Legislative negotiators have agreed to raise Minnesota’s minimum wage to $9.50 per hour, but remain at an impasse over the subject of indexing the wage in future years so that it keeps pace with the cost of living. Yesterday’s Minnesota 2020 article contended that the principle arguments in opposition to indexing were baseless. To further bolster the case for indexing, new projections indicate that growth in an indexed minimum wage will be modest.
First, some background. Under House File (HF) 92 (fourth engrossment), the $9.50 minimum wage would be adjusted in future years for increases in the cost of living as measured by the Consumer Price Index (CPI), not to exceed 2.5% annually. This is the legislation preferred by minimum wage advocates.
A recent Hindsight post noted that “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, newly available CPI projections indicate that the annual rate of CPI growth over the next several years is expected to be less than it was over the last decade. As a result, the minimum wage under HF 92 is projected to grow from $9.50 in 2016 to $11.07 in 2024—an increase of just $1.57 over eight years. (This assumes that that all implementation dates currently in HF 92 would be delayed by one year, as discussed by legislative negotiators.)
Of course, these minimum wage estimates are based on CPI projections which could overstate or understate the level of inflation over the next several years. Let’s assume a worst case scenario, in which the CPI grows by ten percent every year for the foreseeable future. Even under these conditions, the minimum wage under HF 92 would grow by just $2.08 from 2016 to 2024 because of the annual 2.5 percent cap in minimum wage growth. Under this scenario, 80 percent of the effects of inflation would be borne low-wage workers in the form of declining minimum wage purchasing power, while only 20 percent would be borne by employers.
Based on the best CPI projections currently available, the impact of the indexing in HF 92 is modest, resulting in an average minimum wage increase of less than 20 cents per year from 2016 to 2024. Even if inflation turns out to be much higher than expected, most of the impact will be borne by low-wage workers, not businesses. By virtue of the 2.5 percent cap, the minimum wage indexing in HF 92 is already accommodating any legitimate business concerns. For the sake of the financial security of Minnesota’s most vulnerable workers, the indexing in HF 92 should not be further watered-down or compromised away.
Considering the relatively slow pace of change in many things education-related, the recently announced SAT revamp is practically whiplash-inducing. After all, the test reinvented itself in 2005, adding a writing section and dropping some question types. So what’s up with the new version?
1) With Writing Optional, Welcome Back 1600!
The writing section on the SAT never really took off. Many college admissions offices ignored it. Length mattered much more than quality. People who took the pre-essay test resented the fact that the new 2400 point scale made their old scores look less impressive. Now the writing section will be optional, so the 1600 days are here again. (Also, I wouldn’t bet on many students opting into future essay sections.)
2) Good Bye Surfeit of Inscrutability, Hello Sensible Vocabulary
Another significant change is the decision to forsake the interminable, vexatious lists of arcane, even odious, vocabulary words. Instead, the new-new SAT will emphasize terms more useful for academic and professional life. This is another good change.
3) The Business Case: The 2005 “New SAT” was New Coke
Ultimately, the College Board’s decision was probably about dollars and sense. The SAT has lost market share to the ACT for years, and was surpassed a couple of years ago. Part of this was a quality problem, and the “New SAT” turned out to be the standardized test equivalent of New Coke. However, it’s also because the ACT has been much more successful at getting states like Michigan, Colorado, and Illinois to adopt it for statewide usage. I would expect to see the SAT -- currently given statewide only in Delaware, Idaho, and Maine -- to push for similar arrangements in more states.
4) The Common Core SAT
I’ve only seen a brief nod to this in other coverage, but it’s worth remembering that current College Board president David Coleman was a key architect of the Common Core State Standards. Some of the new redesign, such as the move to online testing and the push to incorporate more founding documents from US history, clearly channel some Common Core characteristics. Also, a more explicit alignment of the SAT with the Common Core would be good for business.
5) Zooming Out: Can the SAT Be Made Useful?
Ultimately, the big question facing the SAT is, “Will this help?” Recent studies support the notion that the SAT just isn’t that good at predicting student performance in college. It’s also unclear what, if anything, the College Board will do to address concerns about cultural bias or the fact that family income continues to be a great predictor of SAT scores, with the benefits extending well above the middle class.
