Te fig

ure declined slighly o 112,000 in 2012, bu is sill more han double wha i waspre-recession.38

Te high level o involunary par-ime work and he ac ha i has no allen significanly during he economic recovery indicaes ha his may now be a sandard eaure o he labor marke.

Levels o involunary par-ime work are especially high among people o col

or. Over 40 percen o Arican-American par-ime workers in Minnesoa areworking ewer hours han hey would preer, as are 38 percen o Laino parime workers and 30 percen o Asian par-ime workers. In conras, 17 perceno whie par-ime workers in Minnesoa are involunary par-ime.39

N u m b e r o f w o r

k e r s

Involunary par-ime workers in Minnesoa


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Te insiuionalizaion o emporary hiring has begun oaffec more and more jobs ha were once considered sable,career rack posiions. One example o how widespread hispracice has become is he increasing use by Minnesoa col-leges and universiies o adjunc eachers in roles previously

occupied by ull-ime aculy.

Adjunc proessors are no salaried employees, bu areinsead, paid per course. Tey ypically make $18,000 o$30,000 a year or he equivalen o ull-ime work, com-pared o enure rack proessors who earn $68,000 o$116,000, plus benefis.46 As coningen workers, adjuncsusually do no receive healh or reiremen insurance anddo no have job securiy, since hey rarely know i hey willbe re-hired o work.

Te number o adjuncs and emporary insrucors has:

u Increased rom 37 percen o 44 percen o he oalaculy a he Universiy o Minnesoa in he las enyears.47

u Nearly ripled since 1999 rom 570 o 1,500 a heseven Minnesoa sae universiies.48

u Grown o ounumber ull-imers, 195 o 184, aHamline Universiy.49

Te expansion o emporary and coningen hiring has muliple, negaive consequences or Minnesoans. oo manyworkers are orced o rely on emporary employmen as heiprimary source o income, going rom one placemen o henex, no knowing where heir nex job will be or when iwill come. Tey rarely ge benefis, such as healh insuranceearned sick days or vacaion, and ofen do no qualiy or un

employmen benefis. Te devoluion o regular, ull-imework ino emporary, par-ime, undercompensaed work isa growing challenge or Minnesoans.

Temporary and contingent workforce

Te rend oward hiring emporary and coningen workers insead o perma-nen workers has been growing since he 1980’s and has acceleraed during herecen recession.

Te number o emporary jobs in Minnesoa has more han doubled since 1990,rising o 68,000 in 2013, an all-ime high.40

Tis rend in Minnesoa is consisen wih naional rends. u In he las hree decades, he oal share o jobs creaed by he

Employmen Services indusry has nearly doubled, rom 1.4 percen oall U.S. jobs in 1990 o 2.5 percen o all U.S. jobs in 2014. 41

u During he recen recession he average share o a U.S. company’sconingen workorce grew rom 12 percen in 2009 o 16 percen in 2012.42

u When surveyed in 2011, 34 percen o human resource proessionalsindicaed hey are increasing or planning o increase heir company’suse o coningen workers.43

u Once primarily a problem or office and clerical workers, he use o

emporary services has become he model in more indusries likeproducion, ransporaion, and cusomer service.44

u As i has spread, i has become a par o he business model o mos ohe mos powerul corporaions in he U.S. Seveny-seven percen oForune 500 Companies now use emporary services permanenly.45

“We are hired

one semeser a

a ime, wih no

promise of fuure

classes, and

zero job securiy.

While uiion has increased

a Hamline by 50 percen

since 2006, adjuncs have no

goten a raise, no even a cos-

of-living increase, in ha ime.

This means ha many hings

have been geting worse for

us. Many adjuncs sruggle o

make a living, much less save.”

—Swai Avash


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Dela Airline employees used o clean he insides of planes a he Minneapolis-S. Paul Inernaional Airpor unilDela ousourced his work. Abou four years ago, he subconracor paid cabin cleaners $9-$11 an hour. Dela

brough in a new conracor ha cu wages o $7.25 an hour.

