“It could be worse” is the old Minnesota explanation of weather conditions. It might apply to our housing markets as well.
Minnesota 2020 and Minnesota Housing Partnership have been collaborating on a series of articles looking at the “Uneven Recovery” for our state and local housing markets in the five years since the housing bubble burst. Now come data showing more severe problems in other parts of the country, and why the entire U.S. economy may hang on the housing market going forward.
Katie Doyle of Bankrate.com has assembled data showing “Foreclosures: 10 Worst States Right Now.” Nationally, one mortgage in 1,055 is in some stage of foreclosure – improved from 655 in second quarter 2012 - while Florida continues to lead the pack with one in only 346.
Following behind Florida is Nevada, one if 533; Maryland, 543; Illinois, 603; New Jersey, 619; Connecticut, 752; Delaware, 818; South Carolina, 850; Ohio, 885; and California, 921. Whew. Minnesota doesn’t make the list.
A related real estate data offering from msn.com sheds more light on how vulnerable the housing market recovery might be to rising interest rates and possible Federal Reserve policy going forward. In a slide show presentation on “Home, sweet unaffordable home,” it uses Zillow Inc. data and analysis to list cities and metro areas especially vulnerable to interest rates.
Consider this example: San Francisco homeowners have historically paid 38.2 percent of median household incomes on housing costs. If mortgage interest rates go up to 5 percent, housing costs will take a projected 46.4 percent.
Other areas that should be of concern for the national economy include San Jose, where a mortgage rate increase to 5 percent would raise housing costs from an historical median of 35.6 percent of household income to 42.4 percent; Santa Rosa (Calif.), from 32.2 percent to 40.3 percent; Honolulu, from 37.5 percent to 39.6 percent; and San Diego, from 35.6 percent to 38.9 percent. Los Angeles homes are hanging on the same interest rate cliffs.
Such data beg a couple of Minnesota observations.
First, it means homeowners in California and a few other high-cost areas face the same range of housing cost burdens we’ve noted for 66 percent of renters in Minnesota. Federal guidelines say everything above 30 percent of household income spent on housing is a burden.
Second, our Minnesota economy might withstand downward pressure from a housing collapse and regional recession in states such as Nevada, South Carolina and even Florida. But there is no way we would escape economic shocks from a collapse of California – America’s most populous state.
Before being elected to the City Council and later Mayor of Carver, like most of you I knew little about City water, where it came from, and what it cost, but I soon got to learn a lot more. Some cities rely on surface water, usually rivers, but many depend on deep wells to draw water from subsurface aquifers.
We often think of these supplies as unlimited and free. Today as our population and water usage is growing dramatically, it is becoming obvious that our supplies both from surface water and the aquifers are not unlimited. If we do not reduce our usage, we will suffer shortages.
Today I would like to discuss the amount of water used to keep our lawns green especially with irrigation systems, and why it raises costs and threatens our supplies.
When we first moved to Carver in 1997 the city had one well and one 150,000-gallon water tower. The population was probably about 1100 people; although the quality was poor the supply was adequate as long as there were no problem with our one well or storage tower. Carver’s population grew from 1265 in 2000 to 3724 in 2010. As you can imagine this population surge forced us to expand our city water system. We added a filtration plant, three wells, and 750,000-gallon water tower to meet the growing demand and federal water specifications. The investment exceeded $10 million. So much for free water.
The other day there was a news story about the average person uses about 75 gallons of water per day. This number is about right for personal usage, but I have found it greatly understates the usage in Carver.
In the table below I show the water usage for the year 2007. Looking at the numbers in the first three months of the year and the last three months usage is about 5 to 6 million per month, but from May through September usage ranges from 11.9 to 26.6 million gallons per month.
In 2007, which I suspect was a drought year, almost 40% of our water was used in June and July and almost 60% between May through August. There are many reasons why water usage rises in summer, but we all know that most of it is going for our lawns. It is important to realize that when building a water supply system it has to meet the maximum capacity, which for Carver was five times what was needed for winter requirements, one of the reasons pushing up the cost of city water.