I’ve written before on the importance and cost-effectiveness of bonding for housing this legislative session. Today I’d like to highlight two important ways in which bonding for affordable housing needs can protect public investments we've already made. (Unless otherwise noted, all of the data shared here was provided by Homes for All.)
The first investment is the more obvious one: public housing. 124 local housing authorities own and operate rental housing for 36,000 low-income Minnesotans. More than 90 percent of these buildings are over 20 years old; half are over 35 years old. Many are long overdue for upgrades to elevators, HVAC systems, roofs, and the like. These repairs protect the health and safety of residents (many of whom are elderly and/or disabled) and improve energy efficiency.
Unfortunately, the maintenance backlog is pretty significant; the Minnesota Housing Partnership estimates a backlog $300 million in essential repairs, many of which will become more expensive the longer they’re put off. Even worse, federal funding for public housing has been cut by 25 percent since 2010, so agencies aren’t going to catch up on maintenance without state help. Bonds could help agencies offset this drastic loss and minimize cuts to resident services and rental vouchers while still keeping their buildings in functioning order. By keeping our public assets in good condition, we ensure that they can serve a public purpose for decades to come.
Bonding also protects public investment in rental assistance. Through a program known as Project-based Section 8, renters live in buildings owned by nonprofits or private companies, but receive subsidized rent. Renters pay 30 percent of their income towards their rent and the federal government fills in the rest. Unfortunately, these rents are often insufficient to cover major capital improvements to the buildings. If property owners can’t afford the maintenance they need, they may choose to opt out of the program once their federal contract is up and turn their buildings into private market-rate rentals. In the next five years, an estimated 30 percent of Minnesota’s contracts will come up for renewal, affecting 9,300 units.
The good news is that bonds can be made available to help these nonprofit and private property owners keep their buildings safe, decent, and up-to-code. While most renovation projects also leverage significant private funds, bonding money helps fill in funding gap. Every bonding dollar the state spends to help preserve these properties also secures $4 in future federal rent assistance.
Bonding offers an important opportunity for us to preserve the investments we’ve already made, while keeping low-income Minnesotans in safe, stable homes. This is our chance to continue moving forward to end homelessness. If we don’t act, we risk losing ground.
On Thursday, the Minnesota House of Representatives passed a tax bill that—among other things—repealed three business-to-business (B2B) sales taxes enacted during the 2013 session. During the floor debate on the bill, a repeated theme from conservative legislators was “we told you so.”
In fairness, it should be noted that anti-tax legislators did indeed warn against imposing the three new B2B sales taxes. For that matter, so did Minnesota 2020. In article published during the 2013 session, we noted that “While economists generally favor expanding the sales tax to consumer services, they are reticent about expanding the tax to B2B transactions. By applying a sales tax to each business transaction, the tax load 'pyramids' or accumulates with each transaction.”
However, legislative conservatives did not just oppose the B2B sales taxes, but virtually every tax increase in the 2013 tax act. They opposed the income tax increase, which significantly increased the fairness of Minnesota’s tax system by requiring the top two percent of Minnesota households to pay taxes at a rate closer (but still less than) what other Minnesotans were paying. They opposed the increase in the cigarette tax to $2.83 per pack, even those this increase will save lives, discourage cigarette usage among price-sensitive teens, and partially defray the massive societal costs associated with cigarette smoking. They opposed the closing of unproductive corporate loopholes that was costing the state millions in foregone revenue while doing virtually nothing to stimulate economic growth.
They opposed these and virtually all other tax increases not only in 2013, but over the course of the preceding decade, even though real per capita state general fund revenue and spending had declined by double digits, resulting in a 15.9 percent cut in real per pupil state operating aid to Minnesota school districts, soaring tuition at public colleges and universities, large cuts in aid to local governments resulting in steadily rising property taxes and local budget cuts, decreased funding for transportation infrastructure, perennial neglect of important public priorities such as all-day kindergarten and early childhood education, and a cycle of debilitating budget deficits that ultimately resulted in a state credit rating downgrade.
