Catching the Wind 2.0:
An Update on Changing Employment Practices
in Minnesota’s Wind Energy Industry
August 2019
Lucas Franco

 Catching the Wind 2.0:
An Update on Changing Employment Practices in Minnesota’s Wind Energy
Industry
Executive Summary
In June of 2018, the North Star Policy Institute (NSPI) released a report that examined the use
of local and non-local construction labor to build wind energy construction projects in
Minnesota. Catching the Wind: The impact of local vs. non-local hiring practices on construction
of Minnesota wind farms highlighted the potential for the wind energy industry to spur
economic development in Greater Minnesota, but it also concluded that the state risked losing
tens of millions of dollars in potential economic development due to the outsourcing of
construction jobs to out-of-state workers. The report considered seven wind energy projects
then in permitting or pre-construction stages, and concluded that the use of a largely non-local
workforce to build the projects could cost local communities $32 million in lost economic
stimulus over the short term, and $45 million over the long term, compared to use of a largely
local workforce.
Minnesota has made substantial progress in maximizing local socio-economic benefits of new
wind farm projects since Catching the Wind was published. The Minnesota Public Utilities
Commission (“Commission”) has made quarterly reporting on the use of local and non-local
construction labor a standard feature of wind farm site permits, increasing transparency and
making it easier for communities to hold developers accountable for delivering promised jobs.
The Commission also determined that the use of local construction labor is potentially relevant
to permitting decisions for wind energy facilities in a ruling that sidetracked a project that was
proposed by a company with a record of relying on non-local labor.
Finally, Minnesota’s utilities and clean energy industry leaders have begun to step up to the
plate when it comes to maximizing employment of Minnesota workers on wind farm projects.
Local labor leaders estimate that the local share of Minnesota’s wind energy construction
workforce has shot up from under 20 percent in recent years to well over 50 percent in 2019
thanks to projects like Xcel Energy’s Blazing Star and Tenaska’s Nobles II wind projects that will
not only provide power to Minnesota ratepayers, but they will also provide jobs to Minnesota
workers. Industry and labor leaders have also joined together to support clean energy
legislation that would require utilities and the Commission to consider local job impacts as part
of the resource planning process, and to promote greater use of local workforce and registered
apprenticeship programs on clean energy projects.
The news is not all positive, however. While advocates see Blazing Star and Nobles II as success
stories, the first report issued under the Commission’s new Labor Statistics Reporting
requirement shows that local workers accounted for just 32% of hours worked on NextEra
Energy Resources’ Lake Benton II Repower project in the project’s first quarter. Such a poor
1

 result on a project located some 30 miles away from a local hiring success story shows that
much work remains to be done. It is not yet clear whether the many projects in the
development pipeline will look more like Blazing Star and Nobles II or Lake Benton II.
Catching the Wind 2.0 summarizes these developments and considers the potential impact of
additional wind energy projects that have been announced or begun the permitting process
since the original report was published. The report finds, using the same methodology
employed in Catching the Wind, that use of a largely local workforce (50%-70%) to build 10
proposed wind energy projects is associated with $62 million in additional local economic
activity in Greater Minnesota compared to use of a largely non-local workforce (10%-30%).
Catching the Wind 2.0 concludes that, with thousands of jobs and tens of millions of dollars in
economic development at stake, policymakers, industry and other stakeholders must continue
efforts to ensure that the development of local wind resources benefits local workers and
communities. The report recommends three concrete steps that can be taken to achieve this
goal: (1) enact proposed Clean Energy First legislation to ensure that utility resource plans are
developed with workers in mind; (2) continue to hold developers accountable for putting local
workers first; and (3) encourage collaboration with bona fide state-registered apprenticeship
programs to train a next-generation energy workforce.

