Economy (MN Governor's Race)

Republican voters often cite the economy as their primary reason for voting Republican claiming that Democrats kill the economy with their free-wheeling socialist ways and out of control government spending. Democrat voters often cite Republicans pandering to the top 1% as killers of the economy for the remaining 99%. So, when we are talking about the economy, what are we really talking about and what is the current state of the Minnesota economy?

GDP
The strength of an economy is measured by GDP. The GDP (Gross Domestic Product) includes everything a country or state produces by the people and the companies in the state or country, or our total output. The GDP growth rate measures if an economy is growing more quickly or more slowly than the quarter before. Ideally, the growth rate should be between 2-3%. When the GDP growth rate turns negative, we enter a recession. During a recession income, employment, manufacturing, and retail sales drop in addition to GDP. Healthy income, employment, manufacturing, retail sales, and GDP are signs of a healthy economy. Unhealthy numbers are signs of an unhealthy economy. Here is a chart of annual percentage change of GDP in Minnesota from 2000 to 2017. If you click on one link, click on this one. For additional context, Jesse Ventura (I) was governor from 2000-2003. Tim Pawlenty (R) was governor from 2003-2011 and Mark Dayton (D) has been governor since 2011. For comparison, here are the national numbers.

Let’s examine the Minnesota economy by comparing it to another midwestern state that has had drastically different policies over the past 8 years: Wisconsin. Wisconsin’s economic policy has focused on cutting taxes for the rich, shrinking government through spending cuts, and weakening unions. Minnesota’s economic policies have focused on raising the minimum wage, strengthening labor standards, and boosting public investment in education and infrastructure. What have been the effects?

Jobs & Wages
Minnesota has added more jobs than Wisconsin every year since 2010 and has now passed Wisconsin in overall number of jobs. Additionally, wages have grown faster at every decile in the wage distribution. Median household income grew by 7.2% from 2010 to 2016 versus 5.1% in Wisconsin. In fact, median household income increased over twice as fast in Minnesota than the United States as a whole between 2010 and 2013. It grew 4.4% in the US as a whole and 9.5% in Minnesota. As of November of 2017, median household income was $61,492. Between 2010 and 2017, women’s median wage rose by 5.4% in Minnesota compared to only 0.8% in Wisconsin. Men’s median wage grew by 1.6% and actually fell by 0.9% in Wisconsin. Wisconsin also saw the largest decline in union membership of any state between 2010 and 2017 due to the loss of collective bargaining rights in 2011 and the “right to work” law.

Unemployment in Minnesota fell to 2.5% in May, a near record low. It is consistently ranked below the national unemployment rate. While many state’s labor forces have shrunk due to the retirement of baby boomers, Minnesota ranks third for labor force participation and the 7th best state for employment.

Economic Disparities
Minnesota certainly sounds pretty good, right? Unfortunately, this isn’t true for all Minnesotans. Minnesota ranks 47th in the unemployment gap between white and nonwhite residents and 44th for the racial gap for wealth.

Minimum Wage
Starting January 1, 2018, Minnesota minimum wage became $9.65/hr for large employers and $7.87/hr for other state minimum wages. Current federal minimum wage is $7.25 per hour. An estimated 225,000 in Minnesota will earn less than $9.65/hr. Due to inflation, today’s minimum wage is worth less than when its value peaked in 1968. California passed a law that increases the minimum wage to $15/hr by January 1, 2022. New York followed suit passing a law to raise the minimum wage to $15/hr by the end of 2018. Washington, D.C. passed legislation to do so by July 1, 2020. For more on the minimum wage debate at the federal level, see my blog post from the 2016 presidential election here.

Labor Unions and Collective Bargaining
Labor unions organizing and negotiating over the years have brought about numerous worker protections including the 40 hour work week, paid leave, overtime pay, child labor laws, workers comp, unemployment insurance, pensions, safety standards and regulations, employer health care insurance, raises, sexual harassment laws, the Americans with Disabilities Act, and holiday pay, among many other protections. Unions use collective bargaining to negotiate wages and other conditions of employment using the concept that they are stronger and more powerful together as one voice instead of separate individuals.