Like the boy who cried “wolf,” conservatives both nationally and in Minnesota clamored against virtually every proposed tax increase for over a decade, claiming that the sky would fall if any were enacted, even though the informed consensus was that tax hikes should play at least some role in addressing national and state budget problems. During the 2013 session, they continued to rail against all proposed tax hikes—good and bad alike. When you consistently and reflexively oppose any and all tax increases—regardless of their merit—your credibility on any one tax increase becomes justifiably suspect.
It's a reflection of our autocentric culture, I guess, that two of the seven hoary state statutes Gov. Mark Dayton highlighted for repeal in his proposed legislative "un-session" pertain to private motoring.
One of the laws on the chopping block regulates the size and color of automotive bug deflectors, another has prohibited driving in neutral since 1937. Some claim the latter is impossible anyway. Maybe it is in most of flatland Minnesota, but I've often coasted down a mountain on I-24 in eastern Tennessee, where I hope it's not illegal. Whatever, let's get the gummint off our backs as we enjoy bug-free, gearless motoring in Minnesota.
Another old law requires licensing of elevator operators (another kind of transportation). According to the governor, there are two of them left in Minnesota (where?), and they should be set free from regulatory clutches as well.
Dayton says these are just a few examples of the more than 1,000 "obsolete, redundant or incomprehensible statutes" he's targeted for extinction. The entire list must be somewhere, but I'm not looking it up, and I doubt that many legislators will, either. When the bill passes, it will be one of those sight-unseen pieces of legislation our elected representatives are so infamous for, but in this case no one will complain.
This is mostly harmless fun for bloggers like me and other journalists, not to mention a boost for the guv's regular-guy cred. But I worry that it reinforces public contempt for our government -- which, of course, is self-government and, as Churchill is supposed to have said, the worst form ever invented except for all the others that have been tried.
On the other hand, if all these old laws weren't being enforced anyway, they belong in a responsive state's dustbin of history. Still, let's not confuse this sideshow with government's ongoing duty to attend to what really matters: education, health care, economic development and transportation.
Last year, as part of the energy Omnibus Energy Bill, Xcel Energy was mandated to establish a community solar program. Less than a year later, and before the rules of the program have been finalized, the first community solar project in Xcel's service territory sold out.
The 39 kilowatt array, using panels manufactured by local solar company TenKsolar, is slated to be built on top of the Northern Sun Merchandising building in South Minneapolis later this year. Though this project has just 25 subscribers and similar installations, in all likelihood, will represent a small part of Minnesota’s electricity generation, the model could have major implications on the energy market.
For one, the community solar projects model solves the split-incentives market failure that limits individuals’ ability and incentive to make proactive decisions related to energy. Also known as the “landlord-tenant problem,” split incentives is most often illustrated by apartment dwellers who pay the electricity bills but whose appliances and electricity using devices are supplied by the landlord. The landlord has no incentive to purchase energy efficient devices; tenants have no incentive to invest in energy efficient devices as they will not realize the potential payback and savings should they move in the near future.
A similar dilemma applies to homeowners and commercial property owners as well. Renewable energy technology, such as rooftop solar, often has longer payback periods. If the owner moves, the panels stay and the savings are passed on to the next owner at the expense of the original investor. Property assessed clean energy (PACE) programs that finance clean energy through property taxes address this issue, but only for some property owners.
Community solar opens up the market to renters, property owners in multiple family housing buildings, and those with property unsuitable for solar as the installation is located off-site and the investment follows individuals as they move, so long as they remain within the same utility service territory.
Additionally, community solar allows for greater individual choice and hence, allows for consumer preferences to be better reflected in the energy market. Typically, utilities and public utilities commissions (PUCs) determine where and how electricity is generated, weighing the costs and benefits (generally capacity, compatibility with the system, cost and more recently, environmental and public health considerations) of different energy generation and infrastructure.
As a result, consumers are limited to choosing how much electricity they use with little influence on how it’s generated. Community solar gives those interested a chance to change this, allowing individuals to purchase a share of a project’s generation capacity—up to 120 percent of their average electricity consumed—and represent their demand for specific energy technology in the market.
In other words, though these projects are small, they have a big impact on how individuals - like the 25 subscribers of the Northern Sun Merchandising building project - interact with and are represented in the energy market.
