Local 320 University of Minnesota Economic Benefits Report

December 2014
Local 320 University of Minnesota Economic Benefits Study
Primary Researcher:
Tyler Sirucek
Formerly of St. Cloud State University, tyler.sirucek@gmail.com
Contact:
Rich MacDonald
Interim Director, School of Public Affairs Research Institute, St. Cloud State University,
ramacdonald@stcloudstate.edu
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 by
nearly $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 average
annual 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.
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 Impact

Impact Type
Total Effect
Employment
447.7
Labor Income
$20,277,185
Value Added
$35,465,714
Output
$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 Output

Sector Description
Employment
Imputed rental activity for owneroccupied dwellings

Private hospitals
Real estate establishments
Offices of physicians, dentists, and
other health practitioners
Wholesale trade businesses
Labor Income
Food services and drinking places

Monetary authorities and depository
credit intermediation activities
Insurance carriers
Securities, commodity contracts,
investments, and related activities
Telecommunications
__
Value Added
Output
$ 5,003,373.00
$ 6,822,936.00
24.3
17.2
$ 1,767,088.00
$ 343,644.00
$ 1,938,572.00
$ 2,699,775.00
$ 3,408,824.00
$ 3,216,422.00
22.9
$ 2,112,031.00
$ 2,142,061.00
$ 3,135,064.00
13.8
$ 1,259,320.00
$ 2,179,017.00
$ 3,101,118.00
49.8
$ 1,007,782.00
$ 1,413,973.00
$ 2,758,451.00
6.6
$ 513,908.00
$ 1,972,711.00
$ 2,724,996.00
5.3
$ 589,055.00
$ 1,103,017.00
$ 1,862,714.00
10.8
$ 649,536.00
$ 854,888.00
$ 1,645,608.00
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, and
proprietors.
Statewide Taxes Generated

Total State and Local Tax
Total Federal Taxes
$
$
3,648,484.00
4,594,089.00
3
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 Increase

Impact Type
Total Effect
Employment
22.4
Labor Income
$1,013,859
Value Added
$1,773,286
Output
$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 Increase

Total Federal Taxes
$
$
182,424.00
229,705.00
Of the 1,452 Local 320 employees in the University of Minnesota system, on the basis of available 2013
W-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

Total Employees
Part - Time Employees
Full - Time Employees
1452
306
1146
Percent
100%
21.1%
78.9%
These workers earn an average annual wage of $33,685.23 and $44,753.30 in wages and benefits. The
largest 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
Wages Without Benefits
Total Benefits
Employer Medical Contribution
Employer Retirement Contribution (MSRS)
Employer Dental Contribution
Life Insurance Contribution
Total State Wages without Benefits
Total State Wages with Benefits
$
$
$
$
$
$
$
$
$
44,753.30
33,685.23
11,068.07
8,392.83
1,852.69
761.94
60.62
48,910,956.91
64,981,798.62
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.
Distribution of Statewide Annual Earnings without Benefits

160
140
120
100
80
60
40
20
0
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.
Distribution of Statewide Annual Earnings with Benefits

140
120
100
80
60
40
20
0
Nearly one-third (a total of 467) of Local 320 members are female and 67.8 percent are male (a total of
985).
Distribution of Local 320 Membership by Gender
Female
32.2%
Male
67.8%
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).
% of Total Membership
Race/Ethnicity Demographics
80%
70%
60%
50%
40%
30%
20%
10%
0%
Asian
Females
4%
Black or African
American
31%
Males
2%
23%
5%
71%
% of Total
2%
25%
5%
68%
Other
White
4%
62%
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 Impact

Impact Type
Total Effect
Employment
304.8
Labor Income
$15,229,416
Value Added
$25,553,382
Output
$41,315,856
The additional jobs created by the induced spending of Local 320 employees had the greatest impact on
the health services, wholesale trade, real estate, financial services, and hospitality industries.
Twin Cities Top 10 Industries by Output