When the 2011 Wisconsin Act 10 became law on June 29, 2011 it outlawed collective bargaining which affected compensation, retirement, health insurance (it doubled health care premiums for state employees), and sick leave for public employees.

Another movement to weaken unions are “Right to Work” laws where workers can opt out of union dues, but still benefit from the collective bargaining power, significantly weakening the union’s funding and power. The Supreme Court’s Janus decision this week made all states “Right to Work” states.

Taxes & Spending
One of the reasons Minnesota is such a great place to live is due to our steady stream of revenue and regular budget surpluses. I looked at a couple of different sources to see how Minnesota compares nationally. In one, Minnesota is the fourth highest taxed state behind New York, Hawaii, Maine, and Vermont. Our total tax burden is 10.37% of our income including property taxes, income taxes, and sales taxes. In another, Minnesota was 9th at 10.8% behind New York, Connecticut, New Jersey, California, Illinois, Wisconsin, Maryland, and Rhode Island. Either way, Minnesota generates ample revenue and is frequently placed on best of lists for a variety of measures of quality of life.

So, where does the money go? The pie chart below shows state spending for the 2018 Fiscal Year. One of the greatest political debates of all time is around taxes and government spending. Some are for limited government and very little spending. But, on the other hand, that reduces funding for many programs, services, and products that many Minnesotans depend on.

Source: https://www.usgovernmentspending.com/minnesota_state_spending.html

Here is where the candidates stand on policies which would affect the economy:

Jeff Johnson-R: (Taxes) Candidate Johnson will push for legislation that cuts income taxes across the board and oppose any tax that has an automatic increase. He will push to end taxation of social security benefits and push for legislation to end the business property tax. He will also fight for a cap on property tax increases. (Spending) He wants to cut spending across the board and will not sign a budget that isn’t lower than the previous year’s budget for each agency. In his first week, he plans to audit every government program to determine which are a effective and which are not. Those that are not will be eliminated. He also wants to institute an Automatic Taxpayer Refund provision that automatically returns surplus tax revenue to the taxpayers. (Jobs) He plans to eliminate one regulation for each new regulation created. He will promote vocational and trade schools to fill the need for skilled workers. His administration's policy will be to purchase goods and services from Minnesota based companies. He will measure agency’s effectiveness based on how quickly and efficiently they are able to make a permit decision.

Erin Murphy-D: (Workers’ Rights) Candidate Murphy supports raising the state’s minimum wage to $15/hr and ensuring that all workers have access to paid sick time. She supports labor and collective bargaining. (Jobs) She supports infrastructure investment and job creation through expanding broadband access, increasing use of electric vehicles, and repairing outdated waste and drinking water infrastructure. She believes that supporting Main Street businesses, helping young farmers with start-up costs, and investing in innovation will encourage the spirit of entrepreneurship and economy.

Tim Pawlenty-R: (Jobs) Candidate Pawlenty links good paying jobs to a quality education. He says he will make sure schools are properly funded while holding them accountable for reform and better results. Part of that reform will be to re-emphasize vocational and techinical training in high schools and beyond. (Taxes) He says that we need a tax code that allows businesses to grow and provide good paying jobs while still providing needed services.

Lori Swanson-D: Candidate Swanson is so far the most difficult candidate to find clear stances and policy proposals from. She touts her legal record and has written a series of articles on her vision for Minnesota, but she doesn’t come out and state where she stands on each issue, so I am going to stop covering her for now.