Students must feel safe if they are to learn well. That’s easy enough to say and to agree with. Making it happen is an entirely different matter.
The Minnesota legislature is now hosting another round of debate on a bill aimed at reducing bullying. In addition to language on cyberbullying and many other topics, the bill contains a lengthy list of characteristics about which students cannot be bullied. Perhaps the most controversial of these at present are sexual orientation and gender identity, but the list also includes race, disability, physical appearance, and religion, to name just a few of many.
This language is significant because it confronts local policies, like the now-abolished “neutrality policy” in the Anoka-Hennepin district, that prohibit educators from addressing matters related to sexual orientation and gender identity. In other words, these policies can be seen as tying educators’ hands when responding to anti-LGBT bullying. I discussed some of the fight to change that sort of policy in Anoka-Hennepin in my recent report, “Local Lessons: Five Case Studies in Community-Driven Education Reform.”
One of the key lessons from that struggle was that, whatever the official policy of the state, it will still be important for community leaders at schools across Minnesota to stand up for students hurt by all kinds of bullying, including bullying with anti-LGBT characteristics. The stakes are high, which the Anoka-Hennepin example again demonstrates. The local efforts there started in part in response to several student suicides brought about, at least in part, by bullying. In addition to that worst-case scenario, bullying also makes it tougher for students to stay focused on actually learning, which should matter the most in school.
Another portion of the anti-bullying bill that is of interest is the requirement that state and local policies “emphasize remedial responses over punitive measures” in responding to bullying. This gets at another aspect of student discipline, and will hopefully lay the groundwork for wider adoption of a restorative justice framework rather than the more common “law enforcement in miniature” approach.
One final piece of language that stuck out to me was the importance of policies that include preventive measures to deter bullying rather than strictly reactive approaches. Bullying is often a symptom of other underlying causes, and a real reduction in bullying will come from emphasizing prevention as well as enforcement.
We can and should work from many angles to promote safer schools for all students.
Please join us tomorrow (8 - 9:30 am) for a Tuesday Talk conversation about this issue.
Minnesotans save, maybe, a hair more money for retirement than other Americans. But, like every other American, Minnesotans aren’t remotely saving enough to provide for their secure post-work, retirement life. Savings correlate with household income; the more money you earn, the greater the likelihood of adequate retirement savings. Since 72% of Minnesota households earn less than $100,000 annually, retirement savings for most people aren’t coming remotely close enough to meet the projected need.
The solution is simple: save more money. But, turning that simple idea into practice is enormously complicated because saving money for tomorrow always competes with money needed for today. For most Minnesotans living a paycheck or two or three from financial insolvency, today’s bills trump long-term savings.
That has to change.
The Minnesota State Legislature is considering HF2419, the Minnesota Secure Choice Retirement Savings Plan. Sponsored by State Representative Patty Fritz, (D-Faribault). The legislation would create a paycheck-point-of-contribution, state-managed retirement savings plan for Minnesotans that presently have no access to pension plans or workplace retirement savings benefits. An estimated 40% of workers, approximately one million Minnesotans, lack that access. Today, 168,000 Minnesotans age 55-64, have no retirement savings. The need for better, purposeful retirement saving is clear.
This is not a new idea. California is working out the bugs on its new system. It requires employers to allow workers to use their workplace payroll system to directly deposit money into a California-managed savings account while functionally paying no fees or very low fees. Employers are not required to match worker retirement savings contributions.
This is smart public policy. California has every interest in increasing its citizens’ retirement security while decreasing costly public social safety net reliance. It’s called “providing for the common good” and it will leverage millions of small retirement savings investments that benefit the savers rather than big money fund managers.
Retirement savings are best achieved purposefully, drawn from a working life’s worth of contributions. Current savings data tell us how far we’ve come; retirement need projections reveal savings shortcomings. Both make the case for bold action creating a simple but effective retirement savings mechanism laid out in the Minnesota Secure Choice Retirement Savings Plan. The idea is the easy part. Everyone, without exception, agrees that Minnesotans need to save more for retirement. Now, Minnesota policymakers must turn a simple idea into a simple, effective plan.
Here, you'll find our weekly round-up of links from the Minnesota 2020 staff and writers. Enjoy and have a great weekend!