The rise of the fissured workplace

Over he las hiry years, an increasing number o large companies in he U.S. have shifed rom employing heir workers direcly, o ousourcing he work o smaller companies hrough subconracing, using emporary employmen agencies, creaingranchise arrangemens, and misclassiying workers as independen conracors. Tese radical shifs in he basic employmenrelaionship have had ar-reaching consequences or employers and employees alike. An increasing number o Minnesoanare working in arrangemens in which heir legal employer is no heir acual boss. For example, hey are employed by a empagency ha operaes a he mercy o is cliens or hey work or a ranchisee ha is conrolled by he “home office.”

Te fissured workplace, once a novely, is now he sandard in some low-paying indusries. For example, in he U.S. janiorialas ood, and agriculure workers are ousourced a an alarming rae:50

Te consequences or employers are also proound. Tose wih he economic power o change he wages and working condiions o Minnesoans are increasingly a a remove rom he lives o heir employees. Wihou he direc legal responsibiliy orand an acual direc relaionship wih workers, absenee employers creae less sae workplaces, lower paying jobs, and moredismal work environmens. Tis new realiy o he fissured workplace is he hird body o evidence ha working Minnesoansneed a new bargain wih hose who acually employ hem.

No63%

Yes37%

No20%

Yes80%

No24%

Yes76%

There are 2.1 million janiorial workers in he U.S.

There are approximaely 2 millionagriculural workers in he U.S.

There are 3.8 millionfas food workers in he U.S.

Janitorial workers Agricultural workers Fast food workers in franchise stores

Percenage of workers in conraced work


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Sub-contractingSubconracing occurs when an ouside person or company is hired o perorm acerain piece o work. Long a pracice in indusries like garmen manuacuring,consrucion, day labor, and agriculural work, I has become commonplace inmore and more indusries.51 Te airline indusry provides a srong example.

Te airline indusry has seen a subsanial increase in subconracing which hasransormed wha were once good-paying middle class jobs o povery wage jobs

ha orce many workers o rely on public assisance in order o suppor hem-selves and heir amilies. Tis has been paricularly dramaic in cerain airporposiions such as baggage porers, wheelchair atendans, and workers whoclean he insides o planes.

u en years ago, 25 percen o baggage porer jobs and 40 percen ovehicle and equipmen cleaning jobs were ousourced o ousideconracors. oday, 84 percen o he jobs in boh occupaions areousourced.52

u Naionally, he average hourly wages or baggage porers ell rom heequivalen o over $19 an hour o $10.60, a 45 percen drop. For vehicleand equipmen cleaners, average hourly real wage decreased 25 percen,

rom over $15 an hour o $11.40 (in 2012 dollars).53

Subconracing is also prevalen in he janiorial indusry, where here is nowfierce compeiion among he janiorial companies, wih each conracor ryingo underbid he oher. Since labor is by ar he larges expense, he company wihhe lowes labor coss ofen wins he conrac. In some cases, janiorial compa-nies ry o reduce heir labor coss wih pracices such as paying below minimumwage or no paying overime. Te company ha hired he subconracor is noliable or any o hese violaions because hey are no he direc employer.

Workers employed by subconracors also have litle job securiy since heir jobsare dependen on heir employer winning uure bids o coninue is conracwih he larger company.

“I am a single moher rying

o ge by on he $8 an hour I

am paid o clean a sore. Low

wages deeply affecs my

healh and he healh of my

family. Someimes we can’

even afford o buy milk. I am

always ired and I can’ akemy children ou o play or ge

exercise.”

—Maricela Flores

Carlson Building Mainenance


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“I worked for wo monhs cleaning

a Marshall’s sore in Maple Grove

for a subconracor hired by KBS. I

was old I would be paid $8.50 per

hour bu was never paid anyhing.

