Local 320 University of Minnesota Economic Benefits Report

7/23/2019 Local 320 University of Minnesota Economic Benefits Report

1/21

December 2014

Local 320 University of Minnesota Economic Benefits Study

Primary Researcher:

Tyler Sirucek

Formerly of St. Cloud State University,[email protected]

Contact:

Rich MacDonald

Interim Director, School of Public Affairs Research Institute, St. Cloud State University,

[email protected]
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


2/21

Executive Summary

Local 320 employees across the University of Minnesotas four campuses in the Twin Cities, Crookston,

Morris, and Duluth are estimated to provide economic benefits that create an additional 448 jobs in

their communities with induced incomes of $20,277,185 and an extra $58,896,813 in output. The

induced economic activity of Local 320 employees generates additional state and local taxes totaling

$3,648,484 and $4,594,089 in extra federal taxes. Among the industries that benefit the most from

Local 320 wages are real estate, financial services, health care, hospitality, and telecommunications. In

addition to the direct benefits of a five percent increase in wages for Local 320 workers, it is estimated

that a pay hike of this size would contribute an additional 22 jobs statewide and increase output bynearly $3,000,000.

Nearly eighty percent of the 1,452 Local 320 employees work on the University of Minnesotas Twin

Cities campus. Local 320 employees on this campus generate an estimated additional 305 jobs in the

seven-county metropolitan area with an induced impact on regional output of $41,315,856. The

average annual wage (with benefits) earned by Local 320 employees on the Twin Cities campus is

estimated to be $44,885.44, just sufficient to cover the estimated living wage of $41,830 for a family of

four with one working adult.

The seventy-eight Local 320 employees on the University of Minnesotas Morris campus earn an averageannual wage of $42,375.51 with benefits. This average wage is sufficient to cover the estimated

$36,934.43 living wage for a family of four with one working adult. The economic activity undertaken by

these employees generates an additional 15 jobs in the Morris area and is responsible for nearly $1.6

million in extra regional output.

The Duluth campus employs 178 Local 320 workers who earn an average annual wage of $45,160.13

with benefits. The estimated living wage for a family of four with one working adult in the Duluth area is

$37,549.80. Spending by Local 320 workers supports an extra 44 regional jobs and more than $4.8

million of additional output in the Duluth region.

With 41 employees, Local 320 on the University of Minnesotas Crookston campus has the smallest

overall impact across the system. The economic activity supported by these workers generates 7

additional jobs in the Crookston area and is responsible for more than $800,000 of extra output in the

region. The average annual wage (with benefits) of Local 320 workers in Crookston is $43,788.45 which

is adequate to cover the estimated living wage of $36,991 for a family of four with one working adult.

2


3/21

Statewide Economic Benefits

The wages earned by Local 320 employees are responsible for supporting many other businesses in

Minnesota. The $48,910,956.91 in pre-tax wages and the $19,812,529.91 in benefits and taxes paid by

the employer on behalf of Local 320 employees are responsible for an extra $58,896,813 of output

across the state.

State Total ImpactImpact Type Employment Labor Income Value Added Output

Total Effect 447.7 $20,277,185 $35,465,714 $58,896,813

An additional 448 jobs are supported in industries such as food service and drinking establishments;

private hospitals, physicians, dentists, and other health practitioners offices; real estate and securities

firms; commodities contracts, and investments.

State Top 10 Industries by OutputSector Description Employment Labor Income Value Added Output

Imputed rental activity for owner-

occupied dwellings0 __ $ 5,003,373.00 $ 6,822,936.00

Private hospitals 24.3 $ 1,767,088.00 $ 1,938,572.00 $ 3,408,824.00

Real estate establishments 17.2 $ 343,644.00 $ 2,699,775.00 $ 3,216,422.00

Offices of physicians, dentists, and

other health practitioners

22.9 $ 2,112,031.00 $ 2,142,061.00 $ 3,135,064.00

Wholesale trade businesses 13.8 $ 1,259,320.00 $ 2,179,017.00 $ 3,101,118.00

Food services and drinking places 49.8 $ 1,007,782.00 $ 1,413,973.00 $ 2,758,451.00

