Local governments raise wages to keep up with Twin Cities labor squeeze

Last winter, ice skaters and hockey players in Bloomington were stuck lacing up their skates in the cold — because the labor market was too hot.

Without enough staff, Bloomington couldn't open the warming houses next to its nine outdoor ice rinks. The closures came after staff shortages earlier in the year forced cuts to summer camps and reduced hours for other park programs.

"We really let down a lot of families in the community that enjoy, and rely on, these opportunities," said Bloomington Parks and Recreation Director Ann Kattreh.

But city officials say they hope big raises for warming house attendants — and all kinds of other workers in the just-passed 2023 budget — will attract enough workers to sustain services this winter.

To keep wages competitive in Minnesota's tight labor market, local leaders are directing more resources to pay employees: This month, when city councils across the state passed their budgets, they approved raises for municipal workers from police to planners to pool staff. Depending on the city, money for raises is coming from a combination of higher property tax revenues from rising property values, increased tax rates and higher rates for permits, licenses and fees.

"The market trends are definitely impacting city operations and city budgets," said Gary Carlson, intergovernmental relations director for the League of Minnesota Cities. Between rising wages and other rising costs, he said, proposed tax increases across the state this year have been higher than normal.

Statewide, the total preliminary property tax levy for 2023 appears headed for an increase of 6% over the final levy in 2022, Carlson said. Last year, the preliminary increase for property taxes statewide was 4.5%, and later dropped to a final levy increase of 3.9%, he said.

The municipal workforce has yet to fully recover from early-pandemic layoffs, and cities are working hard to keep staff, Fischer said. In October, 141,218 people were employed by local governments, according to the most recent data available from the Minnesota Department of Employment and Economic Development. In October 2019, more than 147,000 people were in those jobs.

Offers of flexible hours and remote work are becoming more common for cities, Fischer said, especially in cities that have a harder time fitting higher pay into their budgets.

But while remote work might work for City Hall staff, he said, it's not possible for all workers. Pay for police and firefighters is rising. Seasonal parks and recreation staff — most of whom can't work from home — are seeing higher pay, too.

Municipal parks and recreation programs have struggled to hire seasonal staff for the past two years. Competition for lifeguards this summer pushed some pools and beaches to close or go without guards. Shortages of other seasonal workers meant closed playgrounds and fewer summer camp slots.

In Bloomington, parks and rec programs have raised fees to help absorb increased costs, but Kattreh said she is wary of making programs too expensive. As she put together the 2023 budget, she said, she had to keep pay competitive not just with public rinks in nearby Edina and Minnetonka, but with retail and restaurants. That meant bringing pay up to as much as $17 per hour for this winter's warming house attendants, plus a $100 bonus for staying on the entire season.

So far, the higher pay seems to be paying off. After posting job openings this month, Kattreh said Bloomington got plenty of applications, and she hopes the warming houses will be open all winter.