Is the solution to get rid of our lawns? Some day it may be, but today it would help if we just got smarter. Most of us over water our lawns partly because of the convenience of irrigation systems. We need to start doing things differently such as using drought resistant grasses, monitoring rainfall and water only when needed not just if it is our day. We need to collect runoff and use of it on gardens and lawns. We need to do more than worry about the debt we are leaving for our children, but if we are leaving them resources like water.
What can you do in 90 days? You can grow your fingernails about a third of an inch in 90 days. In 90 days, the average American will drink 144 cups of coffee. And if you had the time to read 25 pages a day of dense technical material, you could read the entire Polymet Supplemental Draft Environmental Impact Statement, or SDEIS. You might just need that coffee.
Polymet Mining Corporation is planning to mine for copper, nickel and other precious minerals in an extensive wetland area at the headwaters of the St. Louis River.
When the SDEIS was released by the Minnesota Department of Natural Resources in December, 2013, the public was given 90 days to comment on the document. That time period resulted in two options, both relying on trust, and both bad:
- Don’t even try to read it yourself. Trust the state and federal agencies and their contractors to do the right thing.
- Let outside experts you trust have just 90 days to review complex materials seven years in the making.
Trust the agencies?
Incredibly, citizens who testified at the three public hearings in January had just five or six weeks to review the SDEIS and prepare their testimony. At the hearings, people who did refer to the SDEIS said things like:
- “I haven’t read the whole thing but I did look at the executive summary.”
- “I can’t understand this myself, but…”
- “I trust the agencies that developed this.”
Trusting agencies short-circuits the public review process. The public needs to examine and review the functions of the government that represents its interests. Anyone who goes to a city council meeting or follows the action in Washington, DC understands this.
Trust the rushed outside experts?
When the SDEIS was released on December 7, 2013, Minnesota Environmental Partnership member groups quickly reviewed the document and determined, among other things, that the SDEIS was overly long, unnecessarily multifaceted, and not written by or for laypersons. Groups quickly determined that critical information wasn’t even in the document but in hard to obtain supporting documents.
During the course of the 90-day comment period, substantive issues with the Polymet SDEIS became apparent, each of which could have been addressed by a longer comment period. We learned that the water models in the document didn’t even match with current conditions on the ground, not to mention the mine area after it’s impacted. Researchers found that basic information on water balance, water chemistry, geological conditions of the mine site, and potential pollutants was missing.
Yes, 20,000 citizen comments have been submitted already. But the experts whom citizens are supposed to trust haven’t had enough time. A number of professional conservation organizations, despite having access to the preliminary documents and having extensive staff resources and contracted experts, will not be able to meet the deadline. Their detailed analysis has found flaws buried deeply in the SDEIS, and now there’s inadequate time to frame comments. These groups just need an additional 30 days to complete their comments. But the DNR has refused to extend the comment period.
The entire process has been inadequate. The public should not trust the result. And so, like the fruit of the poisoned tree, the Final Environmental Impact Statement will be inadequate. And an inadequate EIS means the project cannot continue to the next stage, environmental permitting.
“Twenty-first century education” is a phrase that gets thrown around a lot. It means different things to different people, but certainly education in the modern age must include needed updates to how we teach well-established disciplines as well as recognition of new disciplines.
Math education is one area ripe for an overhaul. Many otherwise successful graduates of the US public education system describe themselves as bad at math. There is evidence that the way we teach math undermines students’ likelihood of mastering the skills most important to their academic, professional, and personal life after high school.
This reflects a combination of what we teach, how we teach, and in what order we teach when it comes to math. Retooling math curriculum and instruction to be more playful and exploratory, more conceptual, more reflective of a growth mindset, and less focused on drill-and-kill could all, perhaps counterintuitively, help students master the math skills they do need.
If mathematics is one of the oldest disciplines in need of curricular overhaul, computer science is one of the newest. Often shoveled into math, science, or business standards, computer science deserves more attention as a discrete, multifaceted discipline. This means starting earlier, offering computer science classes at more (ideally all) schools, and developing more teachers who specialize in teaching computer science. There is great need for a true pedagogy of computer science that reflects the ways that students will use these skills in the future, including in conjunction with fast-growing fields like biotech.
All of this requires an approach to curriculum, instruction, and assessment that is different from more traditional techniques. Responsibility for this change is shared between schools of education, local school districts, and state policymakers. The more our schools, especially for students from under-resourced backgrounds, are driven by lockstep curriculum and disempowered teachers, the less able they are to take on the significant work of updating teaching for current needs.