Then I cleaned he same sore for a

monh for a differen subconracorwho also was supposed o pay me

$8.50 an hour. He ended up paying

me for only some of he hours I

worked.

“I was owed a oal of $1,630. I

called KBS, he company ha had

subconraced he work. KBS old

me here was nohing hey could

do for me because I had no been

employed by KBS.”—Anonio Torrealva

Misclassifying workers asindependent contractorsA growing number o employers are mislabeling heir employees as “independen conracors” in order o avoid having o comply wih employmen-relaedlaws such as paying minimum wage or overime, workers compensaion, payrolaxes, or unemploymen insurance.54

When he Minnesoa’s Office o he Legislaive Audior sudied he mater in

2007, hey ound ha a leas 1 in 7 employers who paid unemploymen insurance in 2005 misclassified independen conracors. Te repor concluded hanumber o misclassiying employers would likely grow i employers who do nopay unemploymen insurance were also included.55

A significan percenage o employers misclassified workers in a number o heases-growing, lowes paying indusries in Minnesoa. Tese include : 56

16% o healh care and social assisance16% o manuacuring15% o consrucion14% o reail rade12% o adminisraive suppor, wase managemen, and remediaion services8% o accommodaion and ood service

An example o he consequences o his misclassificaion can be ound wih reai janiors.

Kellermeyer Bergensons Services (KBS) is he larges janiorial company servingreail sores in he U.S.57 and has conracs o clean PeSmar, Sears, J MaxxMarshalls, Michael’s, JC Penney, and Walgreens.58 KBS operaes under he model o hiring subconracors who hire janiors as “independen conracors.” Terehave been numerous repors rom workers in he win Ciies abou no beingpaid heir ull wages rom he subconracors.59


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Franchisee arrangementsFranchisee arrangemens have become anoher way o sep-arae employees rom he economic decision-makers whoshape heir workplaces. Tese arrangemens mos requen-ly ake one o wo orms. Te firs is a requiremen ha anindividual worker become a ranchisee o an individual em-ployer. Tis pracice (which is becoming more common inindusries like consrucion, delivery, janiorial, and por

rucking companies) is a way o evade providing basic ben-efis and opporuniies ha employees migh expec. In aMay 2014 repor, he Naional Employmen Law Projec de-scribes he problem well:

Classic definitions o employment under applicable

workplace protection laws do not capture enough

o these ofen-convoluted structures, and allow

companies to evade responsibility or workers

who historically were considered to be in the

businesses’ domain. Outsourced workers can

lose out on protections under core wage andhour, discrimination, and health and saety laws.

Tey may have no saety-net compensation or

on-the-job injuries or layoffs. Tey may lose

access to career ladders, health care coverage, and

retirement benefits available to direct employees.

Many o the workers in these jobs are immigrants

who are araid to come orward to complain o

unair treatment. And unortunately, there is a

close correlation between contracted occupations

and those with the highest numbers o workplaceviolations.60

Te second, more common, orm o ranchisee arrangemens is he model developed in he as-ood indusry. Inhis model a lead company sells ranchise righs o individual operaors while reaining conrol o significan parso he business including is brand, markeing, adverisingand, in some cases, is acual day-o-day operaions. In isrecen repor on he issue, he Naional Employmen Law

Projec wries:

Recent news reports say that McDonald’s

computers keep track o data on sales, inventory,

and labor costs, calculate the labor needs o the

ranchisees, set and police their work schedules,

track ranchisee wage reviews, and track how

long it takes or employees to fill every customer

order. Domino’s Pizza tracks the delivery times

o its ranchisee’s employees, holding them to the

brand’s standards. McDonald’s reportedly acts as

a labor broker or its ranchisees, via a website that

screens applicants. Fast-ood workers say that on

occasion, McDonald’s has fired employees o its

ranchises, exercising a right commonly associated

with employer status.61

Te ranchise model has become he sandard in he asood indusry. A survey o he 2007 Economic Census revealed ha approximaely 76.3 percen o as ood employees work in ranchisee-owned resaurans.62

