Lots of news this past week:
 
First off Derek Chauvin received his sentencing: 270 months, or 22.5 years. An extra ten years was placed on top of the usual 12.5 years due to abuse of position of authority and cruelty shown to George Floyd. Attorney General Ellison wrote an opinion for The Washington Post this past Saturday. His challenge: let this be a turning point.
 
In the Minnesota Legislature, lots of moves on transportation bill, budget, and policing law changes. See notes on that below.
 
Of particular interest to me was Minneapolis Fed President, Neel Kashkari, interview with Reuters. He wants to keep the U.S. central bank’s benchmark short-term interest rate near zero at least through the end of 2023 to allow the labor market to return to its pre-pandemic strength. is opposing interest rate hikes at least through 2023. Kashkari’s remarks show he’s in a decided minority in an increasingly hawkish Fed, which on Wednesday wrapped up a two-day meeting with an unexpected result: with inflation on the rise, most Fed policymakers now see a case for starting interest rate hikes sooner.
 
On a local level, know that your cities, counties, and state are working hard to build plans for utilization of the federal ARP funds that are coming. I’m impressed with the level of collaboration, though it’s still too early to share any clear plans forward. There is room for optimism. And among top priorities is support for business recovery.
 
See you in the trenches.
​
B

As of Sunday, 3 new MN Deaths and a total of 101 new cases. COVID-19 positivity rate continues to decline, now at 0.61% as of Saturday, lowest numbers since March of 2020.
 
As of Friday, 66.7% of Minnesotans 16 and older have received at least one vaccine dose.  63.2% have completed their vaccine series.

State will give $250M to front-line pandemic workers. But which ones? As Minnesota Public Radio points out, various labor and industry groups are already angling for checks for their factions. This money is not from the state budget but, instead, from federal American Rescue Plan funds.
 
Bounce-Back Recovery Drives Inequality Higher. The current period of growing economic inequality reflects a significantly improving employment outlook among middle-income adults relative to stalled economic conditions for high- and low-income adults. The increase in inequality was driven almost entirely by the employment expectations component of the index, with the share of employed middle-income adults expecting to experience a loss of employment income in the next four weeks falling to 6.76 percent, down from 14.7 percent in May.
 
Minneapolis Fed President Kashkari is arguing against a quick return to interest rate hikes, a position that’s put him in a minority among Fed leaders worried about rising inflation. Kashkari, in an interview with Reuters, said he wants to keep the central bank's benchmark short-term interest rate close to zero through at least the end of 2023 to allow the labor market to recover more fully from the damage it sustained during the Covid-19 pandemic.

Capitol Hill:

• The House is set to take up a $547 billion surface transportation reauthorization bill, legislation that would remove Confederate statues from the Capitol and a measure to establish a select committee to investigate the Jan. 6 insurrection.
• Months ago, President Biden unveiled the centerpiece of his domestic agenda: a two-pronged, $4 trillion effort to transform the U.S. economy by overhauling the nation’s infrastructure and expanding aid to families.
• 'We have a deal': Biden announces bipartisan infrastructure agreement: NBC NEWS: President Joe Biden on Thursday announced a deal on a bipartisan $1.2T infrastructure package, including more than a half-trillion dollars in new spending. But warned he would not sign it unless it was passed "in tandem" with a separate budget reconciliation bill that invested in social infrastructure and other Democratic priorities (that warning was walked back in later comments provided by the President (The Wall Street Journal) 
• On Tuesday, the House Financial Services Committee will hold a hearing titled "A Biased, Broken System: Examining Proposals to Overhaul Credit Reporting to Achieve Equity." Why it's worth watching: Democrats will discuss a proposal to establish a public credit registry within the Consumer Financial Protection Bureau. The move would mean progress for one of President Joe Biden's priorities from his campaign- to call for more "inclusive credit scoring and create a public credit reporting agency." While that measure isn't likely to garner much bipartisan support, the idea of oversight over credit bureaus does: The panel's ranking member Rep. Pat McHenry (R-N.C.) has sponsored legislation in the past that would remove certain negative information from a customer's credit report, and that would give the CFPB more supervision and examination authority over credit bureaus. 
  