Tim Walz-D: (Jobs) Candidate Walz will fully fund Pre-K to K-12 education to create a workforce that keeps Minnesota moving forward. He will support initiatives like expanding broadband to connect rural residents to the internet. He will improve infrastructure by passing a $1 billion dollar bonding bill. He supports re-investing in the Minnesota Investment Fund and the Minnesota Job Creation Fund which help start-up companies create new jobs. (Taxes) He supports expanding the Working Family Tax Credit which is for working individuals whose income is below a certain level and making sure the top 1% pay their fair share in taxes. (Workers’ Rights) Candidate Walz will increase the minimum wage to $15/hr. He will improve and expand sick time laws and ensure that workers aren’t penalized for using their sick time. He will expand paid family leave. He will fight for fair scheduling rules that ensure that workers receive proper notification, are compensated for last minute changes, and have breaks between shifts. He will protect collective bargaining rights and unions.

Child Care (MN Governor's Race)

Child Care Costs

In 78% of Minnesota households, both parents work. Yet, Minnesota has one of the highest child care costs in the country. The average cost to have your infant in a center in the metro area is $340/week. That’s $17,680 a year. And, that’s the average. For in-home daycares, the average is $188.00/week. In rural areas, the average for a center is $216/week which equals $11,232 a year. The in-home average in rural areas is $142.00/week. Keep in mind, these are the averages for one child.

Our oldest is now 6. When he was an infant, we sent him to an in-home daycare and it cost $215 a week which included food and diapers. Our youngest just turned 1. We sent her to a center and it cost us $389 per week and didn’t include diapers. With the addition of before and after school care for our oldest, we were spending $200 more per month on child care than we were on our mortgage. I am home with both of them now for the summer which saves on these costs.

Child Care Shortage
We are lucky that we had options for care. There is a severe shortage of child care in much of the state. Between 2006 and 2015, the number of licensed in home child care providers decreased by 27% across the state which translates to a loss of about 36,500 spaces. Rural areas are the hardest hit by this, and in some cases, entire communities are without access to care. Infants are the hardest to find care for which has serious implications for women who would like to return to the workforce after having a baby. Low-income families and single-parent families are especially hard hit as low-income families are less likely to have paid leave.

There are many reasons for this, but one is the increased amount of regulation that the Minnesota Association of Child Care Professionals says has nothing to do with the safety of the children in their care and is causing caregivers to leave the profession. In May, the Minnesota State Senate unanimously passed a bill that gave more leeway on staff qualifications and allowed more leeway on staff to child ratios if some infants or toddlers were only part time. Another that passed unanimously was an exemption from a training rule that was intended to apply to centers that cared for the developmentally disabled, but was applying to all centers. A third bill passed with a handful of no votes that reduced what was needed for background checks of minors present at in-home day cares. They formerly needed to be fingerprinted and photographed. The bill made it so they would just need to provide a legal name and birth date. According to the Minnesota Association of Child Care Professionals, the minor fingerprint bill was one of the number one regulations causing providers to leave the industry.

Child Care Assistance Program & Fraud
The Legislature hasn’t been discussing changes to state reimbursements that help low-income families pay for care. One of those programs would be the Child Care Assistance Program which is a program out of the Minnesota Department of Human Services. It provides financial assistance to low income families to pay for child care so they can seek employment or education that will lead to employment. It serves more than 30,000 children currently. It is dependent on providers registering for the program to seek reimbursement. However, some providers see the reimbursement rates as too low to cover costs and decline to enroll eligible children for the subsidized care. Eligibility varies based on the size of the household.

Recently, there has been an outcry on how easy it is for providers to defraud the government under this program. According to daycare provider, Becky Swanson, a parent brings the child to the childcare center or the childcare provider and parent signs the child in, but they don’t leave the child. The parent’s signature allows the provider to claim that day as a day of care. So if you’re a parent of two, and if your provider charges $150 a week per child, the provider claims $300 for two children for the week even though they were not in daycare. As of May, there were 10 open investigations into daycare fraud. The state has closed 13 centers since it formed a fraud investigation unit in 2014.