Te power o lead companies o se erms and condiions orboh ranchisees and employees has become so over hain some saes, boh ranchisees and employees are findingcommon cause o beter regulae he ranchise model iselTe Caliornia legislaure in 2014 amended he CaliorniaFranchise Relaions Ac o offer ranchisees greaer proecions and more reedom o operae heir businesses independenly. (Te bill, however, was veoed by Governor JerryBrown.) Many o he larges ranchisors use boh heir scaleand heir legal and geographic disance rom heir ranchisees o heir advanage. Tese ranchisors have oo muchpower over and oo litle responsibiliy or he workers who

wear heir uniorms.


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The impact of poverty wage jobson women and people of colorWomenWomen make up more han wo-hirds (68 percen) o Min-

nesoa workers in povery-wage jobs, alhough hey makeup less han hal o he Minnesoa workorce as a whole.63 Tis concenraion o women in povery-wage jobs has beenon he rise in recen years and is likely o coninue o in-crease since many o he occupaions in which women areconcenraed (ood service, home healh care, and reail) arealso hose areas which are projeced o have he larges jobgrowh.64

Four o he five jobs projeced o add he larges number oworkers in Minnesoa by 2022 are low-wage, ypically pay-ing around $11 or less per hour, and hree o hese low-wage

jobs are emale dominaed.65

Women workers and he fases growing occupaions

OccupaionMedian hourly

wage inMinnesoa

Percenage ofMinnesoa workforce

ha is female

All occupaions $18.15 48%

Home healh aide $11.09 86%

Personal care aide $10.80 80%

Food preparaionand service $8.64 68%

In addiion o he low pay, many povery wage jobs have sub-sandard (or no) benefis.

Earned sick and safe ime: For example, 40 percen oMinnesoa’s working women lack access o earned sick andsae ime benefis a work. Te siuaion is even worse i heyare working par-ime or or less han $15,000 per year. Six-y-six percen o he sae’s lowes paid workers lack access; 74percen o Minnesoa’s par-ime workers lack access.66

Reiremen securiy: Women are doubly disadvanaged

when planning or reiremen. Tey are likely o live longer and less likely o have adequae reiremen savings. A2005 repor by he Sae Healh Access Daa Assisance Cener esimaed he adequacy o reiremen savings or hoseborn beween 1936 and 1965, or, roughly speaking, he babyboomers. Tey ound ha 38 percen o hese single emaleshad insufficien reiremen resources compared o 22 percen o Minnesoans overall.67

Afer a lieime o lower pay, women receive smaller benefis rom heir Social Securiy and pension savings. In 2012women’s reiremen income in Minnesoa was only 50 per

cen o men’s.68 Beyond benefis, low-wage employers ofeninsiue oher employmen pracices ha make i very difficul or women o mee heir amily’s needs. Single mohersin paricular ace enormous challenges.

u Tey may lack he resources needed o pay orsuppor services like child care.

u Teir jobs ofen involve working evenings,weekends, and even overnighs.69

u Teir schedules may be erraic and heir hoursinsufficien, posing addiional obsacles or women

rying o work heir way ou o povery.70

Tese challenges creae enormous problems or women andor single parens in paricular, who are unable o plan abudge due o uncerain income and are unable o arrangechildcare due o uncerain work hours. Te increase olow-paying, emale-dominaed jobs as a share o Minnesoa’s economy is a rend ha will shape wha’s possible orgeneraions o women and heir amilies in Minnesoa.


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People of colorPovery wage jobs: In Minnesoa, povery-wage jobs havehe larges concenraion o workers o color.