2

 Introduction
In June of 2018, the North Star Policy Institute (NSPI) released a report on the local economic
impact of employing local and non-local workers on construction of wind energy infrastructure
in Minnesota. The report highlighted the potential for the wind energy industry to spur
economic development in Greater Minnesota, but also revealed the high cost to Minnesota
communities of reliance on outsourced construction labor by some wind builders. The report
found that seven major wind projects then seeking permits or in pre-construction were
expected to generate anywhere from $41 million and $89 million in local economic activity
generated by construction payrolls, depending on how many of the jobs are filled by local
workers.
Catching the Wind 2.0 looks backward to assess the progress made by Minnesota’s wind
industry one year later. We consider changes that have taken place in the wind energy
permitting process and how the use of local labor differs in 2019 from previous years. We also
look ahead at the next wave of wind energy projects that will be built in 2020 and beyond. We
find that the State of Minnesota, the wind industry, and local skilled trades have made steady
progress toward ensuring that wind energy projects benefit Minnesotans. But we also find that
much work remains to be done to maximize the benefits of major wind farm projects currently
in the development pipeline, including nine new projects that, together with one project from
the first report that is still in permitting, could create 2,000 wind energy construction jobs and
approximately $200 million in potential construction payroll.
Minnesota’s wind industry has continued its sustained growth since the publication of Catching
the Wind in June of 2018. A survey of wind energy projects in development, permitting and preconstruction phases finds 2,000 megawatts of new wind energy currently in the pipeline,
including 1,800 megawatts not identified in the original report. This is in addition to more than
1,400 megawatts of wind energy capacity identified in 2018, most of which is currently under
construction or scheduled for 2020.
Despite the fact that federal tax credits will begin to phase out in 2021, the corporate market
for wind energy and falling production costs is expected to sustain long-term investment. For
example, Google’s partnership with Xcel Energy to supply wind power to run the company’s
new $600 million data center in Becker, Minnesota, reflects growing corporate appetite for
clean energy. At the same time, declining costs for renewable energy are driving a transition
towards a cleaner energy economy.1
This transition to renewable energy sources like wind and solar has many benefits for
Minnesotans, from cleaner air to new job opportunities. At the same time, the transition can
also mean the loss of a good, family supporting jobs for Minnesota workers employed in
1

Megan Mahajan, “Build New Renewable Energy Is Cheaper Than Running Existing Coal,” Forbes, December 2018,
available here: https://www.forbes.com/sites/energyinnovation/2018/12/03/plunging-prices-mean-building-newrenewable-energy-is-cheaper-than-running-existing-coal/#75119a7531f3.

3

 conventional energy generation. These conventional energy jobs provide a middle-class
income, health benefits and secure retirements for thousands of Minnesota workers and their
families. We are already seeing these impacts with the projected transition of the Becker coal
fired power plant to natural gas, which will lead to the loss of 150-160 jobs.2 Job losses will
continue as Minnesota’s investor-owned, cooperative, and municipal utilities shutter or
transition coal-fired power plants.
Clean energy advocates argue that Minnesota can replace jobs in conventional energy
generation with jobs building and maintaining wind and solar installations and energy storage
facilities. But the promise of the clean energy economy will only be realized if the industry
creates the same kind of high-quality jobs for local workers as conventional energy generation
has provided for generations of Minnesotans. Sadly, this has not always been the case. While
many clean energy projects are economic success stories, others have relied heavily on out-oftown workers from states like Texas and California. A traveling workforce spends much less
money locally than a Minnesota-based construction workforce, robbing local communities and
the state as a whole of the full value of clean energy investments.
The goal of the original Catching the Wind Report was three-fold. First, we explored the extent
to which wind developers were relying on non-local labor to build new wind farm projects.
Second, we quantified the estimated impact of employing local and non-local workers on major
wind farm projects. Third, we recommended steps that policymakers and industry could take to
improve outcomes. Through interviews, field research and review of public records we found a
troubling reliance on non-local workers to build recent wind energy facilities.
In looking at seven major wind farm projects between 100 to 300 megawatts (MWs) proposed
or under construction, we estimated the difference in regional economic impact between using
largely local workforce (50% to 70% local) and a largely non-local workforce (10% to 30% local)
to be approximately $32 million dollars before including retirement benefits. Once anticipated
deferred spending associated with retirement benefits was included, the difference grew by
$13 million to approximately $45 million.
Research by NSPI and advocacy for maximizing the local benefits of new renewable energy
development on the part of community advocates and Minnesota Building Trades unions have
had an impact both on the conversation around renewable energy development, and on the
process used by the Commission to approve wind energy projects. The goal of this report is to
evaluate the progress that has been made over the last year and to look ahead at the possible
socioeconomic benefits of proposed wind energy projects slated for development in the coming
years.

Assessing Our Progress
2

Peter Teigland, “What Coal Plant Closures Mean for Minnesotans,” North Star Policy Institute, April 2018,
available here: https://northstarpolicy.org/what-coal-plant-closures-mean-for-minnesotans.

