Along with a lot of my social media friends, I spent a good deal of this evening reading and thinking about an article in The Atlantic titled The Miracle of Minneapolis, about how the 14th-largest metropolitan area in the United States had accomplished what so few American cities have been able to… which is to grow significantly more prosperous, while, at the same time, keeping housing affordable, and creating opportunities for the poor to enter the middle class. The only other financially successful cities that are even close when it comes to social mobility and housing affordability are, according to the article, Salt Lake City and Pittsburgh, and Minneapolis has out-performed them both on a number of critical metrics. Here, with more on that, is a clip from The Atlantic.
…Only three large metros where at least half the homes are within reach for young middle-class families also finish in the top 10 in the Harvard-Berkeley mobility study: Salt Lake City, Pittsburgh, and Minneapolis–St. Paul. The last is particularly remarkable. The Minneapolis–St. Paul metro area is richer by median household income than Pittsburgh or Salt Lake City (or New York, or Chicago, or Los Angeles). Among residents under 35, the Twin Cities place in the top 10 for highest college-graduation rate, highest median earnings, and lowest poverty rate, according to the most recent census figures. And yet, according to the Center for Housing Policy, low-income families can rent a home and commute to work more affordably in Minneapolis–St. Paul than in all but one other major metro area (Washington, D.C.). Perhaps most impressive, the Twin Cities have the highest employment rate for 18-to-34-year-olds in the country…
Well, while reading this, I received a message from a friend who had just finished it, suggesting that, in part, “the Minneapolis miracle” might be attributable to the bold leadership of Minnesota Governor Mark Dayton, who took office in January of 2011, inheriting a $6.2 billion budget deficit and a 7% unemployment rate from his anti-tax Republican predecessor, only to turn things around in dramatic fashion. Dayton, instead of doubling down on tax breaks for the wealthy, like we did here in Michigan under Rick Snyder, who took office at roughly the same time, raised taxes on the wealthy, increased the minimum wage, and invested more heavily in public education. And these efforts, despite warnings from conservatives, have begun paying dividends. The following clip is from a recent article in the Huffington Post.
…During his first four years in office, Gov. Dayton raised the state income tax from 7.85 to 9.85 percent on individuals earning over $150,000, and on couples earning over $250,000 when filing jointly — a tax increase of $2.1 billion. He’s also agreed to raise Minnesota’s minimum wage to $9.50 an hour by 2018, and passed a state law guaranteeing equal pay for women. Republicans like state representative Mark Uglem warned against Gov. Dayton’s tax increases, saying, “The job creators, the big corporations, the small corporations, they will leave. It’s all dollars and sense to them.” The conservative friend or family member you shared this article with would probably say the same if their governor tried something like this. But like Uglem, they would be proven wrong.
Between 2011 and 2015, Gov. Dayton added 172,000 new jobs to Minnesota’s economy — that’s 165,800 more jobs in Dayton’s first term than Pawlenty added in both of his terms combined. Even though Minnesota’s top income tax rate is the fourth highest in the country, it has the fifth lowest unemployment rate in the country at 3.6 percent. According to 2012-2013 U.S. census figures, Minnesotans had a median income that was $10,000 larger than the U.S. average, and their median income is still $8,000 more than the U.S. average today.
By late 2013, Minnesota’s private sector job growth exceeded pre-recession levels, and the state’s economy was the fifth fastest-growing in the United States. Forbes even ranked Minnesota the ninth best state for business (Scott Walker’s “Open For Business” Wisconsin came in at a distant #32 on the same list). Despite the fearmongering over businesses fleeing from Dayton’s tax cuts, 6,230 more Minnesotans filed in the top income tax bracket in 2013, just one year after Dayton’s tax increases went through. As of January 2015, Minnesota has a $1 billion budget surplus, and Gov. Dayton has pledged to reinvest more than one third of that money into public schools. And according to Gallup, Minnesota’s economic confidence is higher than any other state…
I don’t know how good of an analogy it is, but one wonders if there might be a book in this, a comparison between these two wealthy businessmen [Dayton is an heir to the Target fortune] who took over struggling midwestern states at around the same time, and went about trying to fix things in incredibly different ways. [It could be called “A Tale of Two Governors.”] Granted, the politics in the Michigan and Minnesota statehouses was likely very different when the two men came into office, but one does wonder what might have happened had Snyder chosen not to prioritize tax breaks for the wealthy over schools, retirees, and Michigan’s working men and women, and instead followed a course like Dayton. “What would Michigan be like today if he had?”, I wonder. “Would all of my friends with kids in college still be encouraging them to leave the state upon graduation?”
