So, are these actual editors that are working in these design hub jobs? I was under the impression that places that operate like this were hiring pretty much anyone off the street at a low wage, even minimum wage.
First sentence is absolutely true. As for the second sentence, my educated guess is that many of the hires are recent college graduates or people with a little experience who really need the work. The pay is more than minimum wage, but not by that much -- $30K a year is what I've heard, which probably doesn't go far in Austin these days. How much actual editing is going on is anyone's guess. I'd be surprised if there are dedicated copy editors who are able to concentrate exclusively on the word side and writing headlines/cutlines.
I don't mean to give the impression that all editing/design hubs are this way. The ones I'm most familiar with are the Gannett hubs in Asbury Park, N.J., and Nashville and the Cox hub in South Florida. They pay respectably and have a lot of experienced designers and editors who do good work. Hard to say how long those hubs will be around (for example, Cox supposedly already is shifting some of its desk work to GateHouse, and jobs are being cut).