4

 Since the June 2018 release of Catching the Wind, the conversation around local hiring
practices has shifted. There is growing recognition and concern that the failure to recruit and
employ local workers on major wind farm projects in Minnesota could cost regional economies
millions of dollars in lost economic opportunities. The issue is increasingly generating the
attention of news media, especially in Southern Minnesota communities such as Marshall,3
Pipestone,4 Worthington,5 Rochester,6 and across the state of Minnesota.7
We have also seen elected officials, environmental and clean energy advocates, and industry
leaders step up to highlight the importance of the issue and advance solutions. Finally, we have
seen the Commission and Department of Commerce begin to explore and weigh local
construction hiring impacts in the permitting process.
Many of the changes that have taken place over the past year are consistent with the
recommendations laid out in the 2018 Catching the Wind report: (1) secure specific
commitments from both developers and Engineering, Procurement & Construction (“EPC”)
contractors to employ local labor; (2) require quarterly reporting during construction on the use
of local labor; and (3) encourage collaboration with state-registered apprenticeship programs
to recruit and train local workers in skills needed to build wind energy facilities.
One of the most important strides forward has been the adoption of local hire reporting
requirements by the Commission. On December 20, 2018, the Commission approved for the
first time a requirement for quarterly reporting on the use of local and non-local labor to build
the 260 megawatt Nobles II Wind project pursuant to an agreement between LIUNA Minnesota
& North Dakota and developer Tenaska.8 Since then, the same reporting requirement has been
imposed on other wind energy projects approved by the Commission.
The rationale for local hire reporting was to inform public policy and permitting decisions, and
to encourage developers to close gaps between public job creation promises and realities.
While just two such reports have been filed with the Commission to date, each highlights the
need for transparency and the failure to maximize employment of local workers on Minnesota
wind energy projects.
The first report, which was filed prior to the Commission’s adoption of a formal Labor Statistics
Report requirement, showed that just 12% of workers employed by RES Americas to build the
Stoneray Wind Project lived within Minnesota or within 150 miles of the project as of
3

Jim Muchlinski, “Bitter Root project targets the high ground in YMC,” Marshall Independent, January 10, 2019.
Kyle Kuphal, “Wind Workers: One union’s push to keep them local,” Pipestone County Star, October 29, 2018.
5
Karl Evers-Hillstrom, “Union wants Minnesota workers hired for wind farm construction,” Worthington Globe,
September 29, 2018.
6
Jeremiah Wilcox, “Outsourcing Wind Energy Jobs,” KIMT 3, August 6, 2018.
7
Mike Hughlett, “Regulators table Canby area wind farm over labor concerns,” Star Tribune, December 6, 2018.
8
Minnesota Public Utilities Commission Order Issuing Site Permit for Large Wind Energy Conversion System; In the
Matter of the Application of Nobles 2 Power Partners, LLC for a Site Permit for the up to 260 MW Nobles 2 Wind
Project and Associated Facilities in Nobles County (January 31, 2019) (eDocket No. 20191-149838-01).
4

5

 November 1, 2018.9 The figures are consistent with estimates produced by staff of LIUNA
Minnesota & North Dakota, which represents construction laborers that work on commercial
building, civil and energy infrastructure projects, including wind farms, and which identified
more Texans than Minnesotans on the project. The second report, filed on August 13, 2019,
covers work performed during the second quarter of 2019 on NextEra Energy Resources’ Lake
Benton II Repower project and shows that local workers (Minnesota residents and others living
within 150 miles of the project) accounted for just under a third of hours worked.10
A second key development was the Commission’s first-ever decision to refer wind permitting
dockets to a contested case hearing to address concerns over the developer’s expected use of
non-local construction labor. RES Americas’ plans to develop and build the 150 megawatt Bitter
Root Wind project in Yellow Medicine County, Minnesota were sidetracked when, rather than
issuing a permit at the end of an informal hearing process, the Commission ordered further
development of the record on local socioeconomic impacts.11 The project was ultimately sold to
Avangrid, the developer the Trimont Wind Repower project, which is expected to employ a
largely local labor force.12
Third, Minnesota’s investor-owned utilities and many national wind energy developers have
stepped up efforts to maximize the local benefits of wind energy development. Xcel Energy is
using local labor to build Blazing Star I and II, as is Tenaska’s Nobles II Wind, which will serve
Minnesota Power customers. Avangrid and EDF Renewables have also indicated plans to
prioritize local labor on the Trimont and Fenton Wind Repower projects, respectively. Xcel has
taken consideration of Labor’s concerns a step further by making the creation of high-quality
local jobs an explicit consideration in the company’s resource acquisition process.