Jobs held by larges numberof people of color in Minnesoa71

OccupaionMedian hourly

wage in MinnesoaNumber of

workers of color

Home healh aide $11.09 10,341Cashiers $9.04 10,016

Janiors $11.37 9,288

As noed above or women workers, he low-paying jobs haare projeced o have he mos growh over he nex en years,such as home healh aides, personal care aides, and ood ser-vice and preparaion posiions, are also he ones where peo-ple o color make up a large share o he workorce.72

While people o color hold abou 16 percen o all jobs in hewin Ciies mero area, hey make up 38 percen o he home

healh aide and personal care aide jobs and over 30 perceno ood service jobs — he occupaions ha are expeced ohave he mos new jobs in Minnesoa.73 In conras, people ocolor hold a small percenage o he jobs in he ases-grow-ing high-wage occupaions.

OccupaionTwin Ciiesmero area

median hourly wage74

% of posiions inTwin Ciies mero held

by people of color 75

All occupaions $19.40 15.7%

Regisered nurse $34.94 10.0%

Carpener $26.25 8.4%

General operaionsmanager $46.30 7.6%

Marke researchanalyss/markeingspecialiss

$31.06 10.4%

One resul o he overconcenraion o women and people ocolor in low-wage jobs (and heir exclusion rom high-wage

jobs) is he creaion o sark dispariies in pay beween bohmen and women and whies and people o color. Across heU.S. in 2011, workers made he ollowing hourly medianwages:

2011 naional median hourly wageby race/ehniciy and gender 76

In addiion o disproporionaely experiencing low raes opay, people o color also receive ewer and poorer benefiwhile working a less sable, less predicable jobs.

Earned sick and safe ime: For example, people o coloracross he board are less likely o have access o earned sickand sae ime benefis. Te ollowing are he earned sick andsae ime access raes by racial demographics in Minnesoa.77

Whie: 61%

Asian: 58%Arican-American: 53%Laino: 40%

Reiremen securiy: Similarly, ewer people o color inhe U.S. have reiremen savings when compared o whies.7

Whies: 63%Arican-Americans: 38%Lainos: 31%

African-American women $13.13

African-American men $14.26

Whie women $15.89

Whie men $19.76

Laino men $12.74

Laino women $11.77

Source: Sae of Working America


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Scheduling: Early career people o color are more likelyhan early career whies o experience schedule changeso one week or less and employer conrol over heir workschedules. Te char below illusraes hese dispariies:79

Table: Percen of hourly workers by racefacing difficul scheduling pracices

Any flucuaionin weekly hours

1 week or lessnoice of weekly

schedule

Employerdecides iming of

schedule

Whie 74% 39% 47%

African-American 73% 49% 55%

Laino 73% 46% 58%

Temporary and Coningen Work: People o color areover-represened in emporary jobs. For example, he per-cenage o Arican Americans and Lainos working in Em-ploymen Serves is greaer han he percenage o hemworking overall.80

Involunary par ime: Finally, people o color in Minnesoa are disproporionaely suck in involunary par-ime

jobs. Te ollowing percenages o par-ime workers reporha hey are working ewer hours han hey would like: 81

Whie: 17%Asian: 30%Laino: 38%Arican-American: 40%

Tese pracices have real consequences or ens o housando people o color in Minnesoa. A snapsho o jus one bigbox reailer can illusrae how.

Naionally, people o color make up 40 percen o he oaworkorce a Walmar.82 One o he larges employers inMinnesoa, Walmar has 22,000 associaes in he sae.8

Wih an average hourly wage o a Walmar sales associae a jus $8.86 and even lower, $8.51, or a cashier, Walmar is helarges povery wage employer in he U.S.84

A ull-ime worker a hese wages earns less han $18,500 —

well below he povery line and no nearly enough o provide ood, housing, healh care, ransporaion and oherbasic needs or heir amilies.85 However, over hal o heworkers in hese posiions a Walmar don’ even earn hismuch because hey are involunarily par-ime.86

When joined wih he challenges many employees ace likea lack o benefis, unsable employmen, and a broken relaionship wih heir boss, many people o color working inreail are experiencing some o he wors our economy haso offer.