Child Care Tax Credit
The Minnesota Child and Dependent Care Tax Credit is also intended to offset child care costs. But, you may only claim up to $3,000 for one child and up to $6,000 for two or more. The statewide average for one child is $16,120 for center care and $8,528 for in-home care. To be eligible for the full credit (which is 35% of those claimed expenses), you have to show documentation that someone else cared for your child and you must make less than $50,000. The credit phases out if you make more than $50,000 and you become ineligible if you make more than $62,000 for one qualifying dependent, or more than $74,000 for 2 or more qualifying dependents.

Paid Parental Leave
The final issue that falls under this umbrella is paid parental leave. The United States is the only developed country in the world that has no guaranteed paid leave. 1 in 4 American moms have no choice but to return to work when their child is just 2 weeks old. 87% of parents have no access to paid leave through their employers. Each additional month a parent has paid leave, the infant mortality rate goes down 13%. Americans have the highest infant mortality rate in the world. Countries that enact paid family leave see infant mortality rates decrease. They also see a decrease in high school dropout rates, a rise in college attendance, and higher incomes at age 30. Babies whose mothers don’t have paid leave are less likely to nurse or be taken to the doctor. When they become toddlers, they have more behavioral problems and score lower on cognitive tests. While I am citing national numbers here, this is an issue that has yet to be taken up federally and will not be any time soon as it an issue that is historically voted down under Republican leadership like the United States currently has. Therefore, it becomes a state’s issue.



Here is where the candidates stand:

Jeff Johnson-R: Candidate Johnson’s sister, Jodi Olson, runs a daycare out of her home in Detroit Lakes. That’s all I could find that was even remotely related to the above issues.

Erin Murphy-D: Candidate Murphy says, “The lack of affordable, accessible child care is holding too many Minnesotans back from entering the workforce and it’s having adverse effects on our local economy.” She says she will work with communities all over the state to ensure quality childcare that is available and affordable, but has not outlined a specific plan, as of yet. Following her endorsement from the Service Employees International Union (SEIU), she stated, “As governor, I’ll continue to stand up and fight for livable wages, access to paid sick time and paid family leave.”

Tim Pawlenty-R: Candidate Pawlenty is focused on the child care fraud issues more than anything else. On his website, he cites, “childcare providers allegedly defrauding the state of a massive amount of money and sending some of that money to terrorists overseas” as a reason “state government needs to be held more accountable.” In 2003, Governor Pawlenty’s budget doubled the copays for low-income families receiving state-subsidized health care under the Child Care Assistance program.

Lori Swanson-D: Candidate Swanson has been criticized and protested for not catching and prosecuting the day care fraud. I couldn’t find her stance on any of the above issues, but Matt Pelikan, the current DFL-endorsed candidate for Minnesota Attorney General (Swanson’s current job) slammed her for not providing paid parental leave to her staffers.

Tim Walz-D: Candidate Walz plans to increase the Child and Dependent Care tax credit that is available to low-income families in an effort to help cover the costs of child care. He also plans to increase the income eligibility limits so that more people are eligible for the credit. He plans to fully fund an forecast the Child Care Assistance Program. He says he will remove red tape and fees that make opening and running a daycare challenging. He plans to open a Child Care Innovation Center that will offer seed money, training, and technical assistance to those who want to open a child care program. Additionally, he supports progressive paid leave policies so that parents can stay home to welcome a new member of the family. Candidate Walz is the only candidate to have child care as an official part of their platform.

Cannabis (MN Governor's Race)

The legalization of marijuana is an issue that has quickly gained steam in recent years. In 2014, a Star Tribune poll showed that just 30% of respondents favored legalization while 63% opposed. A poll at the State Fair in 2017 showed that 50.6% favored full legalization. Nationally, a Quinnipac University poll in April of 2018 showed support for legalization had his an all time high at 63% with support for medical marijuana at 93%. In Minnesota, cannabis is legal for medical purposes, but illegal for recreational use. Minnesota became the 22nd state to legalize medical marijuana in 2014 when Governor Mark Dayton did so for conditions such as cancer, seizures, and some chronic diseases. He has been opposed to recreational legalization.