9

Data is based on developer compliance filing report to the Minnesota Public Utilities Commission for the
Stoneray Wind Farm Project. The EPC on the project, RES, reported 19 local workers and 153 non-local workers.
Thus, 12% of the workers were local. If you include workers employed by the developer and turbine company the
total local workforce rises slightly to 14%. Our focus is on construction workers. The Permit Compliance Filing was
submitted to the PUC on December 17, 2018, under Docket Number IP-6646/WS-13-216 (eDocket No. 201812148534-04).
10
Compliance Filing – Section 6.1 – Quarterly Labor Statistics Report (Q2 2019) In the Matter of the Application of
Lake Benton Power Partners II, LLC for a Site Permit Amendment for the up to 100.2 MW Lake Benton II Wind Farm
in Pipestone County, Minnesota, Docket Number: IP-6903/WS-18-179 (Aug. 13, 2019) (eDocket No. 20198-15515401).
11
Order Deferring Action and Initiating Negotiations; Notice and Order for Hearing; In the Matter of the
Application of Flying Cow Wind, LLC for a Certificate of Need for the up to 152 MW Bitter Root Wind Project and
Associated Facilities in Yellow Medicine County, Minnesota, MPUC Docket No. IP6984/CN-17-676 (January 3, 2019)
(eDocket No. 20197-154551-19); and Mike Hughlett, Regulators table Canby area wind farm over labor concerns,”
Star Tribune, Dec. 6, 2018. http://www.startribune.com/state-regulators-table-wind-farm-project-after-out-ofstate-worker-concerns/502117821/
12
Mike Hughlett , "New developer will take on Minnesota wind-farm project after hiring flap PUC held up the
project after objections to developer's use of nonunion workers," Star Tribune, May 16, 2019.
http://www.startribune.com/new-developer-will-take-on-minnesota-wind-farm-project-after-hiringflap/510024142/

6

 Clean Grid Alliance, which represents the clean energy industry in Minnesota and across the
northern Midwest, has partnered with LIUNA Minnesota & North Dakota and Ironworkers Local
512 to support Clean Energy First legislation that would boost deployment of renewable and
storage technology, while requiring Minnesota’s utilities and the Commission to consider local
job impacts ad part of the resource planning process. Clean Grid Alliance has also entered into
an agreement with Xcel Energy, LIUNA Minnesota & North Dakota, and leading clean energy
advocacy organizations committing the parties to support new renewable investments coupled
with efforts to maximize employment of local workers and utilization of bona fide stateregistered apprenticeship programs among other provisions.13
Mankato Building Trades President Stacy Karels describes the change his members in
Southwest Minnesota have seen over the past year:
“It’s been a big turnaround. In 2017 and 2018, you hardly saw Minnesota workers on
wind energy projects. This summer we might have a hundred local Building Trades
members at Blazing Star alone, and we’ll put even more to work shortly as Nobles II
kicks off. Over the last couple years, we saw too many projects like Lake Benton II. This
year they’re the exception. For the most part, it seems like the industry understands this
needs to be a two-way street, and if they want to develop local resources they need to
give back to local workers.”
Despite significant progress, however, challenges remain. The developer of Lake Benton II,
where local workers have reportedly accounted for less than a third of the workforce, has plans
to both build 170 megawatts of new wind generation in Dodge and Steele Counties in
Southeast Minnesota to serve customers of Minnesota Municipal Power Agency, and to rebuild
the 100 megawatt Buffalo Ridge Wind to serve customers of Great River Energy. While plans for
both projects are under development, NextEra has not indicated how the company plans to
improve upon its performance at Lake Benton II. And advocates say that while other developers
have recognized the importance of local job creation, few have made commitments to
maximize local employment on upcoming projects.

Economic Impact of Local versus Non-local Hiring on Proposed Wind Farm
Projects
We have identified 10 major wind farm projects in development or pre-construction stages in
Minnesota, nine of which were not included in the original 2018 report. If built, these projects
could add more than 2,000 megawatts of wind power to our grid. They also have the potential
to create well over 1,000 family-supporting jobs for Minnesota workers.

13

Settlement Agreement: Acquisition of the Mankato Center (MEC) (Docket No. IP6949, E002/PA-18-702) (May 20,
2019) (eDocket No. 20195-153012-01).

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 TABLE 1: Proposed Wind Farm Projects
Proposed Project

Megawatts
(MW)

Job Estimate
(1-to-1)

Developer

Fourmile Wind Farm

300

300 TradeWinds

Dodge County Wind Farm

170

170 NextEra

Big Bend Wind Farm

300

300 Apex Clean Energy

Three Waters Wind Farm

200

200 Scout Clean Energy

Oza Tanka Wind Farm

150

150 EDF

Fenton Wind (repower)

205

205 EDF

Redwood River Wind
Farm

200

200 EDF

Buffalo Ridge (repower)

109

109 NextEra

Plum Creek

400

400 Geronimo

The common estimate for wind farm construction job creation is one job per megawatt. Thus,
we expect these projects to generate approximately 2,000 jobs.
What is the potential economic impact of using a majority local workforce rather than a largely
non-local workforce on these proposed projects? In short, we estimate that the difference in
local economic impact between hiring a 50% to 70% local workforce and a 10% to 30% local
workforce is $41 million, not including retirement benefits. When deferred fringe benefits that
will produce future spending are included, that difference grows to $62 million.