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I knew I’d read about that social mobility study somewhere….
“New Harvard study shows Washtenaw County among worst places to grow up when it comes to social mobility”
http://markmaynard.com/2015/11/new-harvard-study-shows-washtenaw-county-among-worst-places-to-grow-up-when-it-comes-to-social-mobility/
Increasing an income tax on the wealthy is easy and would do nothing to make corporations flee – unless their manager level staff truly did pull a mass exodus, which seems like it didn’t happen in Minneapolis.
There’s probably other tax reforms that were pitched. I knew things were going well in Minneapolis, but I might have to do some more digging into the how/why.
We decided to tax pensions of working class retirees and cut taxes on the rich here in Michigan.
For over 40 years there has been a well-financed, coordinated effort to convince ordinary citizens and voters that lower taxes, less regulation, a shrinking public sector, and “free” trade will deliver an economic miracle.
In state after state (Kansas & Louisiana, are notable examples), and even nationally, this has proven to be a disaster – yet voters in many states and districts keep voting for this philosophy because – even with all the evidence to the contrary – they *know* it is the right thing to do.
In addition to Minnesota, it occurs to me that California (under Jerry Brown and his super-majorities in both legislative houses) may be the only other place that has bucked this trend – and both are now notable exceptions to the economic malaise going on in many other places.
Unfortunately, despite these examples, an increasing number don’t believe in facts, evidence, or truth … they *know* what they know … government is bad, taxes are evil, climate change is a hoax, and Donald Trump is going to build a “huuuge” wall along the border with Mexico – and make the Mexicans pay for it!
Check out this passage from the Atlantic, Ann Arbor: “When a city grows rich, its wealth tends to outpace its housing supply, forcing prices higher and making vast swaths of the city unaffordable for middle-class families. And once the rich are ensconced, they typically resist the development of more housing, especially low-income housing, anywhere in their vicinity. “
Minneapolis’ story goes back much further. Orfield’s Metropolitics (1997) documents how Minneapolis’ regional governance model emerged: http://www.amazon.com/Metropolitics-Regional-Agenda-Community-Stability/dp/0815766408
Comparing a single city to an entire State doesn’t make a whole lot of sense, in my opinion. Not trying to excuse Snyder at all…
I would submit that Minneapolis and Governor Dayton are inseparable with regards to the success the region has, as one begets the other. It would be the same as imagining what my life would be like if I were 6’5″. We got Synder because we have metro Detroit, and we have metro Detroit because of a long history that exists here and not in Minneapolis, Salt Lake City, or Pittsburgh.
Demetrius, I actually don’t think this was deliberate but one of the consequences of the way we fail so many in public schools is that we end up with people who haven’t been taught to think logically or critically. We end up with citizens who are easily manipulated and who consequently don’t vote well, imho. That is why so many can’t see through Trump.
Anyways, I don’t wonder what Michigan would be like if our voters were a little bit less racist and hateful of Detroit/Flint/Saginaw/etc. I don’t wonder what Michigan would be like if we adopted more liberal economic policies and made sure that all of our citizens had their basic needs met. I don’t wonder about what Michigan would be like if instead of making senior citizens pay higher taxes we instead had businesses paying taxes. I know it would be a lot better than it is now!
I sometimes wonder how much term limits has to do with this kind of stuff. All of a sudden, there is no incentive to think long term. Everything is short term and one of the consequences of that kind of thinking is that there is little incentive to fix problems that aren’t urgent and especially problems that aren’t urgent and are largely out of sight like for instance, lead water pipes or lead joints in water pipes. As angry as I am at Snyder, fact is that lead pipes predates him as a problem. Why weren’t they fixed before? Big pressure to lower taxes without considering the consequences of that. For a long time people in Michigan got lower taxes but at the expense of our infrastructure.