Ultimately, this is about equity of access to a solid education. That equity of access -- especially in disciplines like computer science -- is a prerequisite for equity of outcomes. Of course, equity of access does not mean that this will look the same in every school in every district. It is important for schools to invite their communities to join them in defining what’s important and supporting the work of achieving those goals, and it is important that schools have the freedom and power to do so. Policymakers at the state and local level need to know what Minnesota communities want and need for students to thrive in this day and age.
In the next few days Minnesota has a real shot at achieving economic justice for working families. Representatives from the state House and Senate are negotiating on a compromise that should ensure that the minimum wage catches up and keeps up to the cost of living.
It appears there's agreement on raising the wage to $9.50; however, there is still debate around ensuring that the minimum wage keeps pace with inflation in future years. This is know as indexing.
Currently the House is calling for the wage to keep pace with inflation as measured by the Consumer Price Index (CPI), but not to exceed an annual growth of 2.5%.
Under that plan, we'd see a modest increase in the minimum wage, but because of the 2.5% cap, the cost of goods would still likely outpace the minimum wage over time.
If inflation over the next 10 years resembles inflation over the last decade, the minimum wage under the current proposal will grow by $1.93 per hour. However, the minimum wage would need to grow by $2.22 to keep pace with the projected growth in the cost of consumer purchases. The graph below shows the growth in the minimum wage over the last decade, assuming that a $9.50 minimum wage had been adopted in 2004 and indexed to inflation along the lines of what is proposed by the House; the graph also shows the growth in total consumer purchases, food, and housing over the same period.
Indexing is a fair compromise between the concerns of the business community over a rapidly escalating minimum wage and the need of working families to maintain the purchasing power of their wages in the face of inflation.
If Minnesota’s original $1.80 per hour minimum wage enacted in 1973 had been indexed to the CPI from 1973 to the 2013, today it would approximately equal the proposed minimum wage of $9.50.
If state policymakers had indexed the minimum wage in 1973, the purchasing power of minimum wage workers would not have eroded over time as it has done. Furthermore, the periodic legislative skirmishes over the minimum wage (such as the one we are now experiencing) could have been avoided and the level of the wage would have been more predictable and stable for businesses and workers alike.
2 Comments ->
Since MN2020 started focusing on dangerous rail shipments of North Dakota crude oil through Minnesota in mid-January, a lot of other people have taken notice. Among them are the railroads, which agreed under pressure from federal regulators to new safety measures such as slowing most oil trains through urban areas to 40 m.p.h., stepped-up track inspections and braking technology to avert pileups when trains derail.
That's a start, expected to be fully implemented by July. But, as the St. Cloud Times editorialized, "Spilling 5 million gallons of crude oil the past five years is bad enough for the environment. But when such spills also catch fire and cause deadly explosions, it's clear more must be done to protect everyone -- and everything -- living near these increasingly busy rail lines."
Like the Twin Cities, St. Cloud is seeing multiple 100-car unit trains of Bakken crude pass through every day of the year. Other Minnesota cities affected include Brainerd, Duluth, Elk River, Marshall, Red Wing, Willmar and Winona.
Recently, U.S. Energy Secretary Ernest Moniz said the nation's infrastructure is inadequate for the dramatic increase in domestic crude oil now being transported. "The Bakken shale has gone from close to nothing to a million barrels a day in a very short time," he told Capital New York. "What we probably need is more of a pipeline infrastructure and to diminish the need for rail transport over time."
That prescription is sure to meet opposition from the progressive wing, but it's clear that a lack of pipelines isn't slowing the pumping and combustion of fossil fuel linked to climate change. That's a much broader problem than can be solved by fiddling with the ways we transport fuel. It may be short-sighted in the long run, but massive spills, fires and explosions along rail lines are a more imminent challenge with better prospects for solution.
Fortunately, both the public and private sectors are confronting the challenge with new urgency. Federal regulators, who knew the risks of oil shipments by rail more than two years ago, recently levied fines totaling $93,000 against three oil companies accused of mislabeling crude shipments as less volatile than they really were.