11%

20% 20%

16%

African-American and Laino workersare over-represened in emporary jobs

African-Americans Latinos

% of all employed U.S. workers

% of U.S. emporary workers


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ConclusionTe basic economic deal or Minnesoa’s working people has been broken.

Te wihdrawal o some employers rom his agreemen has acceleraed

he growh o povery wage jobs, an increase in unsable and insecureemploymen arrangemens, and he fissuring o workers rom he

economic decision-makers ha shape heir workplaces.

Facing eroding sandards and ew sae opions or making change a work,

more and more Minnesoans are quesioning he basic premise ha work

provides opporuniy. No one working ull-ime should have o live in

povery, ye oo many Minnesoans do.For many, in paricular women and people o color, he basic bargain was

never ully realized. Tey were excluded rom many o he New Deal’s

proecions. Now ha he deal has eroded or hose in he middle class, a

new opporuniy has arisen.

Minnesoans across he sae, across class, race, and gender, increasingly

find hemselves acing he same impossible choices. A millionMinnesoans do no earn a living wage, ge sick ime o care or loved ones,

or make enough o save or reiremen. Wih more and more Minnesoans

sruggling every year, here is a growing recogniion ha he broken deal

mus be fixed.

Tis repor is he firs in a series. Subsequen repors will analyze wha

caused he crises we ace and ouline wha we can do o solve hem. Tisrepor described he uure o work in Minnesoa. I’s an uncerain uure

or all us, unless we work o change i.


20/24


1. Nick Wolman, “Minnesoa’s unemploymenrae says a 4.5 percen,” Sar ribune, Augus14, 2014.

2. Briana Bierschbach,“Minnesoa’s newminimum wage, explained,” MinnPos,Augus 1, 2014.

3. Jennier ra n and Sarah reuhaf,

“Minnesoa’s omorrow: Equiy is heSuperior Growh Model,” Policy Link, 2014.

4. Ibid.

5. Adam Belz, “Minnesoa regains jobs los inrecession,” Sar ribune, Sepember 19, 2013.

6. “May 2007 Sae Occupaional Employmenand Wage Esimaes Minnesoa” and “May2013 Sae Occupaional Employmen andWage Esimaes Minnesoa,” Unied SaesDeparmen o Labor, Bureau o LaborSaisics, May 2007, May 2013.

7. “May 2013 Sae Occupaional Employmenand Wage Esimaes Minnesoa,” UniedSaes Deparmen o Labor, Bureau o LaborSaisics, May 2013.

8. Briefing Paper: Access o Paid Sick Days inMinnesoa,” Insiue or Women’s PolicyResearch, Sepember 2014.

9. Amy raub, “Reail’s Choice: How Raisi ngWages and Improving Schedules or Womenin he Reail Indusry Would BenefiAmerica,” Demos, June 2, 2014.

10. Ryan Winkler, chair, “Maki ng Work Pay inMinnesoa: A Repor o he Minnesoa Houseo Represenaives Selec Commitee onLiving Wage Jobs,” June 10, 2014.

11. Ibid.

12. Bureau o Labor Saisics, May 2013.

13. Minnesoa Deparmen o Employmenand Economic Developmen (MN DEED),Minnesoa Employmen Projecions, htps://apps.deed.sae.mn.us/lmi/projecions(accessed Augus 2014).

14. Belz, Sepember 19, 2013.

15. May 2013 and May 2007 Bureau o LaborSaisics.

16. MN DEED Employmen Projecions,Accessed Augus 2014.

17. Ibid.

18. “Rae o employer-based healh insurance

keeps dropping,” USA oday, April 11, 2013,Kelly Kennedy.