In 2012, Colorado and Washington became the first states to legalize recreational use of marijuana with ballot initiatives. Alaska, California, Maine, Massachusetts, Nevada, Oregon, Vermont, and the District of Columbia have all followed suit. Significantly, Vermont legalized it through their state legislature without a ballot initiative, becoming the first state to do so.

What are the benefits of doing so? Marijuana sales create millions to billions (California) in tax revenue and most states have it written into the law that a portion of that money will benefit public education. For example, for the 2017-2018 school year, the Colorado Department of Education received 90.3 million from marijuana revenue. Keep in mind, though, that that won’t solve all of the financial issues in public education, as overall K-12 education funding for the state of Colorado was 5.6 billion for the 2017-2018 school year. In Washington, which generates about $700 million in tax revenue, more than half of the revenue is dedicated to public health programs such as expanding Medicade or funding substance abuse programs.

Another benefit is tourism. 82.4 million travelers visited Colorado in 2016. 15% of those visitors engaged in some marijuana related activity and 5% named it as the motivation for their trip giving Colorado more tourists than most states.

The legalization of marijuana would also lead to a decline in marijuana related arrests and the costs of prosecuting them and imprisoning them. Marijuana arrests and incarcerations disproportionately affect people of color despite the fact that 5 times as many whites are using drugs as blacks. Nationally, blacks are sent to prison for drug offenses at a rate of 10 times the rate of whites. African American serve nearly as much time in prison for non-violent drug offenses (58.7 months) as whites do for violent offenses (61.7 months). In Minnesota, blacks are 6.4 times more likely to be arrested for marijuana possession than whites.

Why do people oppose it? Some still view it as a public safety and health risk. It is a drug, after all. Others say it’s just about big business making money at the expense of the consumer and cite concerns about the industry having no federal oversight since marijuana is illegal at the federal level. Therefore, there are no quality standards or oversight on the growth, processing, packaging, or sale. Data is severely lacking for long-term studies on the effects on society for legalization. They point to the addictive qualities and the inevitability that the marijuana industry will market to children, much like the tobacco industry, and the industry will continue to seek new and increasingly frequent users in order to make money. They say we have enough issues with tobacco and alcohol and don’t need yet another legal intoxicant.

Here is where the candidates stand:

Jeff Johnson-R: Candidate Johnson supported the 2014 bill that legalized medical marijuana, but is opposed to recreational marijuana legalization. In 2014, he was the only GOP gubernatorial candidate to support medical marijuana. Concerning recreational marijuana, he says, “My focus will be on fixing those things that are making life difficult for Minnesota’s middle class. Not legalizing pot.”

Erin Murphy-D: Candidate Murphy supports legalizing marijuana use for recreational purposes including record expungement, a process for releasing non-violent offenders, and support for them as they transition out of the criminal justice system. She also supports expanding the medical cannabis program so that doctors could prescribe medical cannabis to any patient they see fit. She says that this would give doctor’s more tools to help people manage pain and would reduce use of opioids. She is the only candidate to address this issue as a part of her vision on her website.

Tim Pawlenty-R: Back in 2009, as governor, Candidate Pawlenty vetoed a bill to allow terminally ill patients to use medical marijuana. He claimed he was “sympathetic to those dealing with end of life illness” but he felt that marijuana posed “serious public safety and health risks.” I could not find any updated position.

Lori Swanson-D: Candidate Swanson has made no public statements on this issue and I could not find anything concerning her position.

Tim Walz-D: Candidate Walz supports the legalization of marijuana for recreational uses. As part of his work in Washington as a congressman, he has been active in trying to get medicinal marijuana to military veterans. Additionally, he notes, “The system we have had was that we looked the other way, unless you’re a person of color, in which case you face the threat of arrest and incarceration.” He has also stated, “We have an opportunity in Minnesota to replace the current failed policy with one that creates tax revenue, grows jobs, builds opportunities for Minnesotans, protects Minnesota kids, and trusts adults to make personal decisions based on their personal freedoms.”