The wrong information can hamper efforts by emergency responders to fight fires or spills. Spot inspections of 18 crude samples taken from Bakken tanks and pipelines that feed oil trains found 11 of them mislabeled. Chillingly, Canadian inspectors found that the crude oil train that exploded in Quebec, killing 47, was mislabeled as less flammable when it was loaded in North Dakota. That's "why it ignited so quickly," the inspectors said.
BNSF Railway, a major transporter of Bakken crude through Minnesota, is buying 5,000 stronger tank cars, an unusual step for the rail industry, which usually pulls tankers owned by oil interests. It's a small step toward replacing a national fleet of 78,000 old tank cars that are extremely vulnerable to crude spills and fires.
In Minnesota, Gov. Mark Dayton joined United Transportation Union officials in calling for tougher state oversight of oil shipments. One initiative could increase the number of state rail inspectors from the current one -- with responsibility for nearly 4,400 miles of track. Meanwhile, the UTU rail union accused the Canadian Pacific Railway, the other major oil shipper through Minnesota, of compromising safety by cutting jobs and costs as its profits soared fivefold in the fourth quarter.
The company denied the union's allegations and said it will cooperate with the governor on safety issues. CP should do more than that. So should the oil companies, government policymakers and everyone else involved in this risky business, before a real disaster close to home forces truly prompt action.
I'm wrapping up my coverage of the recent Minnesota Association of Alternative Programs (MAAP) conference in Duluth, and hope you enjoyed the series.
Many of the educators at the MAAP conference faced a shared dilemma: The vital work they do doesn’t always show up clearly on standardized tests. This raises an obvious question for policymakers and community members. If tests aren’t the right tool, what is?
One session focused on the use of multiple measurements in assessing alternative programs. “Multiple measurements” is a term that didn’t have a very precise meaning to begin with, but the way the presenters used it differed strongly from the way it’s used in the state’s Multiple Measurements Rating (MMR) system. Most of the MMR uses calculations based on a single measurement tool: standardized tests. The other measurement, at least for high schools, is graduation rate.
However, state tests aren’t particularly appropriate for programs working with students whose past school history means they’re unlikely to take the tests seriously. Even more inappropriate is using a conventional graduation rate measure for a school with an average entry age of 17 and which specializes in students who have already dropped out or at severe risk of doing so.
What, then, should we do? In part, we need to have a more flexible system that assesses schools on what they’re actually trying to do. For some programs, that means including not just achievement on state tests, but growth on other measurements, rates for dropouts and dropout recovery, and engagement measures like attendance improvement and student surveys.
Another session went even further. It suggested a process of schools working with communities to define the student outcomes that were most meaningful and agreeing on ways to assess those outcomes. It would be more difficult to compare schools and districts on these measurements, but schools would feel a much more immediate sense of accountability to their particular communities. This approach would also allow each community to make sure that its priorities are being addressed in school, whether those priorities can be put on a standardized test or not.
The schools at the MAAP conference represent some of the most clear-cut cases where the current accountability approach is a bad fit, but all schools can and should focus on skills beyond those on the state tests. We need to give more consideration to measurements and accountability that better reflect the needs of specific students and communities.
Low income and poor health go hand-in-hand. Working two to three jobs, many low-wage workers don't have the time to take care of their bodies. Wellness visits, a healthy diet, exercising and getting the proper amount of rest are luxuries they really can't afford. Most workers hardly have the time to spend with the families they work so hard to support.
One of the outstanding issues in current legislative negotiations over the minimum wage involves "indexing," which refers to the practice of annually adjusting the minimum wage so that it keeps pace with inflation. Without annual inflation indexing, the value of a $9.50 per hour minimum wage will erode over time as the purchasing power of the dollar declines.
This will not only be bad for low-wage workers who will see their real wages shrink from year to year, but will create periodic political pressure for another minimum wage increase in future years. Indexing the minimum wage to inflation is a common sense way to take politics out of future minimum wage discussions by linking growth in the wage to growth in the cost of items that families need to purchase.
The Consumer Price Index (CPI) measures changes in the price of the market basket of consumer goods and services purchased by the typical household. It makes sense to index Minnesota’s minimum wage based on growth in the CPI to ensure that the wage will keep pace with the cost of living in future years.