Sector Description
Private hospitals
Monetary authorities and
depository credit intermediation
activities
Insurance carriers
Securities, commodity contracts,
investments, and related activities
Petroleum refineries
Employment
Labor Income
------
Value Added
Output
$ 3,338,158.00
$ 4,552,137.00
12.7
16.2
$ 295,337.00
$ 1,253,075.00
$ 2,041,015.00
$ 1,367,477.00
$ 2,423,732.00
$ 2,349,132.00
15.8
$ 1,474,193.00
$ 1,494,877.00
$ 2,179,000.00
9.1
35.8
$ 942,203.00
$ 832,372.00
$ 1,547,575.00
$ 1,124,326.00
$ 2,153,081.00
$ 2,090,970.00
4.2
$ 388,115.00
$ 1,321,530.00
$ 1,802,899.00
$ 478,519.00
$ 871,645.00
$ 1,453,173.00
8.1
$ 556,773.00
$ 713,589.00
$ 1,311,100.00
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 Workers

Total Federal Taxes
$
$
2,497,363.00
3,315,219.00
7
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 Increase

Impact Type
Total Effect
Employment
15.2
Labor Income
$761,471
Value Added
$1,277,669
Output
$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 Increase

Total Federal Taxes
$
$
124,868.00
165,761.00
Eighty percent of the Local 320 employees on the Twin Cities campus are full-time.
Twin Cities Employees by Type

Total Employees
Total
Percent
1155
923
232
100%
20%
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 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.
Twin Cities Average Annual Wages & Benefits

Average Per Person Annual Employer Medical Contribution
8,485.20
Average Annual Employer Dental Contribution

Average Annual Life Insurance
$
$
760.64
61.06
Average Annual Employer Retirement Contribution (MSRS)

Average Annual Wage Without Benefits
Average Annual Wages With Benefits
Living-Wage for family of 4 with 1 working adult
Cost-of-Living for a family of 4 with 2 working adults
$
$
$
$
$
1,854.81
33,723.73
44,885.44
41,830.00
76,565.50
The distribution of wages for Twin Cities Local 320 employees looks similar to the statewide earnings
distribution.
8
140
120
100
80
60
40
20
0
Distribution of Twin Cities Annual Earnings without Benefits
Including benefits in the wage data creates two distinct clusters of wage distribution for Twin Cities
Local 320 workers
Distribution of Twin Cities Annual Earnings with Benefits

120
100
80
60
40
20
0
It is estimated that the minimum earnings (a living wage) one adult worker needs to support a family of
four 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.
Annual Average Twin Cities Living Wage & Cost of Living

$76,565.50
$41,830.00
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 Impact

Impact Type
Total Effect
Employment
14.6
Labor Income
$437,423
Value Added
$938,716
Output
$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 Output

Sector Description
Private hospitals
Nursing and residential care facilities
Telecommunications
Electric power generation,
transmission, and distribution
Employment
0
Labor Income
Value Added
Output
___
$ 233,376.00
$ 318,247.00
0.6
$ 41,144.00
$ 83,645.00
$ 126,476.00
0.9
$ 60,393.00
$ 61,565.00
$ 100,102.00
0.3
$ 13,434.00
$ 70,173.00
$ 99,430.00
2
0.4
1
0.1
0.2
$ 28,078.00
$ 24,413.00
$ 25,754.00
$ 7,261.00
$ 2,014.00
$ 44,175.00
$ 27,231.00
$ 30,046.00
$ 27,554.00
$ 34,271.00
$ 97,425.00
$ 51,336.00
$ 50,089.00
$ 49,706.00
$ 41,320.00
0.1
$ 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 Workers

Total Federal Taxes
$
$
119,944.00
112,682.00
10
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 Increase

Impact Type
Total Effect
Employment
0.7
Labor Income
$21,871
Value Added
$46,936
Output
$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 Increase

Total Federal Taxes
$
$
5,997.00
5,633.00
W-2 earnings reports suggest 71 percent of Local 320 workers at UM-Morris are employed full time.
Morris Employees by Type
Total
Percent
78
23
55
100%
29%
71%
Total Employees
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 & Benefits