Monetary authorities and depository

credit intermediation activities6.6 $ 513,908.00 $ 1,972,711.00 $ 2,724,996.00

Insurance carriers 5.3 $ 589,055.00 $ 1,103,017.00 $ 1,862,714.00

Securities, commodity contracts,

investments, and related activities10.8 $ 649,536.00 $ 854,888.00 $ 1,645,608.00

Telecommunications 2.2 $ 178,298.00 $ 670,018.00 $ 1,206,945.00

State and local governments derive an additional $3,648,484 in taxes from this spending. The Federal

government receives an additional $4,594,089 in taxes from payroll, households, corporations, andproprietors.

Statewide Taxes GeneratedTotal State and Local Tax $ 3,648,484.00

Total Federal Taxes $ 4,594,089.00

3


4/21

If Local 320 employees received a five percent pay raise, the state would benefit from an additional

$2,944,040 in economic activity and an additional 22 jobs would be created. The increase in output

would be distributed across the same top 10 industries as the initial impact.

Statewide Totals Impact of 5% Wage IncreaseImpact Type Employment Labor Income Value Added Output

Total Effect 22.4 $1,013,859 $1,773,286 $2,944,840

As a result of this pay hike, state and local governments would collect an additional $182,424 in tax

revenue and the federal government would add $229,705 to its coffers.

Statewide Taxes Generated from 5% Wage IncreaseTotal State and Local Tax $ 182,424.00

Total Federal Taxes $ 229,705.00

Of the 1,452 Local 320 employees in the University of Minnesota system, on the basis of available 2013W-2 wage data, 306 (representing 21.1 percent) are estimated to work part-time and 1,146 work full

time (78.9 percent of the total).

Statewide Employees by Type Total PercentTotal Employees 1452 100%

Part - Time Employees 306 21.1%

Full - Time Employees 1146 78.9%

These workers earn an average annual wage of $33,685.23 and $44,753.30 in wages and benefits. Thelargest share of the $11,068.07 in estimated benefits is the employers medical contribution of

$8,392.83. As noted above, wages earned by Local 320 workers are nearly $49 million (nearly $65

million when benefits are included).

Annual Average Wages and Benefits

Total Wages With Benefits $ 44,753.30

Wages Without Benefits $ 33,685.23

Total Benefits $ 11,068.07

Employer Medical Contribution $ 8,392.83Employer Retirement Contribution (MSRS) $ 1,852.69

Employer Dental Contribution $ 761.94

Life Insurance Contribution $ 60.62

Total State Wages without Benefits $ 48,910,956.91

Total State Wages with Benefits $ 64,981,798.62

4


5/21

Because more than 20 percent of Local 320 workers are employed part time, annual earnings are

skewed on the lower end of the earnings distribution.

Because part-time employees do not have access to the same employer benefits received by full-time

workers, the pattern of the earnings distribution changes when benefits are included in employee

compensation.

0

20

40

60

80

100

120

140

160

Distribution of Statewide Annual Earnings without Benefits

0

20

40

60

80

100

120

140

Distribution of Statewide Annual Earnings with Benefits

5


6/21

Nearly one-third (a total of 467) of Local 320 members are female and 67.8 percent are male (a total of

985).

Sixty-eight percent of Local 320 members are white and one-quarter are black or African American. Two

percent are Asian and the remaining five percent are classified in the other category (which includes

American Indian or Alaskan Native, Hispanic/Latino, Native Hawaiian or Other Pacific Islander, race and

ethnicity unknown, and two or more races).

Female

32.2%

Male

67.8%

Distribution of Local 320 Membership by Gender

0%10%20%30%40%50%60%70%80%

Asian Black or AfricanAmerican Other White

Females 4% 31% 4% 62%

Males 2% 23% 5% 71%

% of Total 2% 25% 5% 68%

%ofTotalMembership

Race/Ethnicity Demographics

6


7/21

Twin Cities Campus Economic Benefits

The Twin Cities campus is the largest of the 4 study areas. An estimated $51,842,679.12 in wages and

benefits were paid to Twin Cities Local 320 employees in 2013. The wages, benefits, and taxes paid by

the employer generated $41,315,856 additional dollars of output within the 7-county metro region and

led to the creation of an additional 305 local jobs.