@Lynne
I agree with you that coordinated campaign to destroy public education has a lot to do with why we now have entire generations of children (and adults) who are unable to think critically, independently.
But wealthy and corporations have poured billions into think-tanks, front-groups, fake news, etc. – all of which are part of a coordinated decades-long campaign to convince the “average Joe and Jane” that they are the victim of high taxes, big government and “those people.”
Added to this, the complete implosion of serious journalism (including robust news reporting, real investigative leg-work, and citizen and consumer advocacy) means that we will probably see fewer Daytons … and more Trumps … as time goes by.
Lead pipes are everywhere. There millions of them across the US, and municipalities manage them with corrosion control. The problem isn’t the lead pipes, it’s the fact that we have a corporate fascist at the helm who decided to throw the “save money, it’s only Flint” switch, sending untreated, corrosive river water into people homes.
@ Lynne
I also agree with you … and think that Michigan’s toxic brew of racial animosity, class warfare, urban/suburban/rural disconnection, and history of strong (adversarial) local government control makes the possibility of trying leverage anything like the “Miracle of Minneapolis” fairly unlikely.
Trickle down does not work. It never has. And the fact that Snyder keeps pushing it is criminal. We know what works. When you give working men and women more money, they spend it, and everyone does better. What Snyder is peddling is a rigged game in which risks are socialized and profits are privatized. It’s what the donor class wants. Zero risk. Enormous rewards. And they will do whatever they have to keep it rolling. They don’t care that the nation is being torn apart. They’re just a short jet ride from paradise.
Meanwhile in Michigan.
“Michigan’s child poverty rate climbed 23 percent from 2006 to 2014”
http://www.mlive.com/news/index.ssf/2016/03/michigans_child_poverty_rate_c.html
“There is no incentive to think long-term…” Nice paragraph, Lynne. Our unwillingness to fix our crumbling infrastructure is depressing.
Term limits are evil. They shift the advantage to groups like ALEC that come in with ready-made solutions for new elected officials and the resources to make them happen. It’s more difficult to manipulate people who have been in their jobs for several decades. I understand the appeal of term limits, but, if people really want their elected officials out, they have a chance every few years to vote them out. Term limits were just a way to wrest control from seasoned politicians to push through legislation from the far right.
Another interesting paired case study is this, on the metro Louisville and Detroit school districts. In the early ’70s, the two urban school districts were comparably segregated on various axes, but metro Louisville integrated while Detroit’s suburbs fought integration all the way to the Supreme Court, and won:
“By 2000, though, the average black Detroit student went to school with less than two percent white students, while in Louisville, the average black student went to a school that was half white. In 2011, 62 percent of Louisville fourth-grade students scored at or above basic levels for math; only 31 percent of Detroit students did, Orfield found.”
http://www.theatlantic.com/business/archive/2015/03/the-city-that-believed-in-desegregation/388532/
[In reference to what Scott said above.]
Right — any difference in state governance now is icing on the cake; it’s 40-50 years of regionalist policy that has put the Twin Cities where they are now. Which is by no means perfect, but leaps ahead of us.
Which isn’t to say we can’t learn from it. Just that we need to recognize successes like this happen in timeframes of decades. (What’s the aphorism? “The best time to plant a tree is twenty years ago. The next best time is right now.” ?)
@ Mr. X
Term limits are another good example of a thing that many people *know* is a good idea – even though in actual practice, they have been a complete disaster.
Some of this is just effective marketing. The right has been very good at framing things like “term limits,” “school choice,” “pro-life,” “homeland security,” etc., in a way that provokes a knee-jerk reaction of support among many people that don’t/can’t think through what these terms actually represent.
Mark Dayton is a fascinating character. Check out his background and education and also early career on his wikipedia page. https://en.wikipedia.org/wiki/Mark_Dayton
Mr. Maynard , now that you’re getting them are you in favor of tax breaks for business owners?
Lynn:
> I sometimes wonder how much term limits has to do with this kind of stuff.
Mr. X:
> Term limits are evil.
Ask our collective bestest buddy rich guy Phil Power over at the Center for Michigan about term limits. Ask this rich fool about how he totally supported them and now totally doesn’t. While you’re at it, ask him why the hell he thinks we’d listen to anything he says anymore. Oh yeah, he has money so he probably thinks he’s interesting and smart. “Think tank” my ass.
