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Stuck in Neutral

by Dave Senf
December 2015

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Wage and employment disparities for minority workers have changed little over the last two decades.

While racial employment, earnings and income disparities have existed historically, the gaps have become more visible in recent years. That’s because minority workers now account for a higher share of workers in Minnesota and because additional labor market measures allow for detailed comparisons across racial and ethnic groups.

The American Community Survey (ACS), which has looked at economic characteristics by race and ethnicity annually since 2005, provides many of the statistics key to evaluating the progress or lack of progress for Minnesota minorities. The 2014 drop in median black household income and rise in the black poverty rate in Minnesota, as shown in ACS data, is a prime example of how improved data are providing a more accurate and timely picture of how Minnesotans of varying racial and ethnic backgrounds are faring.

Another relatively new source for employment and earnings statistics is the Longitudinal Employer-Household Dynamics (LEHD) program. Minority employment as measured by LEHD has more than doubled over the last two decades to 386,000 in 2014 from 168,000 in 1995. Minority employment as a share of total employment jumped to 14.2 percent in 2014, almost double the 7.4 share in 1995 (see Figure 1).1


Figure 1: Percent Minnesota Jobs Held by Race/ Ethnicity, 1995-2014 


The increase has been steady over the last two decades, although it slowed slightly during the last recession. Of the 444,000 jobs added between 1995 and 2014, a total of 226,000 were held by non-Hispanic whites. The other 218,000 jobs were held by minorities. The minority share of employment will continue to climb over the next two decades as older non-Hispanic whites retire and are replaced by younger workers who are much more racially diverse.

LEHD employment increased 20 percent over the last 20 years, with non-Hispanic white employment growing by just 11 percent. The next-slowest growing group was American Indian, which grew by 54 percent. Hispanic employment grew the fastest (up 161 percent), followed by Asian (up 135 percent), black (up 131 percent), and two or more races (up 127 percent).

Minority worker wages in Minnesota have grown as employment has climbed, but the growth rate of wage income has lagged behind employment growth. Wage growth lower than job growth is another way of saying the increase in minority employment has occurred disproportionately in lower-paid jobs over the last two decades.

Figure 2 compares the percent of Minnesota’s total employment and total wage payments across Minnesota’s largest minority groups since 1995.

Figure 2: Percent of Minnesota Jobs and Wage Payments by Race/ Ethnicity, 1995-2014

 

Asians are the only minority group that has seen its share of wage income increase significantly faster than its employment share. Asians held 2 percent of jobs in 1995 and received 1.7 percent of wages, implying that the average wage for a job held by an Asian was below the overall average wage.

Asians held 3.8 percent of jobs in 2014 and received 3.8 percent of wage payments, which means that over the last two decades the mix of Asian-held jobs shifted from more lower-paid jobs to a mix roughly in line with the wage mix for all workers, regardless of race or ethnicity.

The annual average wage for jobs held by Asians jumped from 86 percent of Minnesota’s average annual wage in 1995 to just slightly above the average in 2014 (see Table 1). Table 1 is another way of viewing the trends shown in Figure 2.


Table 1: Average Annual Wages by Race/Ethnicity, 1995 and 2014

1995 Annual Average Wage

2014 Annual Average Wage

Percent of
1995 Overall Average Wage

Percent of
2014 Overall Average Wage

Overall

26,587

48,733

White Non Hispanic

27,028

50,200

101.7

103.0

White Hispanic

18,533

34,042

69.7

69.9

Black or African American Alone

18,248

30,116

68.6

61.8

American Indian or Alaska Native Alone

18,082

31,171

68.0

64.0

Asian Alone

22,861

49,028

86.0

100.6

Native Hawaiian or Other Pacific Islander Alone

19,691

36,189

74.1

74.3

Two or More Races

18,842

33,850

70.9

69.5

Minorities

19,572

36,524

73.6

74.9

Source: U.S. Census Bureau, LEHD, Quarterly Workforce Indicators



About the Data

The Longitudinal Employer-Household Dynamics (LEHD) program at the U.S. Census Bureau combines data on individual wages and employment records with demographic information (such as sex, race, birth date, place of residence and citizenship). The wages and employment records come from state unemployment insurance programs. Demographic data come from information the Census Bureau has collected from various sources, including Social Security records. Wages and employment information is linked to each individual’s demographic information, and the data are aggregated by geography and industry to prevent any disclosure of individual information.