  

State:

• After more than one year, Gov. Walz is ceasing his coronavirus peacetime emergency executive powers on Aug 1. Republicans are advancing a bill to push for July 1.
• Minnesota House passes $7 billion transportation budget bill. On a unanimous 67-0 vote, the Senate passed a $7.8 billion omnibus transportation funding package Thursday, June 24, and sent it to Governor Walz for his signature. The measure helps jump start $3.68 billion in road construction projects; $300 million in highway expansion via the Corridors of Commerce program and $14 billion for local bridge improvements. Also included in the measure is $10M to leverage federal matching funds for a second daily Amtrak train between St. Paul and Chicago and money to outfit State Patrol troopers with body cameras.  Here's Move Minnesota’s take on what's included--and what's missing.
• Minnesota budget gels slowly but ‘end is not exactly in sight yet’: Minnesota lawmakers chipped away at a budget to-do list Thursday, passing more bills to keep government operations afloat next month while narrowing down areas where they’ve struggled to secure agreement.
• Minnesota lawmakers reach ‘general agreement’ on policing law changes but “the public safety/judiciary budget and policy bill, as the state’s chief executive put it Thursday, will be “the last plane to land.” 

 
Local:

• Rent stabilization petition headed to Ramsey County elections, and St. Paul voters. The goal is to put a “rent stabilization” question on the city’s November ballot. The critical analysis is compelling. And it’s notable that neither St. Paul Mayor Melvin Carter nor Minneapolis Mayor Jacob Frey have rallied to support it. Some critics call it a blunt tool that will benefit the rich as much, if not more so, than the poor, while potentially limiting the city’s tax base or raising taxes on other properties.

 

• This past Friday, the Saint Paul Planning Commission voted in favor of full elimination of parking minimums for developments. It now goes to the City Council where it is expected to pass. Minneapolis already passed similar legislation. The move should reduce overall costs for developments, and the policy is already in place downtown and along the Green Line.

The St. Paul Downtown Alliance continues planning its 300+ events downtown this summer. Check out the #WelcomeBackStPL website and events calendar. I attended the Ordway Cabaret: Live at the Loading Dock this past weekend. Was fabulous – and we loved sitting outdoors!
 
Be sure to come downtown the weekend of July 4: block parties, music, food trucks, and – wait for it – FIREWORKS! No, the City is not sponsoring – but the Saints and business are standing in the gap!
 
Want to get some tips on navigating today’s staffing challenges? Join us virtually on July 8.
Would you like to hear how others Dream Big and Wildly Succeed? Join us virtually on July 14 to listen to Ila Borders, a author, coach, scout, and fighter of gender barriers.  She’s hosted by Mike Veeck of the St. Paul Saints, and you are sure to be inspired.

7 policies in your employee handbook that need review soon: The link between the White House and an employee handbook is more direct than one might imagine: First, the National Labor Relations Act (NLRA or Act) regulates employee handbooks; second, the National Labor Relations Board (NLRB or Board) interprets the Act; and third, Board members are appointed by the President.
 
Check out these 3 signs of remote work burnout.
 
Great article on Value disciplines: Customer Intimacy, Product Leadership and Operational Excellence. This article is from 2018, and yet it is helping us think through how we execute on excellence.

Best Buy to spend $1.2 billion supporting businesses owned by people of color. They will invest in venture capital firms, healp with supply chains and warehousing, and also with warehousing.
 
What companies can and can't do when trying to increase diversity: Experts say there are some legal considerations businesses should keep in mind as they seek to diversify their staffs.
 