Small business owners do not get tax breaks– except that MI corporate tax that was eliminated. It taxed 1% of gross even if you had a profit margin of 1% or less– and many new businesses do. The lower corporate tax rate is unlikely to effect the kind of business Mark is running unless they hit it really big. He’ll take any profits as earning and suffer the same miserable fate as the rest of us on our MI tax– higher personal tax rate, no earned income and child tax credits, etc. Small businesses are in the same boat as the rest of the small fishes. Government taxation and regulation weigh more heavily upon them, and the government offer them fewer benefits, incentives or access to capital than their big rich cousins. It’s still worth it to run your own show, but almost anyone can make more and work less pulling a salary somewhere.
Apologies! I thought the article said something about the tax break costing the city $50000 in lost revenue. I thought the idea was that by subsidizing the makers and getting them to help gentrify, er , enhance the community , this will generate more business as their success trickles around drawing more people and enhancing the economic activity and wealth of the whole neighborhood. Big corporations, like the ones a certain presidential candidate is closely associated with, do it all the time. As another presidential candidate calls it, The Art of the Deal, you get to be friends with people in government and they take a vote to give you a break that helps your business. It’s what makes America great! Some progressive types think that government shouldn’t be helping the job creators and wealth generators with tax breaks but should spend tax revenue on social services etc. I thought Mr. Maynard was more in that school , but I don’t follow closely. What did Twain say? It’s not what you don’t know, but what you know that’s wrong which gets you.
But maybe there was no tax break?
And I don’t think Mr.Maynard is starting a business at this point as much as becoming a landlord/developer. Isn’t that how one of those presidential candidates started?
I’ll have to go back and check the official markmaynard.com record, but I don’t think I’ve ever come out against ORPAs. The only time I can remember mentioning them on this site was about five or six years ago when some local landlords came out against the idea of a local income tax, or some such thing, saying that we were taxed enough. I can’t remember the specifics. It was at the height o the Tea Party thing, and, if I recall correctly, I pointed out that their anti-tax stance was somewhat hypocritical, given the fact that they’d built their rental empire on OPRAs, which are essentially funded by taxpayers. I don’t think, however, that I’ve ever said anything negative about the program itself.
For what it’s worth, and I’d like to think I would have responded the exact same way before receiving one, I think OPRAs are pretty good for the city. When you think about it, it’s really the only significant tool available to the city to encourage redevelopment of derelict buildings that otherwise might fall into greater disrepair. Sure, the city, if all goes according to plan, will lose out on some tax revue for a period of time, but it won’t be making any less than it would have if the building in question had remained untouched, and, in return, they have solid structure that can exist, and generate revenues, for generations to come. [While there’s a slight annual increase, the OPRA essentially locks your property taxes at the pre-renovation rate for a period of up to 12 years.]
But, yes, I do see a difference between incentives like this, especially when they go to local developers with good ideas, and the truly big giveaways that are routinely handed to large corporations that have proven time an again that they aren’t in it for the long haul. As we saw with Pfizer in Ann Arbor, such companies have no qualms about picking up and leaving, even after having taken millions from the state of Michigan. OPRAs are, in my opinion, a different animal. It’s a way for a local community to stop urban decay and create assets that can be used in the future. Whatever happens, 209 Pearl will be in better condition than it is today, and that’s a good thing for the city.
As for what could happen without redevelopment, just look at the former Smith Furniture building, which we’ve all watched decay over the past 20 years. Sure, it might still be salvageable, but just imagine what could have happened if the owner and the city had figured out a way to get it back in play a decade ago.
And, for what it’s worth, Trump started with a “tiny” loan from his father in the amount of a million dollars, whereas I worked for 30 years to come up with $35,000 myself. So the narrative is a little different, Westside.
As I said when you originally posted, good for you! This is great for you and Ypsilanti and I agree that it will enhance the city a great deal. It’s just a funny system you must admit.
The best one was the Zingermans brownfields thing.
Best of luck in your endeavor!
OPRA’s are a win-win as long as the tax payers interest’s are represented in what amounts to a fair deal. There is a huge difference between 1 year of locked in low taxes and 12 years of locked in low taxes.