The aggregated data are used to produce Quarterly Workforce Indicators (QWI) and an online Web-tool called On-the-Map.1 QWI provides local labor market statistics by industry, worker demographics, employer age, and size. QWI data are available for Minnesota from 1994 to 2014.


1More information on the LEHD program and access to QWI can be found at http://lehd.ces.census.gov/.


Employment has grown fastest among white Hispanics, jumping from 1.4 to 3 percent of all jobs over the last 20 years. Wage income for white Hispanic workers has increased at about the same rate, doubling from 1 to 2 percent of all wage income. As a result, white Hispanic average annual wage relative to the overall annual wage has changed little over the last 20 years. White Hispanic annual wage was 69.7 percent of the overall average wage in 1995 and was 69.9 percent of overall average wage in 2014. The wage mix of jobs held by white Hispanic workers hasn’t changed much since 1995, remaining skewed toward low-paying jobs.

Relative pay has declined for black, American Indian, and two or more race workers. Black workers have fared the worst over the last 20 years as their average annual wages have fallen from 68.6 percent of the overall average to 61.8 percent in 2014.

While black employment accounted for 5 percent of jobs in 2014, black wage income accounted for only 3 percent of total wage income. The wage mix of jobs held by blacks has deteriorated over the last 20 years, with low-paying jobs making up a higher share of black employment in 2014 than in 1995. Average pay of American Indians and two or more races has also dropped relative to overall average pay, but not as much as the wages of black workers.

When all non-white groups are combined, the average annual pay of minorities in Minnesota relative to the overall average has increased minimally over the last 20 years, inching up from 73.6 to 74.9 percent. The slight improvement is due primarily to pay gains made by Asian workers.

The minimal improvement shows that there hasn’t been much change in the wage mix of jobs held by minorities over the last two decades. While the share of all jobs held by minority workers increased 92 percent from 7.4 percent two decades ago to 14.2 percent in 2014, the share of total wage income paid to minority workers increased by 95 percent, from 5.5 to 10.7 percent. In other words, there has been almost no decline in the wage income gap for minority groups in Minnesota since 1995 despite the minority workforce accounting for an expanding share of Minnesota workers.

Labor market differences, such as these racial and ethnic earnings differences, arise from many factors, including differences among the groups in age distribution, educational attainment, occupational and industrial mix of jobs held, and the degree of discrimination encountered in the workplace. These factors interact, leading to the existing labor market disparities.

Where different groups tend to be employed (in terms of industry) can be analyzed using the LEHD data set. Employment and earnings data are available in the LEHD database across 300 industries in Minnesota. The industries can be grouped into four wage levels – very high, high, low and very low – based on 2014 average industry wages. The wage level brackets were set so that 2014 employment was distributed equally across all four wage levels.

Minnesota’s annual average wage in 2014 was $48,700 in the LEHD data set, ranging from $288,000 in the oil and gas extraction industry (NAICS 2111 with 42 jobs in 2014) to $10,700 in the fruit and nut farming industry (NAICS 1113 with 318 jobs in 2014). Each industry’s annual average wage is total wages paid by the industry over the year divided by the annual average number of jobs, with no adjustment for hours worked or for seasonality. Industries with low annual average wages not only have low hourly wages but also tend to rely on a part-time and sometimes seasonal workforce.

Very high wage (VHW) industries had annual average wages above $64,900 in 2014, while high wage (HW) industries paid between $64,900 and $44,200 annually. Low wage (LW) industries averaged annual pay between $44,000 and $23,600, while industries with average annual wages below $23,000 were classified as very low wage (VLW) industries.

Racial groups with higher annual wages, not surprisingly, are more likely to be employed in industries with higher pay, while racial groups with lower annual wages are more likely to work in low-paying industries.

Asian workers had the second-highest annual average wage in 2014, due in large part to having the highest concentration of jobs in VHW industries. The Asian workforce had 31 percent of job holders in VHW industries and 23 percent in HW industries. The annual average wage for Asians, however, was held down by 27 percent of Asian employment in VLW industries.

Black employment is concentrated in VLW industries (41 percent) and LW industries (27 percent). American Indian employment is concentrated in LW industries (40 percent) and VLW industries (32 percent). The concentration of black and American Indian employment in lower-paying industries leads to these racial groups having the lowest annual average earnings.

The average annual wage for minority workers in Minnesota in 2014 was 75 percent of the state’s average annual wage. That’s a result of 27 percent of minority workers being employed in LW industries and 34 percent in VLW industries.