Twin Cities Total ImpactImpact Type Employment Labor Income Value Added Output

Total Effect 304.8 $15,229,416 $25,553,382 $41,315,856

The additional jobs created by the induced spending of Local 320 employees had the greatest impact onthe health services, wholesale trade, real estate, financial services, and hospitality industries.

Twin Cities Top 10 Industries by OutputSector Description Employment Labor Income Value Added Output


occupied dwellings0 ------ $ 3,338,158.00 $ 4,552,137.00

Real estate establishments 12.7 $ 295,337.00 $ 2,041,015.00 $ 2,423,732.00

Private hospitals 16.2 $ 1,253,075.00 $ 1,367,477.00 $ 2,349,132.00


other health practitioners15.8 $ 1,474,193.00 $ 1,494,877.00 $ 2,179,000.00

Wholesale trade businesses 9.1 $ 942,203.00 $ 1,547,575.00 $ 2,153,081.00

Food services and drinking places 35.8 $ 832,372.00 $ 1,124,326.00 $ 2,090,970.00

Monetary authorities and

depository credit intermediation

activities

4.2 $ 388,115.00 $ 1,321,530.00 $ 1,802,899.00

Insurance carriers 4 $ 478,519.00 $ 871,645.00 $ 1,453,173.00

Securities, commodity contracts,

investments, and related activities8.1 $ 556,773.00 $ 713,589.00 $ 1,311,100.00

Petroleum refineries 0.1 $ 25,197.00 $ 81,299.00 $ 1,149,545.00

State and local governments collected nearly $2.5 million in additional tax revenues as a result of

increased spending by Local 320 workers and federal tax receipts are estimated to have increased by

$3,315,219.00.

Additional Taxes Generated by Twin Cities Local 320 WorkersTotal State and Local Tax $ 2,497,363.00

Total Federal Taxes $ 3,315,219.00

7


8/21

A five percent wage increase for Twin Cities Local 320 employees is estimated to generate an extra

$2,065,793 in output and support an additional 15 jobs in the 7-county metro. It is important to note

that additional economic impact occurs elsewhere in the State of Minnesota from this economic activity.

This is not captured in the numerical analysis of this study region.

Twin Cities Totals Impact of 5% Wage IncreaseImpact Type Employment Labor Income Value Added Output

Total Effect 15.2 $761,471 $1,277,669 $2,065,793

It is estimated that an additional $124,868 of state and local taxes would be generated by the induced

spending from a 5 percent wage increase for Local 320 employees. Federal taxes would increase by

$165,761.

Twin Cities Taxes Generated from 5% Wage IncreaseTotal State and Local Tax $ 124,868.00


Eighty percent of the Local 320 employees on the Twin Cities campus are full-time.

Twin Cities Employees by Type Total PercentTotal Employees 1155 100%

Part - Time Employees 923 20%

Full - Time Employees 232 80%

Local 320 workers on the Twin Cities campus are estimated to earn an average annual wage of

$33,723.73 (which totals to $44,885.44 with benefits). The average annual wage with benefits issufficient to cover the estimated living wage for a family of four with one working adult, but is not

enough to cover the estimated cost of living with two working adults.

Twin Cities Average Annual Wages & BenefitsAverage Per Person Annual Employer Medical Contribution $ 8,485.20

Average Annual Employer Dental Contribution $ 760.64

Average Annual Life Insurance $ 61.06

Average Annual Employer Retirement Contribution (MSRS) $ 1,854.81

Average Annual Wage Without Benefits $ 33,723.73Average Annual Wages With Benefits $ 44,885.44

Living-Wage for family of 4 with 1 working adult $ 41,830.00

Cost-of-Living for a family of 4 with 2 working adults $ 76,565.50

The distribution of wages for Twin Cities Local 320 employees looks similar to the statewide earnings

distribution.