Agriculture (MN Governor's Race)

The Minnesota governor’s primary is on August 14th, which means we’ve got a lot of learning to do in order to get ready! If you’re new around here, I plan to cover as many issues as I can between now and then. My purpose is to move past the rhetoric and propaganda that comes with elections and educate the populace with how their vote affects the actual policies and laws that govern their lives. I’m starting with agriculture.

This image comes from
https://minnesota.agclassroom.org/educator/materials_poster_ag.cfm
and shows agricultural rankings from 2011.  The text I've written
references current rankings.

Agriculture

According to the Minnesota Department of Agriculture, agriculture generates $121 billion in economic activity and supports 431,000 Minnesota jobs making it an economic cornerstone. There are 73,300 farms in Minnesota.

Overall, Minnesota ranks in the top 10 nationally in the production of more than 20 agricultural products and is the 4th largest exporter of agricultural products. Minnesota is a leading state in annual farm income ranking 5th among the states and contributing about 4% of the nation’s total agricultural receipts. Crops is a $10 billion dollar sector. Minnesota is the leading producer of corn and soybeans. Livestock is an $8.8 billion dollar sector. Livestock and products from livestock (i.e. cotton cloth), account for about half the state’s farm income, the most valuable of which is hogs which account for 18% of the state’s total agricultural revenues making Minnesota the #3 hog-producing state. Minnesota is the leading milk producing state making cattle and calves very important sources of revenue. Minnesota is also a leading producer of eggs and turkeys.

What are the concerns of Minnesota farmers? Minnesota farmers themselves believe that Minnesotans are becoming more and more disconnected with farming. A survey by the Minnesota Corn Growers Association noted that nearly 65% of respondents had no connection with farming. Corn farmers want the next governor to make future policy decisions based on science and research while recognizing the impact corn growers have on the state. Both soybean and hog farmers are concerned about the president’s tariffs and retaliatory tariffs from China.

Here is where the candidates stand:

Jeff Johnson-R: Candidate Johnson says, “Minnesota’s economy was built on agriculture and our natural resources.” But, he says that government is getting in the way of those who work the land. He claims that government permitting harrasses farmers. This is not an issue he currently has an action plan for but he is endorsed by Pawlenty’s former Lt. Governor, Carol Molnau, a family farmer for south-central Minnesota, who is said to be working with Johnson on the campaign trail around agricultural issues.

Erin Murphy-D: Candidate Murphy wants to continue to put the spotlight back on farming and says, “I think we should use all the opportunities we have to bridge those divisions.” She will invest more in the development of perennial crops which she says will help farmers grow crops that have a market while also protecting and restoring the health of our land. Her running mate, state representative Erin Maye Quade, wasn’t able to answer a question about E85 from the Forum News Service, but later stated on Twitter, “I misspoke. I know how important E-85 is to the state’s economy and livelihood of Minnesotans.”

Tim Pawlenty-R: Candidate Pawlenty recently told MPR’s Cathy Wurzer that “It is not in America’s best interest to get in a trade war, particularly over products and services that relate to agriculture.” He says that he hopes the president can resolve disputes with other countries without the need for tariffs (with the exception of steel tariffs). I could not find any other plans he has for agriculture policy although in 2011, while announcing his presidential bid, he came out against ethanol subsidies which challenged the corn industry.

Lori Swanson-D: Candidate Swanson comes from a family of farmers, but I couldn’t find much on her actual agriculture policy aside from the mention that her pick for Lieutenant Governor, Congressman Rick Nolan, has focused on agriculture, among other issues, on the state a federal congressional level. It seems as though his focus will be rural Minnesota and has said that, “Farm economy is at the foundation of small-town economic success.”

Tim Walz-D: Candidate Walz says, “Minnesota is a state that was built on the strength of its agricultural sector and we need to ensure that our family farmers and rural communities are able to compete in the global marketplace.” His plan includes working to aggressively expand markets, supporting new and beginning farmers, investing in agriculture-related research, and supporting the growth of organic and locally grown products.