Before I get into it, I need a minute. Tell me you aren’t feeling batted about with the horrific killings this year already. The most recent heinous acts of 5 Memphis police officers; killings in LA during the Lunar New Year celebrations; St. Paul’s own shooting at a rec center. And more. CNN tells us, “there have been more mass shootings than days in 2023” thus far. As of the 22d day of the year, there already had been at least 36 mass shootings in the U.S. There are no words to convey adequately our community horror, united sympathy for families. I don’t have any answers; I simply have to pause, with you, in a moment of shared grief.
I do have one ask for you: we want your feedback on the City of St. Paul's proposal to increase the sales tax by 1% to fund street and park improvements. You can access the short survey here. Your response will inform our thinking so please let us know what you think!
Bottom line for my thoughts this week: despite the pressure of high interest rates and fears of recession, the U.S. economy ended 2022 on solid footing. Economic growth remains solid, if slow, largely on the hiring within our amazing small business sector (remember, they’re our economic engine!). We certainly are seeing inconsistency, with select large tech companies laying off, but small companies definitely are still hiring, and both GDP/consumer spending remain in modestly positive growth mode. What remains uncertain is ongoing inflation, with wage growth alongside a job market that is still too tight.
Ok then. So let’s look at some data points to fill in:
Our issue in Minnesota? Simply and painfully put, we have a lot of jobs, but not enough workers. As it stands today, the U.S. Chamber’s Worker Shortage Index tells us that, in Minnesota, for every 100 open jobs, we have 43 workers. We’ve got an aging population, and one of Minnesota’s most important sources of new workers, immigrants, largely was cut off by pandemic-related curbs on immigration.
Minnesota’s silver bullet? Welcoming more workers. To do so we absolutely are supporting policies and practices that attract workers from out of state and remove barriers to employment for those already here, such as affordable housing and childcare.
We also are investing where we can have great impact: our Career Connect Day for youth career exploration as well as adult job seekers; and our first Small Business Summit, to provide hands on resources and training to help our small businesses grow.
See you in the trenches.
Last week I talked about “the business lane” as we address our priorities and challenges: public safety, a potential St. Paul sales tax proposal, proposed family leave mandates, housing in a rent control environment, our unsheltered population, all of which impact our success in welcoming and supporting business development. Today I want to talk about two more of these topics: proposed family leave mandates and housing in a rent-controlled environment.
Read more in “It’s Our Business”….
First off, the proposed family leave mandates. Amanda Duerr gave us all the heads up last week that Paid Family and Medical Leave (S.F. 2) had its first Senate committee stop, in the Jobs and Economic Development Committee. This past Thursday Governor Walz released the second of four parts of his budget recommendations, $4.1B in proposals that included the creation of a paid family and medical leave program. The current paid leave proposal being advanced by DFL lawmakers would offer up to 12 weeks of partially paid time off for family reasons. It also would provide up to 12 weeks of medical leave. The program would be funded by a payroll tax (currently proposed at 0.7%, up from 0.6% earlier this month), which would be shared by employers and employees. In addition, the Governor’s budget recommendations call for giving workers up to 48 hours of “sick and safe” time each year. Both proposals are moving through the legislature. The MN Chamber has put together a good one-pager on the proposal.
I have a couple of concerns. First, is the tails. The long-term implications to budgets at all levels – government and businesses. Using one-time surplus money to initiate programs with ongoing budgetary commitments is a dangerous game at best. Second, is the “mandate” rather than “incentive” approach. Large companies have strong benefits packages that rival anything the government could require (often better), and the smaller companies already provide as many benefits as they can afford. Charlie Weaver of the MN Business Partnership is referenced in this Star Tribune article as saying, “just do no harm.” Employers are in the best position to design benefits packages that serve the distinct needs of their employees. And companies serious about retaining employees already understand the importance of investing in people. A mandate like this could do some serious harm.
Next is housing in a rent-controlled environment. Last week I spoke on a panel about rent control and I shared my observations about how it’s going so far in St. Paul. Lest I get too hyperbolic, let’s stick to numbers that I shared: from 2020 to 2022, St. Paul’s multi-unit housing permits issued (per HUD data) went from 2036 to 937. During the same period, Maplewood’s permits increased from 8 to 148. People, housing development is still happening. It’s just moving out of St. Paul. I also reference a Jan 2022 NMHC survey (National Multifamily Housing Council): the survey indicated that apartment market conditions have generally improved. That said, in rent-controlled markets, 58% of national developers surveyed are reducing or avoiding investment; and of those, 26% are specifically avoiding Minnesota.