8


9/21

Including benefits in the wage data creates two distinct clusters of wage distribution for Twin Cities

Local 320 workers

It is estimated that the minimum earnings (a living wage) one adult worker needs to support a family offour in the Twin Cities area is $41,830. However, a cost of living measure published by the Minnesota

Department of Employment and Economic Development calculates cost of living for a family of four with

two working adults to be $76,565.50. Thus, a Local 320 worker earning the average annual wage with

benefits of $44,885.44 would need to have his or her salary supplemented by a second earner in order

to keep up with the estimated annual cost of living in the Twin Cities.

020406080

100120140

Distribution of Twin Cities Annual Earnings without Benefits

020406080

100120

Distribution of Twin Cities Annual Earnings with Benefits

$41,830.00

$76,565.50

Living-Wage for family of 4 with 1 working adult Cost-of-Living for a family of 4 with 2 working adults

Annual Average Twin Cities Living Wage & Cost of Living

9


10/21

Morris Campus Economic Benefits

Local 320 employees on the University of Minnesotas Morris campus earned an estimated

$3,305,289.97 in wages and benefits in 2013. The wages, benefits, and taxes paid by the employer

generated $1,599,282 in additional dollars of output in the seven counties surrounding Morris (Stevens,

Pope, Swift, Grant, Douglas, Big Stone, and Traverse counties). An additional 15 regional jobs were

supported by the spending of Local 320 workers from the Morris campus.

Morris Total ImpactImpact Type Employment Labor Income Value Added Output

Total Effect 14.6 $437,423 $938,716 $1,599,282

The additional jobs created by induced spending of Local 320 workers significantly impacted the health

services, wholesale trade, real estate, financial services, telecommunications, and hospitality industries.

Morris Top 10 Industries by OutputSector Description Employment Labor Income Value Added Output


occupied dwellings0 ___ $ 233,376.00 $ 318,247.00

Wholesale trade businesses 0.6 $ 41,144.00 $ 83,645.00 $ 126,476.00


other health practitioners 0.9 $ 60,393.00 $ 61,565.00 $ 100,102.00Monetary authorities and depository

credit intermediation activities0.3 $ 13,434.00 $ 70,173.00 $ 99,430.00

Food services and drinking places 2 $ 28,078.00 $ 44,175.00 $ 97,425.00

Private hospitals 0.4 $ 24,413.00 $ 27,231.00 $ 51,336.00

Nursing and residential care facilities 1 $ 25,754.00 $ 30,046.00 $ 50,089.00

Telecommunications 0.1 $ 7,261.00 $ 27,554.00 $ 49,706.00

Real estate establishments 0.2 $ 2,014.00 $ 34,271.00 $ 41,320.00

Electric power generation,

transmission, and distribution0.1 $ 5,379.00 $ 22,522.00 $ 39,295.00

State and local governments collected nearly $120,000 in additional tax revenues as a result of

increased spending by Local 320 workers and federal tax receipts are estimated to have increased by

$112,682.

Additional Taxes Generated by Morris Local 320 WorkersTotal State and Local Tax $ 119,944.00


10


11/21

A five percent wage increase for Morris Local 320 employees is estimated to generate an extra $79,964

in output and support 0.7 additional jobs within the study area.

Morris Totals Impact of 5% Wage IncreaseImpact Type Employment Labor Income Value Added Output

Total Effect 0.7 $21,871 $46,936 $79,964

A small amount of additional federal, state, local and taxes would be generated by Local 320 employees

spending of a 5 percent wage hike.

Morris Taxes Generated from 5% Wage IncreaseTotal State and Local Tax $ 5,997.00


W-2 earnings reports suggest 71 percent of Local 320 workers at UM-Morris are employed full time.

Morris Employees by Type Total PercentTotal Employees 78 100%



Local 320 workers on the Morris campus are estimated to earn an average annual wage of $32,276.24

(which totals to $42,375.51 with benefits). The average annual wage with benefits is sufficient to cover

the estimated living wage for a family of four with one working adult, but is not enough to cover the

estimated cost of living with two working adults.

