A Little Privacy Please

by Brent Pearson
May 2011

Private-sector employment across the state of Minnesota provides workers with flexibility in work conditions, hours, and benefits, and it comprised approximately 86.5 percent of industry employment during the third quarter of 2010.[1] Growing the private sector is essential to stimulating the economy and job market. Luckily, private sector employment is growing, up 1 percent (statewide) over the year in May 2011, compared to 0.6 percent for total nonfarm employment. Not all private-sector employment is equal, and not all employment sectors offer private employment. Additionally, the regions of the state vary as to the amount of private-sector employment.

More Privacy in Southeast Minnesota

During the third quarter of 2010 the percentage of employment in the private sector was higher in the central and southern regions of the state than in the northern regions (see Table 1).

Metropolitan Statistical Areas (MSAs) typically offered higher percentages of private employment across all employment sectors than their regions as a whole. Led by Rochester with 92.2 percent of total employment in the private sector, southeast Minnesota had the second-highest percentage of private employment in the state, just behind the seven-county Twin Cities region.

Southeast Minnesota’s employment sector mix is heavily weighted toward health care and social assistance, manufacturing, and retail trade. These three sectors accounted for 53.3 percent of all industry employment. Each of these sectors had high percentages of private-sector employment: health care and social assistance (96.7 percent), manufacturing (100 percent), and retail trade (99.9 percent). Conversely, there were nearly 198,000 jobs in the private sector of nearly 226,000 total jobs. The bulk of the 28,000 jobs that were not in the private sector were found in public administration (11,079 – 100 percent nonprivate), educational services (11,314 – 73.1 percent nonprivate), and arts, entertainment, and recreation (1,489 – 34.4 percent nonprivate). This, however, paints the labor picture canvas with a broad brush.

Table 2 digs a little deeper into where nonprivate employment is found. For instance, of the 1,489 nonprivate jobs in the arts, entertainment, and recreation employment sector, nearly all were gambling facilities and state run museums, parks, and historical sites. The bulk of public administration included state run programs and government positions, while education administration fell under public schools, junior colleges, and state universities. 

Interestingly enough, there was relatively little wage differential across all industries for private and nonprivate employment.   Considering average weekly wages in all industries combined, a mere $4 separated the two. For every sector except one where both private and nonprivate employment exists, average weekly wage differentials were less than 8 percent.  The lone exception was arts, entertainment, and recreation, where there was a 37 percent gap between wages in the performing arts industry and those in gambling, amusement, and public museums, parks, and historical sites employment.

No Profit No Privacy

By their very nature nonprofits do not sell for profit shares of stock in their organizations. Typically controlled by boards rather than private ownership with taxable wealth in the hands of employees and shareholders, nonprofit organizations provide services to Minnesota citizens and communities. In many nonprofit organizations revenues pay for salaries and services provided by the organization. According to the Minnesota Council of Nonprofits, the number of nonprofit jobs has increased steadily, an average of 3 percent over the past 11 years.[2]

According to the Minnesota Nonprofit Economy Report, in 2009 roughly 12 percent of all nonprofit employment was located in Olmsted County. Additionally, the region had the second-largest nonprofit workforce outside of the Twin Cities metro area – employing 22 percent of the region’s population. While health care was responsible for more than 80 percent of these jobs and is a key industry in southeast Minnesota, particularly Olmsted County, it is important to note that nonprofits weathered the recent economic recession as well or better than other private-sector employment.[3]

Diversity is Key

Private-sector employment offers considerable flexibility. Occupations range from part time to full time, the hourly wage range is broad, and the skills and experience needed for occupations range from master’s degrees to entry level. While we know that employment is primarily private, a look at the top 15 occupations in southeast Minnesota by total employment, as well as the top industries that employ those professions, indicates that occupations in the private sector are leading the way (see Table 3).

With private-sector occupations ranking so high, diversity plays an important role in the labor market. Among the top 15 occupations in the southeast region, hourly wages range from $8.16 per hour for fast-food work to $35.98 per hour for registered nurses. While this list is not particularly surprising nor does it make southeast Minnesota particularly unique, it reinforces the notion that regional labor markets, just like regional economies, are better served when all their eggs are not in one proverbial basket.

Let’s consider this diversity for a moment. According to a 2010 study commissioned by the Georgetown University Center for Education and the Workforce, the shift has begun from an industrial economy to a service-sector economy. This shift compares starkly to the widening gap between the upper-middle class and the lower class.[4] Considering the service sector is comprised of health service professionals, retail employment, and leisure and hospitality and that wages in the region are split among the top occupations, perhaps southeast Minnesota is seeing this come to fruition. For each of those service-sector occupations, private employment is high. The natural inference is that high levels of private employment are directly correlated with high diversity in the labor market, and that where there is diversity in labor conditions there are wide gaps between wages and career options. Essentially this is true, but for southeast Minnesota’s labor market this logic cannot be applied universally.

Consider the regional labor market as a microcosm of the overall state of the economy or at the very least a byproduct of it. Then southern Minnesota is on track to maintain steady growth in employment. Consider that southeast Minnesota is second only to the seven-county Twin Cities metro area in private employment, with Rochester among the highest in the state in percentage of private employment. Finally, consider that the health care industry grew during the recent recession and is one of the top employing industries in the region. While a lot of this is from health care occupations in Olmsted County, more rural communities are heavily based in manufacturing – an industry that is 100 percent private.[5]

Growing the private sector is essential to the long-term stability of the labor market in southeast Minnesota. The private sector offers many choices in career paths and a high degree of diversity in wages, full- and part-time employment, hours worked, benefits, and experiences. Meanwhile, nonprofits and nonprivate employment also play a role in the regional economy. Essentially, more choices ensure that the regional labor market will be better equipped to weather future recessions and shifts in labor market demographics.

[1]Minnesota Department of Employment and Economic Development, Quarterly Census of Employment and Wages (QCEW) 
[2]Minnesota Council of Nonprofits “Minnesota Nonprofit Economy Report 2010”
[3]Minnesota Department of Employment and Economic Development, Quarterly Census of Employment and Wages (QCEW)
[4]The Georgetown University Center for Education and the Workforce “Help Wanted: Projections of Jobs and Education  Requirements Through 2018”.
[5]Minnesota Department of Employment and Economic Development, Quarterly Census of Employment and Wages (QCEW)

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