7,542.80

$
$
725.42
55.86

$
$
$
$
$
1,775.19
32,276.24
42,375.51
36,934.43
58,569.00
The distribution of wages for Local 320 employees is more uniform than is observed for the Twin Cities
study area.
11
Distribution of Morris Annual Earnings without Benefits

10
8
6
4
2
0
Adding benefits to annual average earnings creates a bi-modal distribution of average annual earnings.
Distribution of Morris Annual Earnings with Benefits

8
6
4
2
0
four in the Morris area is $36,934.43. However, a cost of living measure published by the Minnesota
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.
Annual Average Morris Living Wage & Cost of Living

$58,569.00
$36,934.43
12
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 Impact

Impact Type
Total Effect
Employment
43.5
Labor Income
$1,550,839
Value Added
$2,983,572
Output
$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 Output

Sector Description
Private hospitals
Monetary authorities and
depository credit intermediation
activities
Nursing and residential care
facilities
Retail Stores - General merchandise
Employment
0
Labor Income
__
Value Added
Output
$ 646,516.00
$ 881,633.00
3.7
6.3
$ 245,678.00
$ 106,853.00
$ 272,022.00
$ 157,947.00
$ 497,597.00
$ 327,012.00
0.8
$ 42,070.00
$ 215,361.00
$ 304,719.00
1.9
$ 214,614.00
$ 217,172.00
$ 302,084.00
1.2
0.9
$ 12,591.00
$ 53,541.00
$ 176,938.00
$ 115,408.00
$ 212,865.00
$ 177,835.00
2.5
$ 67,232.00
$ 77,816.00
$ 127,281.00
0.2
$ 23,571.00
$ 76,354.00
$ 124,203.00
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
Additional Taxes Generated by Duluth Local 320 Workers

Total Federal Taxes
$
$
327,425.00
372,359.00
A five percent wage increase for Duluth Local 320 employees is estimated to generate an extra $242,122
in output and support 2 additional jobs in the Duluth area.
Duluth Totals Impact of 5% Wage Increase

Impact Type
Total Effect
Employment
2.2
Labor Income
$77,542
Value Added
$149,179
Output
$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 Increase

Total Federal Taxes
$
$
16,321.00
18,617.00
There are 178 Local 320 employees on the Duluth campus, 78 percent of which work full time.
Duluth Employees by Type

Total Employees
Total
Percent
178
40
138
100%
22%
78%
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 & Benefits

8,296.25

$
$
788.49
59.95

$
$
$
$
$
1,877.58
34,137.86
45,160.13
37,549.80
60,017.00
There is a fairly normal distribution of Local 320 wages in the Duluth study area.
14
Distribution of Duluth Annual Earnings without Benefits

20
15
10
5
0
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.
Distribution of Duluth Annual Earnings with Benefits

15
10
5
0
The minimum annual earnings (a living wage) needed to support a family of four with one adult worker
in 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 twoearner family of four.
Annual Average Duluth Cost of Living & Living Wage

$60,017.00
$37,549.80
15
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 Impact

Impact Type
Total Effect
Employment
7.2
Labor Income
$236,817
Value Added
$489,765
Output
$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 Output

Sector Description
Employment
Imputed rental activity for owner0
occupied dwellings
Private hospitals
0.5
0.3
1
0.1
0.4
Nursing and residential care facilities
0.6
Telecommunications
0.1
0
0.1
Labor Income
Value Added
Output
_____
$ 128,123.00
$ 174,718.00
$ 35,408.00
$ 17,132.00
$ 13,093.00
$ 38,930.00
$ 36,979.00
$ 20,881.00
$ 69,119.00
$ 57,007.00
$ 46,643.00
$ 5,688.00
$ 30,864.00
$ 43,846.00
$ 26,722.00
$ 27,194.00
$ 42,744.00
$ 14,106.00
$ 2,768.00
$ 16,428.00
$ 14,088.00
$ 27,273.00
$ 26,460.00
$ 3,248.00
$ 11,958.00
$ 19,855.00
$ 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 Workers

Total Federal Taxes
$
$
58,135.00
62,993.00
16
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 Increase