Morris Average Annual Wages & BenefitsAverage Per Person Annual Employer Medical Contribution $ 7,542.80




Average Annual Wage Without Benefits $ 32,276.24

Average Annual Wages With Benefits $ 42,375.51



The distribution of wages for Local 320 employees is more uniform than is observed for the Twin Cities

study area.

11


12/21

Adding benefits to annual average earnings creates a bi-modal distribution of average annual earnings.

It is estimated that the minimum earnings (a living wage) one adult worker needs to support a family offour in the Morris area is $36,934.43. However, a cost of living measure published by the Minnesota

Department of Employment and Economic Development calculates cost of living for a family of four with

two working adults to be $58,569. Thus, a Local 320 worker earning the average annual wage with


to keep up with the estimated annual cost of living in Morris.

0

2

4

6

8

10

Distribution of Morris Annual Earnings without Benefits

0

2

4

6

8Distribution of Morris Annual Earnings with Benefits

$36,934.43

$58,569.00


Annual Average Morris Living Wage & Cost of Living

12


13/21

Duluth Campus Economic Benefits

The University of Minnesota-Duluth campus is the second largest of the four study areas. An estimated

$8,038,503.17 in wages and benefits were paid to Duluth Local 320 employees in 2013. The wages,

benefits, and taxes paid by the employer generated $4,842,433 in additional dollars of output within the

counties of Saint Louis, Carlton, Pine, Aitkin, and Lake in the Duluth area and led to the creation of an

additional 43.5 jobs in the study area.

Duluth Total ImpactImpact Type Employment Labor Income Value Added Output

Total Effect 43.5 $1,550,839 $2,983,572 $4,842,433

The spending of Local 320 workers had the greatest impact on the regional health services, wholesale &

retail trade, real estate, financial services, power generating, and hospitality industries.

Duluth Top 10 Industries by OutputSector Description Employment Labor Income Value Added Output


occupied dwellings0 __ $ 646,516.00 $ 881,633.00


Food services and drinking places 6.3 $ 106,853.00 $ 157,947.00 $ 327,012.00Monetary authorities and

depository credit intermediation

activities

0.8 $ 42,070.00 $ 215,361.00 $ 304,719.00


other health practitioners1.9 $ 214,614.00 $ 217,172.00 $ 302,084.00

Real estate establishments 1.2 $ 12,591.00 $ 176,938.00 $ 212,865.00


Nursing and residential care

facilities2.5 $ 67,232.00 $ 77,816.00 $ 127,281.00


transmission, and distribution 0.2 $ 23,571.00 $ 76,354.00 $ 124,203.00Retail Stores - General merchandise 1.9 $ 48,775.00 $ 74,365.00 $ 104,424.00

State and local governments pulled in $327,425 in additional tax revenues as a result of increased

spending by Local 320 workers and federal tax receipts are estimated to have increased by $372,359.

13


14/21

Additional Taxes Generated by Duluth Local 320 WorkersTotal State and Local Tax $ 327,425.00


A five percent wage increase for Duluth Local 320 employees is estimated to generate an extra $242,122in output and support 2 additional jobs in the Duluth area.

Duluth Totals Impact of 5% Wage IncreaseImpact Type Employment Labor Income Value Added Output

Total Effect 2.2 $77,542 $149,179 $242,122

The spending that results from a five percent wage hike is estimated to increase state and local taxes by

$16,321 and federal tax receipts by $18,617.

Duluth Taxes Generated from 5% Wage IncreaseTotal State and Local Tax $ 16,321.00


There are 178 Local 320 employees on the Duluth campus, 78 percent of which work full time.

Duluth Employees by Type Total PercentTotal Employees 178 100%



Average annual earnings of Local 320 workers on the Duluth campus are estimated to be $34,137.86

(which totals to $45,160.13 with benefits). As with other areas in this study, the average annual wage

with benefits is sufficient to cover the estimated living wage for a family of four with one working adult,

but is not enough to cover the estimated cost of living with two working adults.

Duluth Average Annual Wages & BenefitsAverage Per Person Annual Employer Medical Contribution $ 8,296.25


Average Annual Life Insurance $ 59.95Average Annual Employer Retirement Contribution (MSRS) $ 1,877.58





There is a fairly normal distribution of Local 320 wages in the Duluth study area.