19. Briefing Paper: Access o Paid Sick Days inMinnesoa,” Insiue or Women’s PolicyResearch, Sepember 2014.

20. Insiue or Women’s Policy Research,Sepember 2014.

21. Insiue or Women’s Policy Research,“Maerniy, Paerniy, and Adopion Leave inhe Unied Saes,” Briefing Paper, May 2013.

22. “Naional Compensaion Survey: EmployeeBenefis in he Unied Saes, March 2013,”Bullein 2776, Unied Saes Deparmen oLabor Bureau o Labor Saisics”, Sepember2013.

23. Charles Hallman, “Alarming ‘reiremenracial divide’ could leave millions o

Black elders a risk, AARP pushes or saereiremen savings plan o bridge he gap,”Minnesoa Spokesman-Recorder, January 22,2014.

24. Carol Polsky, “Many older workers can’afford o reire,” Newsday, March 31, 2013.

25. “Middle Class Americans Face a ReiremenShudown,” Wells Fargo press release,Ocober 23, 2013.

26. “Te Sae o Minnesoa’s Middle Class,”DEMOS and Growh and Jusice, htp://www.demos.org/sies/deaul/iles/publicaions/Minnesoa_Middle_Class.pd (accessedAugus 2014).

27. Hallman, January 22, 2014.28. Susan J. Lamber, Peer J. Fugiel, Julia R.

Henly, “Precarious Work Schedules amongEarly-Career Employees in he US: A NaionalSnapsho,” EINe a he Universiy o Chicago,Augus 27, 2014.

29. Ibid.

30. Ibid.

31. Ibid.

32. “Scrambling or Sabiliy: Te Challengeso Job Schedule Volailiy and Child Care,”CLASP, March 2014.

33. “Te Low-Wage Drag on Our Economy: Wal-

Mar’s low wages and heir effec on axpayersand economic growh,” US House Commiteeon Educaion and he Workorce, May 2013.

34. raub, June 2, 2014.

35. Bureau o Labor Saisics, May 2013.

36. “Affirmaive Acion Daa Saisics Packe,compiled rom American CommuniySurvey 5-Year Daa 2006 o 2010,” MinnesoaDeparmen o Employmen and EconomicDevelopmen and Minnesoa, Deparmen oHuman Righs, htp://mn.gov/deed/images/Daa_Definiions.pd (accessed November2014).


38. “Geographic Profile o Employmen andUnemploymen,” Unied Saes Deparmeno Labor, Bureau o Labor Saisics, 2007-2012.

39. “Geographic Profile o Employmen andUnemploymen,” Unied Saes Deparmeno Labor, Bureau o Labor Saisics, 2012.

40. “Minnesoa sees surge in emp jobs,” Sarribune, Adam Belz, July 21, 2013.

41. Rebecca Smih, Claire McKenna, “empedOu: How he Domesic Ousourcing oBlue-Collar Jobs Harms America’s Workers,Naional Employmen Law Projec, NaionaSaffing Workers Alliance, July 2014.

42. Saffing Indusry Analyss, 2012 ConingenBuyers Survey, July 11, 2012.

43. Sociey or Human Resource Managemen“Workplace Forecas: Te op Workplacerends According o HR Proessionals,” Feb2011.

44. Rachel Vilsack, “racking Minnesoa’semporary, Sel-Employed, and ConracWorkorce,” Minnesoa Deparmen oEmploymen and Economic DevelopmenSepember 2013.

45. Smih, McKenna, July 2014.

46. Beena Raghavendran, “Hamline adjuncaculy voes or union,” Sar ribune, June20, 2014.

47. Maura Lerner, “Adjunc proessors sayhey’ve become he “emp workers’ o collegeclassrooms,” Sar ribune, March 31, 2014.

48. Ibid.

49. Raghavendran, June 20, 2014.

50. Caheri ne Ruckelshaus, Rebecca SmihSarah Lebersein, Eunice Cho, “ WHO’S HEBOSS: Resoring Accounabiliy or LaboSandards in Ousourced Work,” NaionaEmploymen Law Projec, May 2014.