Our Economic Impact Model
Our economic impact estimates are based on the North Star Policy Institute (NSPI) model
developed in Catching the Wind. Prior to the NSPI report, there was not an adequate model for
the economic impact of local versus non-local workers on Minnesota wind farm projects. As
discussed in the 2018 report, the JEDI model developed by the National Renewable Energy
Laboratory does not sufficiently account for the realities of wind work in Minnesota.
8

 First, the JEDI model does not include overtime, even though we know from interviews with
wind workers, developers and contractors that wind construction involves substantial overtime
during a condensed six-month construction season (mid-May to mid-November). During this
period workers work long hours to complete projects, typically working an estimated 1,500
hours over six months or 60 hours per week. This requires substantial overtime pay
(approximately one third) for wind farm workers.
Second, the JEDI model does not adequately account for fringe benefit payments. Many wind
farm workers receive benefits, such as healthcare and retirement benefits. These benefits can
often be banked for future needs and utilized near a worker’s permanent home, and they can
account for a significant portion of total payroll. Excluding the impact of these payments
significantly underestimates the overall impact of local versus non-local spending patterns.
Third, the JEDI model does not sufficiently account for different spending patterns of local and
non-local workers. Based on insights from wind farm workers, we found that non-local wind
farm workers largely try to live off per-diem payments while working away from their
permanent home and send hourly paychecks home. Non-local workers are rooted in
communities outside of Southern Minnesota. They often have families and own homes in their
permanent place of residence. In contrast, local workers are rooted in Minnesota communities.
They tend to spend their earnings locally.
The NSPI model compensates for shortcomings with the JEDI model and accounts for these
differences in spending patterns. We replicate the NSPI model for this analysis.

Wages and Benefits
We estimate pay and benefit rates based on an average of prevailing wage rates established by
the Minnesota Department of Labor and Industry for heavy industrial and highway projects
across southern Minnesota. These prevailing wage rates are calculated based on wage surveys
submitted by local construction employers and trade unions, and industry sources affirm that
these rates are consistent with the rates commonly paid to Minnesota workers employed on
wind energy projects.
Wind farm construction requires the skills of construction laborers, ironworkers, millwrights,
operating engineers, and electricians. Workers in these trades typically earn between $27 and
$38 per hour in wages and $20 to $26 in hourly fringe benefit contributions (e.g. healthcare,
pension and vacation payments) depending on their trade. We estimate the average wage of a
wind energy construction worker based on an average of the rates for each craft.

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 TABLE 2: Average Prevailing Wage Rates Southern Minnesota14
Craft

Wage

Fringe Rate

Laborer

$27.99

$20.07

Millwright/Ironworker

$36.60

$25.43

Operator

$34.25

$20.50

Electrician

$36.90

$20.12

AVERAGE (standard)

$33.94

$21.53

Overtime

$50.90

Based on interviews with wind construction workers and contractors, we found that overtime
work is common as wind energy construction workers typically work long hours. In northern
climates where the construction season is limited, our research indicates that the typical wind
energy project may last six months, during which time workers average 60 hours per week, for
a total of roughly 1,500 hours -- 1,000 hours of straight time ($33.94 per hour) and 500 hours of
overtime ($50.90 per hour).

Spending Patterns of Local and Non-Local Workers
Local and non-local workers are assumed to perform similar work and earn similar wages on a
wind farm construction project. Non-local workers are defined as workers that do not maintain
a permanent residence within a daily commuting distance of the project. Non-local workers
secure temporary lodgings and generally receive per-diem payments from employers to offset
lodging and food costs.
Workers on wind energy projects in Minnesota typically receive per diem payments of roughly
$100 according to interviews with workers and other industry professionals.15 Per diems are
generally provided on working days, so non-local workers on a Minnesota wind project could be
expected to receive per-diem payments six days per week over the six-month duration of a
project. Thus, we estimate the total value of per-diem payments to a non-local worker
employed on a Minnesota wind project to be $15,600 ($100 x six days a week x 26 weeks).
We expect local workers on a Minnesota wind project to earn approximately $59,388 in pay,
excluding benefits, while non-local workers should receive gross pay totaling $74,988, excluding
benefits. These estimates are calculated based on 1,000 hours of work at the standard pay level
(1,000 x $33.90) plus 500 hours of overtime (500 x $50.90). For non-local workers, we add perdiem to their total pay ($59,388 + $15,600).
14

This is the average prevailing wage rates across Department of Labor and Industry Regions 6, 7, 8 and 10. The
millwright/ironworker rate is an average of the two crafts.
15
Per diem rates are based on interview and survey data from past and current wind farm construction workers.