Impact Type
Total Effect
Employment
0.4
Labor Income
$11,831
Value Added
$24,468
Output
$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 Increase

Total Federal Taxes
$
$
2,905.00
3,146.00
There are 41 Local 320 employees on the Crookston campus, 73 percent of which work full time.
Crookston Employees by Type
Total
Percent
41
11
30
100%
27%
73%
Total Employees
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 & Benefits

7,827.12

$
$
752.76
60.10

$
$
$
$
$
1,832.38
33,316.08
43,788.45
36,991.00
57,360.00
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
Distribution of Crookston Annual Earnings Without Benefits

5
4
3
2
1
0
Adding benefits to annual average earnings creates a wide distribution of average annual earnings.
Distribution of Crookston Annual Earnings With Benefits

4
3
2
1
0
four in the Crookston area is $36,991. However, a cost of living measure published by the Minnesota
two 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.
Annual Average Crookston Cost of Living & Living Wage

$57,360.00
$36,991.00
18
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, the
campus 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 Estimates
Enrollment Type
Employee Only
Employee and Spouse/Same Sex Domestic Partner
Employee and Spouse/Same Sex Domestic Partner and Child/Children
Employee and Child/Children
Percent
48%
13%
34%
5%
Total
100%
19
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 fulltime 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 county
in 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, the
study 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
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 of
imports, 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 total
economic 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 total
output, 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

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Local 320 University of Minnesota Economic Benefits Report

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December 2014

Local 320 University of Minnesota Economic Benefits Study

Statewide Economic Benefits

State Total Impact

State Top 10 Industries by Output

Imputed rental activity for owneroccupied dwellings

Food services and drinking places

Statewide Taxes Generated

Statewide Totals Impact of 5% Wage Increase

Statewide Taxes Generated from 5% Wage Increase

Statewide Employees by Type Total

Annual Average Wages and Benefits

Distribution of Statewide Annual Earnings without Benefits

Distribution of Statewide Annual Earnings with Benefits

Distribution of Local 320 Membership by Gender

Twin Cities Campus Economic Benefits

Twin Cities Total Impact

Twin Cities Top 10 Industries by Output

Additional Taxes Generated by Twin Cities Local 320 Workers

Twin Cities Totals Impact of 5% Wage Increase

Twin Cities Taxes Generated from 5% Wage Increase

Twin Cities Employees by Type

Twin Cities Average Annual Wages & Benefits

Average Annual Employer Dental Contribution

Average Annual Employer Retirement Contribution (MSRS)

Distribution of Twin Cities Annual Earnings without Benefits

Distribution of Twin Cities Annual Earnings with Benefits

Annual Average Twin Cities Living Wage & Cost of Living

Living-Wage for family of 4 with 1 working adult

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

Morris Campus Economic Benefits

Morris Total Impact

Morris Top 10 Industries by Output

Additional Taxes Generated by Morris Local 320 Workers

Morris Totals Impact of 5% Wage Increase

Morris Taxes Generated from 5% Wage Increase

Morris Employees by Type

Morris Average Annual Wages & Benefits

Average Annual Employer Dental Contribution

Average Annual Employer Retirement Contribution (MSRS)

Distribution of Morris Annual Earnings without Benefits

Distribution of Morris Annual Earnings with Benefits

Annual Average Morris Living Wage & Cost of Living

Living-Wage for family of 4 with 1 working adult

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

Duluth Campus Economic Benefits

Duluth Total Impact

Duluth Top 10 Industries by Output

Additional Taxes Generated by Duluth Local 320 Workers

Duluth Totals Impact of 5% Wage Increase

Duluth Taxes Generated from 5% Wage Increase

Duluth Employees by Type

Duluth Average Annual Wages & Benefits

Average Annual Employer Dental Contribution

Average Annual Employer Retirement Contribution (MSRS)

Distribution of Duluth Annual Earnings without Benefits

Distribution of Duluth Annual Earnings with Benefits

Annual Average Duluth Cost of Living & Living Wage

Living-Wage for family of 4 with 1 working adult

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

Crookston Campus Economic Benefits

Crookston Total Impact

Crookston Top 10 Industries by Output