Indexing the minimum wage for inflation will also provide predictability and stability for businesses, as employers will have a reasonable idea as to what future wage costs will be, since growth in the minimum wage will be determined by the rate of CPI inflation and not by the vagaries of the legislative process.
Average annual growth in CPI inflation has been two percent for the last several years (2010-2013) and is expected to average less than two percent for the next four years (2014-2017) based on IHS Global Insight projections. Under House File (HF) 92, the state minimum wage would increase only modestly in 2016 and 2017 based on these CPI projections.
The hourly large employer minimum wage would increase by an estimated 15 cents and 17 cents respectively (less for small employers) during the first two years that the HF 92 inflation indexing would be in effect, based on estimates derived using IHS Global Insight CPI projections. Even if the rate of inflation were to increase in future years, HF 92 would cap the annual minimum wage increase to 2.5 percent.
Indexing the minimum wage will protect the earnings of low-wage workers from inflation, take the politics out the determination of the minimum wage in future years, and provide stability and predictability for Minnesota businesses. Minnesota should join eleven other states in adopting this common sense approach during the 2014 session.
Minnesota’s economy demands an increasingly educated workforce. By 2018, it’s estimated that 70 percent of Minnesota jobs will require some post-secondary education. In fact, Minnesota companies require a better-educated workforce than in any other state, and they report trouble with finding qualified applicants.
Workers, too, struggle in this job market. Those without a high-school or college degree are largely limited to shrinking job prospects and stagnant or declining wages. And we can’t ignore that the Twin Cities has one of the largest racial gaps in the nation when it comes to employment for people of color.
Given these realities, we should prioritize education for low-income workers. One way to do that is to update the Minnesota Family Investment Program (MFIP, or “welfare-to-work”) to ensure that the poorest families have better routes to self-sufficiency. Right now, just 63 percent of parents enrolled in MFIP have a high-school diploma or GED. Only 1.4 percent have a college degree. If low-income parents can’t improve their educational prospects, they face long odds for staying employed at a sustainable income level.
There are a few ways in which current MFIP guidelines limit a family’s educational prospects, and ultimately its self-sufficiency:
- Parents are allowed to pursue education, but those working towards English proficiency or a GED/diploma are usually limited to spending half of their required “work activity hours” on schooling. That means that they must spend the other half of those hours (10-15 per week) either working or looking for work. Asking a low-income parent (quite likely a single parent) to pursue school, employment, and parenting all at once slows their educational progress. The longer it takes for them to finish their education, the longer they’re stuck with low-wage jobs or no job at all.
- MFIP participants pursuing higher education are limited to two-year programs. Any four-year program doesn’t count as work activity, meaning that parents wanting to earn a bachelor’s degree would still have to complete 20-30 hours of work or job-searching each week on top of their schoolwork and parenting. Parents would also be denied childcare for the time that they spend in class since that class isn’t an approved work activity.
- MFIP participants often don’t realize that they have the option to go to school—it’s not usually encouraged or advertised. States are judged on how well their assistance programs help people find work. States do not get credit towards their “work participation rate” for people who take the time to get a degree (nor do they get credit for families whose earnings improve enough to leave MFIP altogether, but that’s a different story).
- Once an MFIP participant finishes their GED or postsecondary program, they are given six weeks to find a full-time job relevant to their education and career goals. After that, they are required to accept any reasonable full-time job offer, whether or not it puts their education to use and offers a path towards increased earnings. In today’s economy, six weeks is a tight timeline for any grad.
The Workforce Education Bill, which the Prosperity for All coalition hopes to pass in this legislative session, would address these barriers to education. The bill would:
- Give all MFIP participants the opportunity to pursue any level of education full-time. Parents would still be required to meet the 20-30 hour weekly “work activity” quota, but schoolwork could constitute any needed percentage of those hours. Many parents would likely still choose to work at least a few hours per week and won’t be penalized for doing so.
- Extend approved postsecondary studies to include four-year degree programs.
- Mandate that all MFIP participants are informed of their right to education.
- Give recent graduates twelve weeks to find a full-time job that meets their employment goals before requiring them to accept any full-time job.
These provisions are common-sense updates that reflect Minnesota’s changing economy. By giving our poorest families a hand up to better education and better jobs, we’ll create a more competitive, self-sufficient workforce for this generation and those to come.
Posted in Economic Development
2 Comments ->