14


15/21

As with the other campuses in the study area, the inclusion of benefits in the calculation of pay creates

an uneven income distribution of Local 320 workers in Duluth.

The minimum annual earnings (a living wage) needed to support a family of four with one adult workerin the Duluth area is estimated to be $37,549.80. An alternative measure of cost of living published by

Minnesota DEED identifies the cost of living for a family of four with two working adults to be $60,017.

Thus, a Duluth Local 320 worker earning the average annual wage with benefits of $45,160.13 would

earn a living wage, but annual earnings would be insufficient to support the cost of living of a two-

earner family of four.

0

5

10

15

20

Distribution of Duluth Annual Earnings without Benefits

0

5

10

15

Distribution of Duluth Annual Earnings with Benefits

$37,549.80

$60,017.00


Annual Average Duluth Cost of Living & Living Wage

15


16/21

Crookston Campus Economic Benefits

The Crookston campus is the smallest of the 4 study areas. An estimated $1,795,326.36 in wages and

benefits were paid to Crookston Local 320 employees in 2013. The wages, benefits, and taxes paid by

the employer generated $816,545 additional dollars of output in the four counties (Polk, Red Lake,

Pennington, Norman) identified as being in the Crookston area. An additional 7 jobs were created by

the spending of the Local 320 workers in Crookston.

Crookston Total ImpactImpact Type Employment Labor Income Value Added Output

Total Effect 7.2 $236,817 $489,765 $816,545

The spending of Local 320 workers had the greatest impact on the regional health services, wholesale

trade, real estate, financial services, telecommunications, power generating, and hospitality industries.

Crookston Top 10 Industries by OutputSector Description Employment Labor Income Value Added Output


occupied dwellings0 _____ $ 128,123.00 $ 174,718.00



Food services and drinking places 1 $ 13,093.00 $ 20,881.00 $ 46,643.00

Monetary authorities and depository

credit intermediation activities0.1 $ 5,688.00 $ 30,864.00 $ 43,846.00


other health practitioners0.4 $ 26,722.00 $ 27,194.00 $ 42,744.00

Nursing and residential care facilities 0.6 $ 14,106.00 $ 16,428.00 $ 27,273.00

Telecommunications 0.1 $ 2,768.00 $ 14,088.00 $ 26,460.00


transmission, and distribution0 $ 3,248.00 $ 11,958.00 $ 19,855.00

Real estate establishments 0.1 $ 893.00 $ 16,170.00 $ 19,507.00

An extra $58,135 of state and local taxes is generated by the spending of Local 320 workers. Federal tax

receipts increase by $62,993 as a result of this spending.

Additional Taxes Generated by Crookston Local 320 WorkersTotal State and Local Tax $ 58,135.00


16


17/21

A five percent wage increase for Crookston Local 320 employees is estimated to generate an extra

$40,793 in output and supports a slight increase in area employment.

Crookston Totals Impact of 5% Wage IncreaseImpact Type Employment Labor Income Value Added Output

Total Effect 0.4 $11,831 $24,468 $40,793

A wage hike of five percent would also induce a small amount of additional state, local, and federal

taxes in the Crookston area.

Crookston Taxes Generated from 5% Wage IncreaseTotal State and Local Tax $ 2,905.00


There are 41 Local 320 employees on the Crookston campus, 73 percent of which work full time.

Crookston Employees by Type Total PercentTotal Employees 41 100%



Local 320 workers on the Crookston campus are estimated to earn an average annual wage of

$33,316.08 (which totals to $43,788.45 with benefits). The average annual wage with benefits is

sufficient to cover the estimated living wage for a family of four with one working adult, but is not

enough to cover the estimated cost of living with two working adults.

Crookston Average Annual Wages & BenefitsAverage Per Person Annual Employer Medical Contribution $ 7,827.12








As with the Morris study area, the distribution of wages for Local 320 employees in Crookston is more

uniform than is observed for the overall sample.