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 TABLE 3: Gross Pay Non-Local Workers
Local Worker at 1500
hours
Non-Local Worker
1500 hr Salary

$59,387.89

$59,387.89

Per Diem

$0.00

$15,600.00

Gross pay

$59,387.89

$74,987.89

We can estimate the amount the average local worker spends in their local area by deducting
taxes and savings, and by applying an estimated share of their income that will be spent in a
local area based on the work of economists that have studied the economic impact of local
payrolls. The following table presents expected tax payments and savings for each worker:
TABLE 3 - Tax Deductions 2018
Deductions

Local Worker

Non-Local Workers

Effective Federal (12.17%)

$7,304.00

$7,304.00

Effective FICA (7.65%)

$3,334.00

$3,334.00

Effective State (5.55%)

$4,592.00

$4,592.00

Total Tax

$15,230.00

$15,230.00

After Tax Income

$44,157.89

$44,157.89

Savings (3.1%)

$1,368.89

$1,368.89

After savings

$42,789.00

$42,789.00

Current Fringe Benefits

$16,146.33

$16,146.33

Deferred Fringe Benefits

$16,146.33

$16,146.33

Total Local Spending Per Worker

$55,988.56

$15,600.00

Difference in Iocal spending per
worker

$40,388.56

These calculations are based on standard tax rates for Minnesota. The “effective” tax rate is
based on an analysis of the income bracket in which workers in this income bracket are
situated.16 Per diems are generally not treated as taxable income.
16

Tax estimates corroborated by Smart Asset’s online tax estimator. The full estimator is available at:
https://smartasset.com/taxes/income-taxes#SRQvQjkXhc.

11

 The average American currently saves approximately 3.1% of their income.17 If we assume this
trend holds, the average after-tax and after-savings income of both local and non-local workers
would be about $42,789. On top of this income, non-local workers are expected to receive
$15,600 in per-diem payments.
The economic contribution of local workers to local economies is not limited to their paychecks.
Fringe benefits, which for construction workers typically include health care coverage and
retirement, training, and vacation benefits can also contribute to local economic activity.
Among these benefits, health care and retirement benefits account for the lion’s share.
Health care contributions are usually spent in the short-term in local economies as workers and
their families patronize local clinics, hospitals, and pharmacies. Retirement funds, on the other
hand, are deferred and will only contribute to local economies once a worker retires and begins
to draw on pension payments or retirement savings.
For this reason, we estimate that half of fringe benefit contributions ($32,292/2 or $16,146)
have a similar impact to post-tax, post-savings income, and the other half are treated as income
that is deferred to be spent after retirement.
In past efforts to measure the local economic impact of local employment, economists have
estimated that, on average, local workers spend 95% of their income within the region in which
they live.18 Thus, we would expect a construction job on a Minnesota wind energy project that
is filled by a local worker to directly contribute $55,989 in the regional economy (95% of after
tax /after savings income + 50% of fringe benefits or 95% of $42,789+ $16,146) in the near
term, and likely an additional $16,146 over the long term. We separate the impact of fringe
retirement spending because such spending is deferred until retirement so impacts may only
occur five, 10, or 20 years later.
Our research indicates that non-local workers, on the other hand, seek to restrict their local
spending to the amount of their per diem and can be expected to spend the remainder of their
wages and benefits in their primary place of residence .19 Thus, we expect that a non-local
worker employed on a Minnesota wind energy project will spend $15,600 locally over the
duration of the project.
One former wind energy construction worker, explained how, “When you’re traveling on a
wind project, you usually get two checks: your hourly check and your per diem allowance.” He
17

James Chen, “Savings Rate,” May 15, 2018, Investopedia, available here:
https://www.investopedia.com/terms/s/savings-rate.asp
18
Bruce Nissen and Yue Zhang, “Hiring Our Own? The impact of local vs. non-local hiring practices in two county
GOB projects,” August 16, 2006, Research Institute on Social and Economic Policy at Florida International
University.
19
This assumption is based on survey analysis and interviews with current and past wind energy construction and
other sectors that typically employ traveling workforce.