51. “Chain o Greed: How Walmar’s DomesicOusourcing Produces Everyday Low Wagesand Poor Working Condiions or WarehouseWorkers,” Naional Employmen Law Projec

June 2012.52. Miranda Diez, Peer Hall, and Ken Jacobs

“Course Correcion: Reversing Wage Erosiono Resore Good Jobs a American Airpors,Ocober 2013.

53. Ibid.

54. “Independen Conracor Misclassificaionand Subconracing,” Naional EmploymenLaw Projec, htp://www.nelp.org/conenconen_issues/caegory/independen_c o n r a c o r _ m i s c l a s s i i c a i o n _ a n dsubconracing (accessed 2014).

55. “Miscla ssificaion o Employees asIndependen Conracors”, Office o he

Legislaive Audior, Sae o MinnesoaNovember 2007.

56. Ibid.

57. Kellermeyer Bergensons Services websiehtp://www.kbs-clean.com/Abou-KBS.aspx(accessed Sepember 2014).

58. Kellermeyer Bergensons Services websiehtp://www.kbs-clean.com/LaesNews.aspx(accessed Sepember 2014).

59. Worker inerv iews by Cenro de rabajadoresUnidos en Lucha (CUL).

Notes


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60. Ruckelshaus, Smih, Lebersein, Cho, May2014.

61. Ibid.

62. Ibid.

63. “Underpaid and O verloaded: Women in low-wage jobs,” Naional Women’s Law Cener,July 30, 2014.


65. MN DEED Employmen Projecions, AccessedAugus 2014 and “Affirmaive Acion DaaSaisics Packe”, Accessed November 2014.


67. Lynn A. Blewet, “Reiremen Securiy andMinnesoa’s Elderly Populaion,” MinnesoaDeparmen o Human Services, Sepember9, 2005.

68. Women’s Economic Secur iy Agendawebsie htp://www.mnwesa.org/

helegislaion/2014-legislaion/older-women/ (accessed November 2014).

69. Naional Women’s Law Cener, July 30, 2014.

70. raub, June 2, 2014.

71. “Affirmaive Acion Daa Saisics Packe”,Accessed November 2014.

72. Joe Rihn, “argeing he Black Jobs Crisis,”Capial and Main, April 14, 2014.


74. “May 2013 Meropolia n and Non-Meropolian Area OccupaionalEmploymen and Wage Esimaes:

Minneapolis-S. Pau-Bloomingon, MN-WI,”Unied Saes Deparmen o Labor Bureau oLabor Saisics, May 2013.

75. “Affirmaive Acion Daa Saisics Packe”,Accessed November 2014.

76. “Hourly wage growh by gender andrace/ehniciy 1989-2011 (2001 dolllars),Sae o Working America htp://saeoworkingamerica.org/char/swa-wages-able-4-21-hourly-wage-growh/(accessed Augus 2014).


78. Hallman, January 22, 2014.

79. Lamber , Fugiel, Henly, Augus 27, 2014.

80. Smih, McKenna, July 2014.

81. “Geographic Profile o Employmen andUnemploymen,” 2012 Unied SaesDeparmen o Labor, Bureau o LaborSaisics.

82. “Walmar 2014 Diversiy & Inclusion Repor”hp://cdn.corporae.walmar.com/04/50/c9c43670400296b2a4aca089d2c/diversiyinclusion.pd (accessed Augus 2014).

83. Minneapolis-S. Paul Business Journa“Te Lis: Larges Employers”, htp://wwwbizjournals.com/winciies/subscriber

only/2014/07/11/larges-employers.hml(accessed 2014).

84. Naalie O’Reilly, “Why aren’ argeemployees sriking like heir cousins aWalmar?” Moley Fool, November 16, 2013.

85. Federal povery level or a amily o our is$23,550.

86.“Te Low-Wage Drag on Our Economy: WaMar’s low wages and heir effec on axpayersand economic growh,” US House Commiteeon Educaion and he Workorce, May 2013.


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(2014) The Future of Work of Minnesota

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