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
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Editor's Note: Below is a copy of my prepared testimony supporting the minimum wage. It was delivered Monday, March 3rd at a minimum wage conference committee hearing.
Madam Chair and members of the committee, my name is Steve Fletcher. I’m the Executive Director of Minnesota 2020 – a progressive think tank focused on policy solutions on issues that matter to Minnesotans. I’m honored to be able to offer my testimony today.
I’m also relieved that these hearings are finally here, after we’ve spent the months since the end of last session analyzing the minimum wage issue from nearly every possible angle to answer the questions that felt unresolved when that session ended. Our research staff, joined by our colleagues and friends at Jobs Now, Growth and Justice, and more have exhaustively considered the issue, and arrived at a strong consensus:
I’m happy to report to you that you have the opportunity, by raising the wage to at least $9.50, indexed to the consumer price index, to do something for our state that is unambiguously supported by research – a rare luxury in politics, and a strong call to action.
Over the last few hearings, I have heard this bill’s opponents distort reality to make their argument, providing numbers out of context that calculate only the costs to business of raising the wage without adjusting their estimates for any of the benefits. History and economics tell us that increasing consumer purchasing capacity is a strong way to kickstart our economy that will ultimately create more jobs – not less.
Raising the wage will put nearly half a billion dollars into the hands of people who will spend that money on basic goods and services, fueling demand and increasing business opportunities. None of the estimates of the costs presented by the naysayers factor in that increased spending capacity. Do not be frightened by numbers given to you out of context, and designed to demonstrate costs in isolation from benefits. It is statistical sleight of hand that cannot be supported by real world examples.
In particular, we’ve heard fear-mongering about indexing. We’ve been told that putting the wage on auto-pilot forced Washington and Oregon to raise the wage in a recession – as though that was a bad thing.
In truth, it’s widely accepted that growing income inequality (along with reckless, unrelegulated financial industry practice) was a key cause of the recession. There’s no reason to assume that Oregon and Washington suffered for having higher wages. In fact, there’s plenty of reason to believe that the recession would have been worse had consumer purchasing capacity been even lower. The fact is, these arguments are a great example of why we need to take politics out of the wage-setting process by indexing to CPI – so that fear-mongering won’t leave workers and employers wondering what next year’s legislature might have in store for them.
We’ve searched exhaustively, and can find no place where the wage was raised and the sky fell. Businesses do not abandon location criteria like infrastructure, educated workforce, access to roads and freeways, visibility, and pedestrian traffic in order to save a few bucks on payroll across the border. Back of the house kitchen staff are not paid better in states with tip penalties.
On the whole, increases in the minimum wage create jobs by kick-starting the economy. Raising the minimum wage to at least $9.50 benefits everyone, including the unemployed youth about whom the business lobby has recently grown so concerned. It’s time to act, boldly and decisively, to enact popular, research-supported legislation that will directly benefit hundreds of thousands of workers and indirectly benefit us all. Thank you in advance for helping workers catch up and keep up.
The far right and far left tend to agree on more issues than folks realize, but have very different ideas for how to resolve those issues. The recently enacted federal farm bill is one example.
Putting bitter disagreements over the SNAP program aside, when it comes to parts of the bill dealing directly with farming, both sides agree commodity crops are getting far too much federal support. Advocates on the far left would rather see programs that favor small-scale agriculture or some type of means test, some on the far right would rather see no programs at all.
Historically, Congress has chosen commodity support programs to avoid making the farm bill farm welfare on the theory that sound food and fiber policies are in the general public's interest.
While the nature and scale of farming have changed over the generations, federal farm policy has been slow to follow. Certainly there are shortcomings in how we support getting fresh fruits and vegetables to American tables, but funding micro farmers and small-scale growers is too inefficient to produce the bounty needed to feed the nation. Many say this is just a subsidy for peasant farming.
Our current large scale farming contains a mixed bag production practices with some farmers "mining" the land and water resources while others consciensously employ what agronomists and other scientists define as "best practices" to mitigate harm to land, water and air. Minnesota agriculture isn't an exception. Both the farm bill's commodity programs and the large farmers' scale help them avoid the boom and bust cycles of previous generations.
So what's the balance to make farming sustainable from an economic, environmental and food security stand point?
This farm bill got us closer and farther from this balance. You can read the overview from Kent Olson, an economist with the University of Minnesota Extension Service and a leading expert on farm finances, for more on some of the bill's details.
Minnesota’s two U.S. senators and at least two members of the U.S. House of Representatives worked tirelessly on this farm bill. While some might criticize the final outcome, it's important to remember there are a number of competitive interests in this type of legislation. At the end of the day, one of the main goals is to ensure a stable and affordable food supply, and that's what this farm bill does.