12

 further detailed how he, “always tried to live on my per diem and send my hourly check home. I
had bills to pay at home, my house, my family.”
The near-term difference in local spending patterns between a local and a non-local worker
employed on a Minnesota wind energy project is $40,389 ($55,989 - $15,600). This is $40,389
less that a non-local worker can be expected to spend at neighborhood grocery stores, car
dealerships, restaurants and clothing stores. This amount is the economic stimulus gained or
lost by decisions to hire local or non-local workers. The gap grows to approximately $56,535
when deferred spending associated with retirement benefits are taken into account.
The potential gain or loss in local spending is considerable when we consider total anticipated
employment on all 10 proposed wind farm projects. Based on industry standard estimates of
job creation (one non-supervisory construction job per megawatt of wind energy), the projects
will employ approximately 2,000 construction workers. The local economic impact of these
projects could differ greatly depending on how many of the workers come from the local area
or hundreds or even thousands of miles away.
It is rare for a wind energy project to employ an entirely local workforce. The leading U.S. wind
energy EPCs pursue national business models and employ a national workforce that includes
key personnel who are essential to the safe and successful execution of the company’s wind
energy projects. There can be significant differences, however, between projects built by EPCs
that partner with local workforce providers and deliver projects where a large majority (50% to
70%) of hours worked on the project are performed by local workers, and projects that rely
largely on out-of-state crews where local workers account for a small share of hours worked
(10% to 30%).20
The following table lays out estimates of total local spending for all 10 projects based on
hypothetical levels of local and non-local construction hiring:
TABLE 4 - Direct Local Spending
100% local

$113,880,726.84

70% local

$79,716,508.79

50% local

$72,805,563.42

30% local

$56,375,498.05

10% local

$39,945,432.68

0% local

$31,730,400.00

20

The low range was originally developed based on conversations with tradesmen and women with industry
experience has subsequently been validated by early results of local workforce reporting which range from 12% to
32%. The High range is based estimates from numerous tradespeople and others familiar with wind projects in
Minnesota, which will be compared to results from Nobles II Wind Labor Statistics Reports once they are available.

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 70/30%
Difference

$23,341,010.73

The projected difference in cumulative local spending between a project that relies on a 70%
local workforce and 30% local workforce would be roughly $23 million in current spending.
The differences in local impacts continue to grow when we account for multiplier effects of
local spending. Wages earned by local construction workers are re-circulated within local
economies through secondary purchases and other economic transactions. This spending
creates additional jobs via multiplier effects that have been well-documented by economists.21
In this report, we focus on the earnings multiplier. In Nissen and Zhang’s 2006 study of the
economic impact of local hiring on two major construction projects in Florida, they provide an
earnings multiplier of 1.7377 for new construction work. This means that every dollar spent in a
local economy will result in an additional 73.77% in economic activity, beyond the earnings of
those employed on the project.22
If we replicate the multiplier used by Nissen and Zhang (2006), total local spending would be as
follows:
TABLE 5 - Total Economic Impact
Percent Local

Total Impact with Multipliers

100% local

$197,890,539.02

70% local

$138,523,377.32

50% local

$126,514,227.55

30% local

$97,963,702.96

10% local

$69,413,178.37

0% local

$55,137,916.08

21

The following is an example of using multiplier effects on a major pipeline project in Minnesota: Bureau of
Business and Economic Research (BBER) at the University of Minnesota Duluth (UMD) Labovitz School, “ Enbridge
Pipeline Construction: Economic Impact Study,” prepared for Area Partnership for Economic Expansion (APEX),
April 18, 2017.
22
Bruce Nissen and Yue Zhang, “Hiring Our Own? The impact of local vs. non-local hiring practices in two county
GOB projects,” August 16, 2006, Research Institute on Social and Economic Policy at Florida International
University, pg. 8. Nissen and Zhang use an earnings multiplier specific to their region of analysis – Miami-Dade
County, Florida. We do not have a regionally specific RIM II earnings multiplier for Southern Minnesota. However,
we expect only minor variation from the regionally specific earnings multiplier used by Nissen and Zhang.
Additional research is needed to determine the exact earnings multiplier for North Dakota.

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 70/30%
Difference

$40,559,674.35

When we include economic multipliers, the present value difference in total economic impact
of using 70% local workers versus 30% rises to $17 million. When deferred retirement benefits
are included, the total difference in economic impact between 70% and 30% local increases by
another $21 million to a cumulative difference of $62 million.
TABLE 7: Impact with 50% of Deferred Fringes
Percent Local

Total Economic Impact

100% local

$252,105,996.77

70% local

$176,474,197.74

50% local

$153,621,956.43

30% local

$114,228,340.29

10% local

$74,834,724.15

0% local

$55,137,916.08

70%-30% Split

$62,245,857.45

For rural areas of Minnesota, these differences in local economic impacts could amount to
meaningful boosts to local household and business incomes, and to the tax base for local
schools and governments.

The Availability of Local Workers
Prioritizing local hiring on these wind farm projects can not only create good, family-supporting
jobs for local workers and millions of dollars in local economic activity, but can also provide a
pathway into a career in the construction industry. In Southern Minnesota, there are
thousands of workers employed in low-wage, part-time jobs with few opportunities for upward
mobility. For example, among the roughly 414,403 workers in the region, 38,099 are employed
in low-wage retail, accommodations, and food service jobs. Many of these workers would
welcome an opportunity for a well-paid, 40+ hour per week job with generous benefits.23

23

Arne L. Kalleberg, “Good Jobs, Bad Jobs: The Rise of Polarized and Precarious Employment Systems in the United
States, 1970s-2000s,” 2011, Russell Sage Foundation.