I absolutely am on the side of those most vulnerable to affordable housing shortages. And I believe rent control is hurting – not helping – our renters. My opposition to rent control has three faces:
What are your thoughts on this? I’d love to know!
See you in the trenches.
Front of mind and with me every day is “the business lane” as we address our priorities and challenges: public safety, a potential Saint Paul sales tax proposal, proposed family leave mandates, housing in a rent control environment, our unsheltered population, all of which impact our success in welcoming and supporting business development. Today I want to talk about 2 things: public safety and the proposed 1% sales tax in Saint Paul.
First off, public safety. I had a chance to sit down with St. Paul’s new Chief of Police last week and was encouraged. I conveyed to him our very serious and immediate concerns about lack of accountability, crisis as well as chronic issues around Central Station, youth offenders, lack of prosecution at the County level on offenses that are therefore repeated – by a small group of offenders. All within the context of ensuring employees and visitors alike feel welcome and safe when they enter our beloved city. We had a very candid conversation and I know he feels the weight of his responsibility across these concerns and more.
As I told him, business owners have accountability of their own – to clients, tenants, employees. We are wired to deliver on expectations, taking direct charge as needed. Absent a sense of order within a city, those same business owners are inclined to “take matters in their own hands.” My inclination is to give this new Chief a moment. He’s smart, already invested in our community. I want to see how he tackles “accountability.”
Second is the proposed 1% sales tax in Saint Paul. On this one, we want to hear from you. Candidly, I’m not philosophically opposed to the use of a sales tax. That said, so much goes into it in this case – the timing, the amount, the restrictions, other taxes/fees/costs business owners have absorbed – or will. With other business-aligned partners, we will be sending out a survey later in January to gather your input. Please let us know what you’re thinking. Your response will inform me as I talk with Mayor Carter about the business perspective on his proposal. You are a diverse community and I anticipate the responses will be as well. That said, we do need your input. And Mayor Carter does want to know what you think!
Finally, it’s Annual Meeting time again, and it promises to be our biggest yet. Our theme this year is “Investing In Tomorrow.” Business leaders are adapting to a tomorrow that already is upon us. To my mind, our most important job is to stay relevant as we adapt to tomorrow’s people, culture, and technology. Please join us, and bring a “friend we haven’t met yet.” I look forward to seeing you!
See you in the trenches.
Happy 2023, everyone. I hope you had an opportunity to recharge over the holidays. We certainly did. As we start the new year, I’ve modified our blog moving forward. I’d like to go deeper on particular areas of interest, and leave the news updates to other partners. Let me know what you think!
Two things are front of mind for me: public safety and this legislative session (Be sure to join us for our annual Breakfast with the Mayors event on Jan 26, to hear from Mayors Carter and Frey on these issues and more).
First continues to be public safety. I look forward to the new Chief’s ideas and stronger response from the county attorney's office in the form of more prosecutions. The City also is doing yeoman’s work to reach the unsheltered, and they need more support – and state funds – to assist. We have a moral imperative to ensure our “housing of last defense” option is not the skyway system or buildings downtown.
Second, of course, is the legislative session ahead.
Among St. Paul’s priorities, Mayor Carter will be presenting his proposed 1% sales tax for legislative approval. I did share my early thoughts with the media when asked; thus far, we’ve still got questions. Here’s what I do know: the City has some very real infrastructure challenges, and improvements can’t be supported totally through property taxes alone (and that resource continues to shrink as a % of population). Philosophically, I’m not opposed to a sales tax – with a couple very specific clarifications/restrictions. Working with other St. Paul business partners, the Chamber will be surveying our members for your feedback on the Mayor's sales tax. We will be supporting the City’s legislative efforts to reconfigure the LGA formula to ensure the capital city receives a more fair share of those funds to support infrastructure that is used by all of us in the state of Minnesota. We believe that should be the City's top priority and is the most expedient way to address its budget challenges.
At the state level, if early indications prove out, this will be a very interesting session. Like many of you, I was at the MN Chamber Session Priorities event last week. We heard from the Governor and DFL majority. Since then, I’ve also read a few analyses of what to expect this Session. Governor indicates he wants a combination of tax cuts and tax rebates.
Controversial, but likely: reproductive rights, paid family leave, legalized cannibis, expanded voting access
Governor and legislators alike indicated that a bonding bill is a “must have.” I agree with the Governor’s approach to use one-time money for one-time investments. This is a real opportunity for big thinking/investments.
And in Ramsey County, hopefully that’s good for us.
Finally, I continue to track economic indicators. Join us on Wed, Jan 11, for our virtual Lunch With Leaders. We’ll be hearing from the Federal Reserve on economic outlook for 2023 and beyond.
See you in the trenches.