17


18/21

Adding benefits to annual average earnings creates a wide distribution of average annual earnings.

It is estimated that the minimum earnings (a living wage) one adult worker needs to support a family of

four in the Crookston area is $36,991. However, a cost of living measure published by the Minnesota

Department of Employment and Economic Development calculates cost of living for a family of four withtwo working adults to be $57,360. Thus, a Local 320 worker earning the average annual wage with


to keep up with the estimated annual cost of living in the Crookston area.

0

1

2

3

4

5

Distribution of Crookston Annual Earnings Without Benefits

0

1

2

34

Distribution of Crookston Annual Earnings With Benefits

$36,991.00

$57,360.00


Annual Average Crookston Cost of Living & Living Wage

18


19/21

Methodology Used in the Study

Below is a description of the methods used to arrive at the results in this study.

The original data that were received from Local 320 officials only provided names and W-2 wages of the

Local 320 workers. With the assistance of SCSU graduate student Teegbzanga S. Dominique Kabore, thecampus of each Local 320 employee was determined by using a website that houses Minnesota public

salaries (http://extra.twincities.com/car/salaries/ ). Only 7 of the 1452 employees campus locations

were not identified. Since the Twin Cities campus makes up the largest share of all local 320 employees,

the 7 additional employees were categorized as working on the Twin Cities campus. The aggregate

demographic details of all employees were also provided by Local 320 officials.

1. Average wage of Local 320 University of Minnesota employees

The study uses W-2 wages for each of the 1452 Local 320 employees. It was assumed that the W-2

wages were gross wages after Social Security and Medicare taxes have been removed. To calculate

the actual wage, the formula below was used.

2 = ( ) ( )

=(2 )

(1 )

2. Average cost of benefits of Local 320 University of Minnesota employees

A number of assumptions needed to be made to estimate the average cost of benefits. Since several

options exist for medical and dental plans, and there are 4 different enrollment statuses, the following

assumptions were used:1.

Only employees whose before-tax wages were greater than 75 percent of the before-tax mean

for their respective study area received employer contributions, since only full-time employees

are eligible.

2. Medical and dental contributions were determined by averaging the employer contributions for

all available plans for each study area.

3. Since the medical and dental benefit averages are on a per pay period basis, the bi-weekly

benefits were multiplied by 26 to arrive at the annual contributions.

4. The average employer medical and dental contributions were weighted using the 4 enrollment

types as follows (these weights approximate what can be found in existing studies):

Benefits Enrollment EstimatesEnrollment Type Percent

Employee Only 48%

Employee and Spouse/Same Sex Domestic Partner 13%

Employee and Spouse/Same Sex Domestic Partner and Child/Children 34%

Employee and Child/Children 5%

Total 100%

19
http://extra.twincities.com/car/salaries/http://extra.twincities.com/car/salaries/http://extra.twincities.com/car/salaries/http://extra.twincities.com/car/salaries/


20/21

5. Employer paid life insurance was provided for full-time employees and was calculated by

multiplying the pre-tax wages by 115% and rounding up to the nearest $1,000. This amount was

then multiplied by .001716 to arrive at the annual cost.

6. MSRS Retirement contributions of 5.5% were applied to all before-tax wages for every

employee.

Note: since not all employees qualified for employer contributions to medical, dental, and life

insurance, the overall average cost of benefits is lower than the actual amount received by full-

time employees.

3. Cost of living for each community where Local 320 employees reside.

Two different cost of living estimates for each study area are provided.

1. Both estimates assume a family of four.

2. The first estimate is the living-wage, which is the minimum amount of money needed for one

working adult to support his/her family. This living wage estimate is calculated for each countyin the State of Minnesota and published on the following website:

http://livingwage.mit.edu/states/27/locations .

3. The second is a cost-of-living estimate based on a study conducted by the Minnesota

Department of Employment and Economic Development titled Minnesota Cost of Living Study:

2014 Annual Report which is found at

http://mn.gov/deed/images/Cost_of_Living_Study_Annual_Report.pdf .

This estimate is based on two working adults in a household of four and represents the average

cost of living in the area, not the minimum needed to survive.