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 TABLE 6 - Total Employment and Wages in SE & SW Minnesota24
Industry

Average
Average
Average Weekly
Employment Hourly Wage Wage (40 hrs)

Average Annual
Wage (2,080 hrs)

Health Care and
Social Assistance

48,443

$26

$1,058

$55,016

Manufacturing

34,478

$28

$1,104

$57,408

Retail Trade

22,638

$12

$498

$25,896

Educational Services

18,891

$20

$817

$42,458

Accommodation and
Food Services

15,461

$7

$297

$15,444

We estimate that the average construction worker on a Minnesota wind energy project would
earn approximately $2,376 per week (40 hours at straight time rate of $33.94 per hour and 20
hours as overtime rate of $50.90 per hour) excluding fringe benefit payments. This is three to
five times the average weekly earnings of a worker in accommodation, food service or retail
work.
The experience and training requirements for wind energy construction workers vary widely:
from positions that require specialized skills, years of experience, and a license or certification;
to jobs that can be filled by individuals with little or no construction experience. When local
workers are hired to build wind energy projects, some may be entirely new to construction,
while others are recruited from lower-paying jobs in civil, building, and residential construction.
Some of the 38,099 workers currently employed in the retail, accommodation, or food service
industries could begin work on a wind project as soon as construction begins, while others
could benefit from jobs opened up when current construction workforce “moves up” to wind
projects. Those employed by contractors that participate in registered apprenticeship programs
would also benefit from classroom, hands-on, and on-the-job training to improve their skills
and career prospects.
We expect that many of the 38,099 workers employed in industries that pay substantially less
than wind energy project jobs would be eager to seize an opportunity to earn higher wages in
the construction industry. Regional building and construction trades unions are ready and

24

Employment data is for Q1 2019. Wage and employment data is based on averages for Southwest and
Southeast Minnesota Planning Areas. A map of all planning areas is available here:
https://apps.deed.state.mn.us/assets/lmi/areamap/plan.shtml.

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 willing to work with wind developers and contractors to help dispatch the existing skilled
workforce, and to recruit and train a new workforce.

Conclusion
The 10 proposed wind farm projects identified in the current, together with projects identified
in NSPI’s 2018 report that have not yet been built, have the potential to create hundreds and
possibly thousands of family-supporting jobs for Minnesota residents and to inject millions of
dollars into the local economies across Southern Minnesota. Project developers can maximize
the benefit of the project to Minnesota by working with their EPC contractors and area skilled
trades to prioritize local hiring and ensure that a large majority of construction work on each
project is performed by local workers.
Minnesota has made substantial progress toward ensuring that local workers benefit from the
creation of high-quality jobs on wind farm construction projects, but the work is just beginning.
New data reporting standards will help to make the process more transparent, but reporting
isn’t enough unless developers are held accountable. Further reforms are needed if we want
local jobs to be a consistent benefit of clean energy development rather than depending on the
whims of a developer.
First, Minnesota should pass bi-partisan Clean Energy First legislation to ensure that local hiring
efforts are prioritized in the utility resource planning process. Second, local policy makers in the
communities where wind farm projects are being built need to hold developers accountable for
making local hiring a priority. Third, policymakers and utilities should seek greater collaboration
with state-registered apprenticeship programs, which can help to recruit and train local
workers with the skills needed to help build clean energy facilities as proposed in the Mankato
Energy Center settlement agreement. Through these modest efforts, the state can complete
the work of ensuring that we are making efficient use of renewable energy resources and
promoting a sustainable transition to a clean energy economy that works for all Minnesotans.

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 About Local Jobs North
Local Jobs North Dakota & Minnesota seeks to promote good, family-supporting construction
jobs for North Dakotan and Minnesotan workers through research and advocacy. Their goal is
to educate the public and policy makers about the social and economic benefits of using local
workers.
www.locajobsnorth.org

About the Author
Lucas Franco is the Research Manager for LIUNA Minnesota & North Dakota, which represents
more than 12,000 unionized construction laborers across Minnesota and North Dakota and is
affiliated with the half-million member Laborers International Union of North America. He has
completed the requirements for a Ph.D. (to be conferred September 2019) in Political Science
from the University of Minnesota. He has published numerous articles and reports on
employment trends in the construction industry.
Contact the author for comments or questions.
Lucas Franco
lfranco@liunagroc.com
612-850-8755

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