Can we reframe education conversations, in Minnesota and beyond, by talking about students’ achievements, rather than student achievement?
That is one vital question I took away from a recent visit, by Alfie Kohn—an author and lecturer on human behavior, education, and parenting—to Macalester College.
Kohn always packs a punch, and this visit was no exception. When speaking about the six most “fatal flaws” of education policies such as No Child Left Behind (NCLB) and the Obama administration’s Race to the Top, Kohn zeroed in on what he thinks are the policies’ “dark undertones.”
These policies’ persistence for example, in creating schools where everything hinges on “student achievement,” as measured by standardized test scores, guarantees that a certain number of students will fail, and that “there will always be losers.” Kohn reinforced the increasingly obvious point that the students who tend to fail under this system come from the vocational track, or low-income families. Often, they are also students of color, as well as Special Education students, and students whose first language is not English. They are students who, for whatever reason, are least acclimated to the dominant culture’s value system and methods of constructing and measuring knowledge.
In Kohn’s view, this system then guarantees that white, affluent, English speakers are always ahead of the game, and it is their version of success that sets the standard for everyone else. Kohn even went so far as to say that the current standardized education system we offer students amounts to “educational ethnic cleansing in America.”
Pushing all students to get higher scores on standardized tests, Kohn said, “measure[s] what matters the least” in education, such as rote memorization and test-taking skills.
Instead, Kohn asked those in the packed room to think about paying attention to “students’ achievements.” For Kohn, real achievement and deep thinking come from interdisciplinary, project-based learning, and is far more likely to produce meaningful, life-long growth for students. It is important, Kohn said, to call attention to the “unethical” ranking of schools according to test scores in order to create an authentic culture of learning.
In a world where it is often true, as Kohn aptly put it, that “the rich get richer, and the poor get worksheets,” it would behoove those who create, implement, or uphold education policy to consider this gem from Kohn: “Of all the chasms that separate one world from another, none is greater than the gap between the people who make policy and the people who suffer the consequences.”
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What fun for transit-bashing conservatives when a Green Line light-rail train on a test run in St. Paul ran off snow-clogged tracks last Wednesday shortly after President Obama, a few blocks away, extolled the line, which is set to launch passenger service in June.
According to the Pioneer Press: "President Obama comes to Minnesota, touts how great light rail is, and train goes off the tracks hours later," wrote a self-described Minneapolis conservative who goes by the Twitter handle Eye on Politics. "Can't make it up. ... Barack Obama's magic touch!"
All of this, of course, is utter baloney. The mishap, which caused no injuries or travel delays, occurred during testing designed to iron out problems like this before anyone gets on board. Indeed, in 10 years of Metro Transit Hiawatha light-rail service, such a derailment has happened exactly once.
Obama could be chided for saying that an auto trip between the Twin Cities downtowns might take two hours in a big snowstorm. I doubt it, but correct me if you've ever put up with that. Still, light rail offers a big advantage when the roads are slick, as they were on the last weekend of February.
"Across Minnesota, the State Patrol had responded to 964 crashes, more than 2,300 vehicles off the road, 1,082 stalled vehicles, 74 jackknifed semitrailer trucks and 4,414 calls for service from Thursday through Saturday afternoon," the Star Tribune reported.
Far be it from me to gloat over the misfortunes of thousands of my fellow drivers. But let's get real when it comes to rail transit's safety, reliability and efficiency compared with its sometimes dicey chief alternative, private motoring.
Not all of the results of the recent Saint Paul Public Schools negotiations will show up in the teachers’ contract. Some of the proposals, identified by both the community and the teachers’ union as priorities, will receive action from the school board without being written into the contract. (Full disclosure: I was part of the union’s community engagement process, taking notes and doing follow-up research for community discussion groups.)
Whole Child Supports
Beyond the new contract’s tighter class size language, the district will hire at least 42 full-time positions’ worth of staff in critical roles, including nurses, media specialists, school social workers, and counselors. This reflected a joint priority of families, community leaders, and union members, who spoke passionately and frequently about the importance of these roles in keeping children safe and healthy, not just physically, but mentally and emotionally as well. According to the districts’ summary, “Staffing guidelines will be incorporated into a board resolution on staffing supports to be adopted by the SPPS Board of Education on March 18.”
Another popular, shared priority was increasing access to early childhood learning opportunities. The district operates a popular pre-K program, and has committed outside of the contract to spending at least $6 million a year on it. This should help reduce the waiting list for the program, benefiting hundreds more students every year. Much of the additional investment was made possible by the state’s new funding of all-day kindergarten, freeing up district funds that had been set aside for all-day-K.