The DEED report only provides data for nine different counties, therefore for those areas not

directly located within one of the counties in the report, the nearest county was used or the

average of county values was used when more than one reported county was close to the study

area. Below is a list of the areas and counties used:

a. Twin Cities: Hennepin and Ramsey Counties

b. Duluth: St. Louis County

c. Crookston: Polk County

d. Morris: Clay County

4. Counties in study area:

To determine the regional economic impact of Local 320 employee wages on their communities, thestudy area was defined to include those counties that were adjoining or close to the actual city of

employment. The counties used in the Greater Minnesota study areas may not accurately represent all

employees in those areas. With any regional study, there is always the possibility of in-commuting,

where individuals will commute from far distances to work in an area. In-commuting causes some of the

money earned in the study area to leave the study area, which causes a lower regional impact of wage

spending. Note that the study is necessarily restricted to Minnesota counties, although Local 320

20
http://livingwage.mit.edu/states/27/locationshttp://livingwage.mit.edu/states/27/locationshttp://mn.gov/deed/images/Cost_of_Living_Study_Annual_Report.pdfhttp://mn.gov/deed/images/Cost_of_Living_Study_Annual_Report.pdfhttp://mn.gov/deed/images/Cost_of_Living_Study_Annual_Report.pdfhttp://livingwage.mit.edu/states/27/locations


21/21

employees may live and spend earnings in other states (particularly Wisconsin, South Dakota, and North

Dakota.

Study areas used the following counties:

Twin Cities: Hennepin, Ramsey, Washington, Scott, Anoka, Dakota, Carver

Morris: Stevens, Pope, Swift, Grant, Douglas, Big Stone, Traverse

Duluth: Carlton, Saint Louis, Aitkin, Pine, Lake

Crookston: Polk, Red Lake, Norman, Pennington

5. Economic Benefit that Local 320 employees provide to their study area.

To capture the economic benefits created by the spending of Local 320 employee wages, IMPLAN is

used to perform an input-output analysis. Since all effects captured in the induced impact are initiated

as a result of income spending this analysis provides only the Induced effect on the economy. As

earned income is spent, further production in local industries is triggered creating a multiplier effect.

This process continues until the original spending leaves the study area through the purchase ofimports, or goods and services that are purchased from outside the study area. Imports are considered

leakages since the money leaves the study area, which means it no longer produces any additional local

economic activity. The total economic impact from all the spending of wages is captured in the induced

effect. Income that is saved does not trigger the multiplier effect since it is not being spent.

Deriving the induced effect in IMPLAN requires using loaded wages, or all wages including benefits and

taxes paid by the employer. When the software is run, it deducts payroll taxes, in-commuters, personal

(income) taxes and savings. The remaining value after deductions is applied to the multiplier. Since

taxes have been removed, it must be noted that they will show up in the tax section of the results. To

quantify the total effect, taxes must be considered despite some taxes leaving the state.

There were a total of five different IMPLAN analyses run to provide a clearer picture of the totaleconomic impact of Local 320 workers. The first was an aggregate model that looked at the state as a

whole. This model used the sum of the loaded wages for all employees. The benefit of this model is that

some of the leakages from the various regional studies may be captured within the state model. It is

important to understand that the regional multipliers will most likely be lower than the state multiplier

due to these leakages.

The remaining four models captured the effect on the region where the employees work. Each analysis

used the loaded wages of employees in their region. Each regional analysis used only the counties in

their respective study area. Since each study area borders the rest of the state, some of the leakage

that occurs remains in the state but does not show as affecting the region. This leads to lower

multipliers for the smaller regional studies than for the state area. Within each regional area the totaloutput, state and federal taxes, and the top 10 industries affected are described. The results also

provide the number of jobs supported by the additional economic activity.

To identify the effect of a 5 percent wage increase on the regional economies, a new scenario was run

using 5 percent of the loaded wage from each of the previous five models. The same process described

above was used in calculating the estimated effects of the wage hike.

21

Local 320 University of Minnesota Economic Benefits Report

Documents

Transcript of Local 320 University of Minnesota Economic Benefits Report