Table 2 is another way of displaying Minnesota’s wage gap using the four categories of industry wages. White non-Hispanic workers hold 85.7 percent of all jobs in Minnesota, but they hold a slightly higher share of VHW industry jobs (88.6 percent) and HW industry jobs (88.9 percent). White Hispanic workers hold 3 percent of all jobs in the state yet hold 3.8 and 3.9 percent of LW industry and VLW industry jobs, respectively.


Table 2: Wage Mix of Racial/Ethnic Groups, Minnesota, 2014

Total Jobs

Very High Wage Industry Jobs

High Wage Industry Jobs

Low Wage Industry Jobs

Very Low Wage Industry Jobs

Percent of Employment

White Non Hispanic

85.7

88.6

88.9

84.8

80.6

White Hispanic

3.0

1.9

2.3

3.8

3.9

Black or African American Alone

5.0

3.1

3.4

5.4

8.1

American Indian or Alaska Native Alone

0.9

0.4

0.6

1.5

1.2

Asian Alone

3.9

4.8

3.6

3.0

4.1

Native Hawaiian or Other Pacific Islander Alone

0.1

0.1

0.1

0.1

0.2

Two or More Races

1.5

1.1

1.1

1.5

2.4

Minorities

14.2

11.4

11.0

15.1

19.4

Source: U.S. Census Bureau, LEHD, Quarterly Workforce Indicators


Asian workers hold a disproportionally large share of VHW industry jobs (4.8 percent) compared to their share of the workforce (3.9 percent). Black workers hold a disproportional share of VLW industry jobs (8.1 percent) relative to their share of all jobs (5 percent). Minority workers hold 14.2 percent of all jobs in the state but only 11.4 percent of VHW industry jobs. They hold 19.4 percent of VLW industry jobs.

Of the 300 industries covered by LEHD data, 130 are LW or VLW industries employing half of Minnesota workers. The largest LW and VLW industries, in terms of number of employees, are listed in Table 3 across racial/ethnic groups. Six industries are leading employers for all groups. The industries are —

  • NAICS 6111 Elementary and Secondary Schools
  • NAICS 5613 Employment Services (primarily temp help)
  • NAICS 6241 Individual and Family Services
  • NAICS 6231 Nursing Care Facilities
  • NAICS 7225 Restaurants and Other Eating Places
  • NAICS 7211 Traveler Accommodation

These industries combined employ almost one out of every five workers (514,000 people) in Minnesota. Minority employment is even more concentrated in these six industries and other large LW and VLW industries. The top 10 largest industries with low or very low wages account for 34.1 percent of all minority jobs. Fifty percent of jobs held by American Indian workers are in one of the top 10 LW and VLW industries. Roughly 40 percent of jobs held by black workers are in the top 10 industries that have either low or very low wages. The rate in those industries is 37.2 percent for white Hispanic workers and 24.4 percent for white non-Hispanic workers.


Table 3: Largest Low and Very Low Wage Industries by Race/Ethnicity, Minnesota, 2014

White Hispanic

Jobs

Average Annual Wage

White Non-Hispanic

Jobs

Average Annual Wage

NAICS

Total

80,698

34,042

NAICS

Total

2,325,817

50,200

7225

Restaurants and Other Eating Places

9,352

15,019

6111

Elementary and Secondary Schools

143,568

41,401

3116

Animal Slaughtering and Processing

4,535

37,265

7225

Restaurants and Other Eating Places

125,811

14,118

5613

Employment Services

3,887

16,798

9211

Executive, Legislative, and Other General Government Support

64,078

43,267

5617

Services to Buildings and Dwellings

3,116

21,273

6241

Individual and Family Services

40,158

21,477

6111

Elementary and Secondary Schools

2,327

36,369

6231

Nursing Care Facilities

39,957

26,467

7211

Traveler Accommodation

1,728

20,040

5613

Employment Services

39,223

28,393

6241

Individual and Family Services

1,593

19,359

4451

Grocery Stores

35,722

20,509

6231

Nursing Care Facilities

1,417

20,809

6232

Residential Intellectual and Developmental Disability, Mental Health, and Substance Abuse Facilities