Again, it is important to note that these agreements reflect areas of community and teacher interest well outside the conventional boundaries of wages, benefits, and conditions of employment. Even though these particular pieces were not written into the contract, the progress that has been made on these issues should be seen as a result of the recent negotiations process. These outcomes demonstrate the power of proactive, inclusive union engagement with communities, and they also reflect the deep interest families, community leaders, and teachers have in working together to make schools better.
The state budget situation in the current biennium improved to the tune of $408 million according to the February 2014 forecast released today. The forecast includes projections of state revenues and expenditures for the current FY 2014-15 biennium, with “planning estimates” for the FY 2016-17 biennium. The new forecast will provide the backdrop for tax and budget discussions during the remainder of the 2014 legislative session.
The $408 million improvement is sufficient to boost the projected FY 2014-15 surplus from $825 million—as projected in the November 2013 forecast—to $1.233 billion. The improvement amounts to 0.9 percent of the total state general fund—a significant but not huge change from the preceding forecast. As has been the trend in recent forecasts, the improvement in state finances was driven by an increase in projected state revenues, with individual income tax collections up $188 million, sales taxes up $167 million, corporate taxes up $38 million, and all other revenues down $27 million relative to the November forecast, for a total net revenue change of $366 million. The balance of the budget improvement consists primarily of a modest 0.1 percent reduction in projected state spending.
The improvement in state finances is driven by improvements in the state and national economies. On the national level, projected GDP and employment each improved relative to the November 2013 forecast, as did household balance sheets. Increased stability in the federal budget situation resulting from the recently passed federal budget and the agreement to avoid another debt ceiling crisis helped to boost business and consumer confidence. A recent string of disappointing job, housing, and manufacturing reports indicates that 2014 is off to a slow start, but this is believed to be the temporary effects of extreme winter weather conditions that have blasted many parts of the nation. (Damn polar vortexes!)
In the official state forecast document, Minnesota Management & Budget (MMB) notes that Minnesota’s performance is expected to be particularly strong:
Minnesota’s economy continues to make solid gains. The Bureau of Economic Analysis (BEA) reports the state’s real GDP rose 3.5 percent in 2012, ranking among the six fastest-growing state economies during that year, and most labor market indicators suggest that trend continued in 2013. Minnesota’s unemployment rate ended the year at 4.6 percent, the lowest level since just before the recession began in December 2007 and a full two percentage points less than the nation.
The official projected surplus for the FY 2016-17 biennium has increased from $2.2 billion in the November 2013 forecast to $2.6 billion in the new November forecast. However, the official surplus is based on the dubious practice of counting inflation on the revenue side of the state budget, but largely ignoring it on the expenditure side. This approach—which is required in statute—has the effect of reducing the level of expenditures relative to revenues and overstating the size of the state surplus (or understating the size of deficits). After fully adjusting both revenues and expenditures for inflation, MMB projects that the surplus will be $1.5 billion—41 percent less than the official surplus.
Minnesota 2020 has argued that the official state forecast should be changed so as to fully recognize the impact of inflation on both revenues and expenditures.
The surplus in the February forecast should enable state policymakers to enact federal conformity items (excluding estate tax conformity; as noted in a recent Hindsight post, federal estate tax breaks have been overly generous and increase tax regressivity) and eliminate the business-to-business sales taxes enacted during the 2013 session. The legislature should refrain from cutting any other taxes and put the remainder the projected FY 2014-15 surplus in the budget reserve, which will add stability to state finances and help cushion the state budget against future unanticipated developments.
Click here for links to official February forecast documents from MMB.
According to a press release from Minnesota Management & Budget Commissioner Jim Schowalter, today’s February forecast will reveal a $408 million improvement in state finances for the current biennium, bolstering the projected budget surplus to $1.2 billion for FY 2014-15. Approximately 90 percent of the projected $408 million improvement is due to an increase in projected state revenue collections, while the remainder is due to a decline in projected spending. The structural budget balance projected for the upcoming FY 2016-17 biennium is now projected to be $2.6 billion.
The February forecast will set the parameters for fiscal deliberations during the remainder of the 2014 legislative session and will provide policymakers with an opportunity to adopt federal conformity initiatives and still beef up the state budget reserve, as recommended by the bi-partisan Minnesota Budget Trends Study Commission. Full forecast details will be released later this morning. Hindsight with post a more in depth analysis of the forecast this afternoon.
Posted in Fiscal Policy