What a wonderful Fourth of July holiday in the Twin Cities: great weather (no rain); great fireworks display in downtown Minneapolis; and the Twins beat the Angels 5-4 at Target Field. Whether you were also in the Twin Cities or somewhere else in ‘CCO territory, I hope you also had a wonderful holiday yesterday.
We’re halfway through the 2017 and six months into a new presidential administration. So how are things in Minnesota economically? I think the answer is this: pretty good. USA Today does an annual survey of state economies each Spring. As of March 2017, Minnesota’s economy and broader quality of life ranked quite high, like 3rd highest among the 50 states. Here is where you can learn more about the USA Today stats on Minnesota: https://www.usnews.com/news/best-states/articles/2017-03-02/minnesota-ranks-no-3-among-best-states. Some of the favorable stats are well known to locals: lower than (national) average unemployment at less than 4%; a higher rate of workforce participation in the economy at nearly 70% of all working-age adults; steady economic growth across a broad base of industries; lots of corporate headquarters; world-class public education (K-12 and university) and high rates of educated workers –nearly half the state’s 5.5 million residents have a 2-year university degree or more. Last Monday, the Dow Jones Industrial index hit a new record at 21,562. President Trump claimed credit for that achievement. And I think he gets to do that now as much as any US President can claim responsibility for the economy. Six months into his term, it’s now a “Trump economy” nationally. In our state, though, I think there are deeper trends that transcend any single president whether that be Trump, Obama or someone else. Our local economic success has more to do with long-term investments in innovation by our great firms, long-term investments in education and infrastructure by local and state governments, and long-term investments in young and old by great families from around the state. Way to go, Minnesota. Happy Fourth to you all.
Even with the holiday, there is local business news Construction in the Twin Cities (and in greater Minnesota) is booming…and creating a shortage of skilled craftsmen: electricians, plumbers, welders. Here’s where you can learn more about this “good problem” to have: http://www.startribune.com/worse-than-dating-twin-cities-builders-go-all-out-to-find-workers/432561123/. Home, apartment, commercial and municipal builders are raising pay and benefits to get more local craftsmen to come into the workforce or up their hours. They are even shipping in craftsmen from other states. So far, increase in the cost of building has been minimal, but building schedules are getting longer. Gray-collar workers like these are tougher to find in an booming economy because their training institutions are less evident. You don’t necessarily go to the University of Minnesota for craft training. Such training programs do exist in the state university system but they don’t scale up easily. One answer to the training gap involves the craft unions. They run their own training schemes and have incentives to increase membership (and the dues that come with larger membership). There’s a great opportunity here for partnership among prominent buildings in town like M.A. Mortenson to work with the International Brotherhood of Electrical Workers and the Minnesota State University system to create more training opportunities. Here’s an example of a training program in electrical maintenance and controls offered as a 2-year associates degree out of MnSCU’s Mesabi Range College: https://www.mnscu.edu/college-search/public/institution/programProfile?rcId=0411&progId=8239. Programs like these are likely to lead to win-win-win outcomes for contruction businesses, craftsmen, and training institutions.
Two other recent state business developments related to state public policy merit a comment, I think. One is the start of Sunday liquor sales in Minnesota. It took decades of debate in St. Paul but the recently completed legislative session finally ended the Sunday ban on liquor store (off-sale) business. Now it’s a business choice for stores large and small around the state. Here’s where you can learn a bit more about how consumers responded with the first Sunday opportunity three days ago: http://minnesota.cbslocal.com/2017/07/02/minnesota-sunday-liquor-sales/. Sales were brisk as this “Blue Law” vestige finally ended. There are still localities where on- and off-sale liquor sales are banned or limited, usually in response to some local interest in regulating business activity deemed questionable from a public health or moral perspective. That’s fine, as long as dissenting local residents have convenient alternatives. Now, they likely do. Let’s leave morals out of it. More consumer choice in any business context –liquor or otherwise– is more often welfare enhancing than detracting.
Here’s the other business development tied to public policy focuses on Minneapolis. Last Friday saw the city council pass an ordinance raising the minimum wage to $15/hour for local businesses. The vote made news in the UK: http://www.dailymail.co.uk/wires/ap/article-4655582/Minneapolis-council-approves-15-hour-minimum-wage.html. The ordinance is limited to private businesses and will be phased in over the next seven years. (With a little inflation in the next seven years, $15/hour just might be worth in real terms what prevailing market wages are worth today.) Economists and casual observers can and often do have strong views about setting and raising minimum wages. Maybe it enriches workers at the bottom of the labor market. Maybe it punishes smaller businesses trying to keep their wage bills down. Maybe both are at work along with other dynamics we understand only partially. Last week’s move by Minneapolis puts it in pretty rare company –Seattle is the only other mid-sized US city that has also passed a $15/hour minimum wage ordinance. We’ll get a good sense of its implications later this November when Minneapolis Mayor Betsy Hodges and the city council face the voters. Public policy matters for business, and in an election year, business and worker voters matter for public policy.
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