Leading for a Greater Minnesota (Organizing Apprenticeship Project) -- On Wednesday, Organizing Apprenticeship Project led a rally for equity at the capitol, presenting the legislature with an inspiring vision for what they might do if they made racial justice the framework for decision making.
The Dalai Lama’s Ski Trip: What I learned in the slush with His Holiness. (Slate) -- This is just a fun and uplifting read!
From Grid Waste to Good Taste (Ensia) -- Environmental scientist and writer Justin Lichter offers an exciting prospect in the U's Ensia online mag for turning power grid electrical waste into a green house farming resource, and the potential is great.
Hennepin County among best in nation at closing housing-affordability gap (MinnPost) -- "Good news" is always a bit of a stretch in housing equity, but Hennepin County's progress at increasing its stock of affordable housing relative to the number of families in need is, indeed, good. With that said, it's nowhere near enough; there are only 42 affordable units for every 100 families in the greatest need, the fifth best ratio in the country.
Day 2: A World Class Transportation System (Strong Towns) -- I've long admired Minnesota conservative Charles Marohn's deep critiques of post-WWII U.S. transportation and development policies. This week his Strong Towns blog is featuring a five-part series conceived mainly as a response to the MOVE MN transportation funding campaign. He doesn't like it; we think it has some merit. That said, his second installment offers great insight about the inherent weakness of our system of paying for roads and bridges.
Energy Sec. Predicts 30-40 Pct. Renewable Energy By 2030 (Here & Now) -- Cool interview with Secretary Moniz about the future of energy, particularly nuclear and renewables.
A Letter From Ray Jasper, Who Is About to Be Executed (Gawker) -- An amazing article on race, the prison industrial complex and death row from the graceful perspective of an inmate on death row.
The Indian sanitary pad revolutionary (BBC) -- The cost of sanitary napkins is prohibitive for many rural women in India, leading to menstrual practices that are not always effective or hygienic. This article tells the story of an Indian man who overcame many obstacles to invent a machine that makes affordable sanitary pads. The machines have now spread across rural India, and may soon expand to more countries.
If you've ever doubted the critical importance of transportation to the broad economy, consider the havoc being wrought on many other enterprises at least partly by the sudden glut of crude oil shipments by rail from North Dakota's booming Bakken Formation.
We've already focused on the dangers of deadly explosions and fires and the disruption to Amtrak passenger train schedules posed by these rolling pipelines. Now reports are filtering in of other commodities and commuters being shoved off the tracks to make way for a virtual river of black gold. Railroads say bad winter weather is causing the problems, but frustrated shippers of Canadian oats and Minnesota sugar say their products are being sidetracked because moving the oil is more lucrative.
The oats controversy, reported in the Wall Street Journal, tickled the fancy of Minnesota media outlets because of a threat to Twin Cities-based General Mills' production of Cheerios. Despite a bumper crop of the hearty grain on the Canadian prairies, its U.S. futures contracts soared 42 percent beginning Jan. 1 because of the shipping backlog.
In classical economic terms, no matter how great the supply, if it can't reach its markets it does nothing to ease demand or prices. At the grocery store, expect prices of cereal, cookies and granola bars to rise 1.5 percent, the Journal warned.
In late January, the Associated Press reported that rail shipping delays forced American Crystal Sugar to cut production at a plant in East Grand Forks, Minn., and two in North Dakota. The plants were running out of space to store their sweetness.
Meanwhile, Metro Transit's Northstar commuter rail service from Big Lake to Minneapolis saw its stellar 96 percent on-time record shredded by freight train congestion beginning in January. One scheduled morning run on the tracks it leases from BNSF Railway was scratched recently, the four others delayed up to two hours. "Commuters could wait for their trains or board replacement buses," the Star Tribune reported.
Again, the railroad blamed the weather. But, as American Crystal CEO Dave Berg noted, "winter weather is not a new phenomenon" in these parts.
What is new is dozens of 100-tanker car unit trains carrying crude oil through Minnesota every week, gumming up the works. We don't have to suffer a blazing train wreck catastrophe to feel adverse effects. But as long as our economy keeps running on oil, we'll be beholden to it in surprising ways that will keep emerging.
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