28,905

22,874

4451

Grocery Stores

1,139

15,790

4529

Other General Merchandise Stores

27,158

21,724

3114

Fruit and Vegetable Preserving and Specialty Food Manufacturing

958

27,771

7211

Traveler Accommodation

23,996

21,909

Top 10 Total Jobs

30,051

Top 10 Total Jobs

568,575

Top 10 Percent of Total Jobs

37.2

Top 10 Percent of Total Jobs

24.4

Black or African American Alone

Jobs

Average Annual Wage

American Indian or Alaska Native Alone

Jobs

Average Annual Wage

NAICS

Total

136,387

30,116

NAICS

Total

25,246

31,171

7225

Restaurants and Other Eating Places

9,819

12,271

9211

Executive, Legislative, and Other General Government Support

3,020

31,973

6241

Individual and Family Services

9,421

18,659

7132

Gambling Industries

2,082

24,274

5613

Employment Services

8,302

15,298

7225

Restaurants and Other Eating Places

1,847

12,756

6231

Nursing Care Facilities

6,719

26,330

6241

Individual and Family Services

1,354

24,717

6232

Residential Intellectual and Developmental Disability, Mental Health, and Substance Abuse Facilities

5,203

20,109

5613

Employment Services

1,160

16,789

6216

Home Health Care Services

4,658

17,323

7211

Traveler Accommodation

1,160

22,918

6111

Elementary and Secondary Schools

4,227

37,209

6111

Elementary and Secondary Schools

871

36,218

6233

Continuing Care Retirement Communities and Assisted Living Facilities for the Elderly

2,535

20,557

6231

Nursing Care Facilities

426

22,290

5617

Services to Buildings and Dwellings

2,466

18,057

4451

Grocery Stores

367

16,036

7211

Traveler Accommodation

2,245

18,723

6232

Residential Intellectual and Developmental Disability, Mental Health, and Substance Abuse Facilities

350

19,871

Top 10 Total Jobs

55,592

Top 10 Total Jobs

12,636

Top 10 Percent of Total Jobs

40.8

Top 10 Percent of Total Jobs

50.1

Asian Alone

Jobs

Average Annual Wage

Minorities

Jobs

Average Annual Wage

NAICS

Total

104,625

49,028

NAICS

Total

386,463

36,524

7225

Restaurants and Other Eating Places

7,629

16,557

7225

Restaurants and Other Eating Places

33,175

14,175

6241

Individual and Family Services

5,121

19,989

5613

Employment Services

19,364

18,058

5613

Employment Services

4,605

23,904

6241

Individual and Family Services

18,863

19,599

6111

Elementary and Secondary Schools

2,576

42,764

6111

Elementary and Secondary Schools

11,341

38,473

6216

Home Health Care Services

1,588

17,976

6231

Nursing Care Facilities

10,962

25,016

6231

Nursing Care Facilities

1,587

25,504

3116

Animal Slaughtering and Processing

8,073

36,644

8121

Personal Care Services

1,498

19,318

6232

Residential Intellectual and Developmental Disability, Mental Health, and Substance Abuse Facilities

7,919

20,003

7211

Traveler Accommodation

1,363

23,989

6216

Home Health Care Services

7,600

17,589

3116

Animal Slaughtering and Processing

1,282

36,678

5617

Services to Buildings and Dwellings

7,431

19,802

4521

Department Stores

1,142

17,151

7211

Traveler Accommodation

7,240

20,840

Top 10 Total Jobs

28,391

Top 10 Total Jobs

131,966

Top 10 Percent of Total Jobs

27.1

Top 10 Percent of Total Jobs

34.1

Source: U.S. Census Bureau, LEHD, Quarterly Workforce Indicators

The LEHD data clearly show the extent of Minnesota’s racial gaps, how little the gaps have changed over the last 20 years, and in which industries the gaps exist. Any progress on reducing these gaps will quickly show up in future LEHD data.

Self-employed workers are not included in QWI, nor are some wage and salary jobs that are not covered by unemployment insurance. Minnesota’s average annual QWI total in 2014 was 2,712,281. The 2014 Quarterly Census of Employment and Wages (QCEW) total was 2,729,679. LAUS (Local Area Unemployment Statistics) annual average estimate of Minnesotans employed (which includes self-employed) in 2014 was 2,852,478. The jobs included in QWI data account for approximately 90 percent of all jobs in Minnesota.


1 LEHD employment data is broken out into six racial groups (White Alone, Black or African American Alone, American Indian or Alaska Native Alone, Asian Alone, Native Hawaiian or Other Pacific Islander Alone, Two or More Race Groups) and two ethnicity groups (Hispanic or Latino and Not Hispanic or Latino). All racial group employment except White Alone is combined with White Hispanic or Latino employment to calculate minority employment.

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