Creating a healthy office: As Twin Cities employers continue to make decisions about their workers’ return to the office, they face a wide range of concerns from employees’ regarding health and safety. New protocols are being created that cover everything from seating arrangements and meeting size restrictions to mask-wearing guidelines and testing workers for symptoms of illness as they enter the building.
READ MORE
 
President Biden unveiled a new initiative aimed at curbing violent crime nationwide last Wednesday. The Twin Cities are among metro areas included in the Community Violence Intervention initiative.  
 
Building a Culture for Inclusive Recruitment & Retention. The Center for Economic Inclusion wrote this solid piece.
 
Business travel takes back seat as MSP rebounds: The industry has been recovering at a steady pace since the fall, though business travel is still mostly stalled – leisure travel is powering the recovery.

Met Council likely to award $200,000 toward Rondo Land Bridge strategy, Plaza del Sol makeover. Rondo Land Bridge is planned to extend from Chatsworth St. N. westward 6 blocks to Grotto St. N.
 
“Work-from-anywhere jobs – where are they? The 25 top companies hiring remote workers right now: The focus on remote work has only heightened amid what many experts are calling the "great resignation" or "great reshuffling" as workers flee their jobs at historic rates. Companies are upping pay, offering bigger bonuses and scrambling for workers as Covid-19 restrictions ease and the economy recovers.
READ MORE
 
The US labor shortage is a 'national economic emergency' getting worse by the day, the U.S. Chamber of Commerce said. Most current state-level numbers on Minnesota job vacancies are from Q42020: over 127,000 job vacancies.  We also have 1.1 unemployed worker for each vacancy (although, as we discussed last week, the match between worker and job is really off).

Before we begin, a thought on Juneteenth. Because it’s been on my mind all week – and through this past weekend. And now, of course, this historic date is a federally recognized holiday. On June 19, 1865, the last remaining slaves in the United States were freed. A day we all should honor as a country, yes?  I appreciate AG Ellison’s comments from Saturday: “The arc of the moral universe bends towards justice, but it doesn’t happen on its own. It happens through us and the work we do together to build a better future.” Juneteenth is important for all of us, and reminds us of both the sacrifices behind us and the need to recommit ourselves to the struggle for true liberty and justice for all.
 
Let’s start today where we finished last week:  how far and how quickly will inflation increase? I quoted CNBC’s Jeff Fox: “If the Federal Reserve’s benign view on inflation prevails, employment will be key.” The bottom line? Nationally we have 10M potential workers still considered unemployed and 9.3M open jobs (the highest number ever recorded). Not everyone is in a hurry to come back to the office, which is an indication of a longer-than-desired ramp up to full employment levels. The longer it takes to get back to full employment, the more it will cost employers in the form of wages. Higher wages trigger longer term inflationary pressures that the Fed is trying to avoid.

The challenges with labor participation are many: childcare shortage, transportation concerns, a host of worries related to health, basic inefficiencies in the job search process, and the benefits cliff. And, of course, the growing desire for a more flexible work environment. Lots of people simply don’t want to “go back;” employees are pushing for continued flexible work environments. On that final note, DEED Commissioner Steve Grove offered good commentary: “You’ve pinpointed a huge trend in the future of work that has only been accelerated by the pandemic. This is a moment in our nation’s economy of extraordinary power for workers. Workers are in the driver’s seat. Employers who are nimble and flexible will have the best opportunity to succeed.”  

Grove went on to talk about several long-term priorities for DEED to maximize long term growth in our workforce and participation rate (this was in discussion format, I’m summarizing here):

1.   Assist people in finding work, getting back into the market. There are a whole host of factors that impact a successful search; our job is to eliminate as many hurdles as possible, and work with businesses to identify their needs;
2) Match the skills we need over next 3-5 years (and promote training programs);
3) Develop a strategy to attract workers to MN;
4) Track and promote the jobs in our state where hybrid can be possible, especially as we recruit from outside MN; and
5) Encourage more to start their own businesses. Historically, economic turmoil translates to more business start-ups. And Minnesota has the highest business survivability rate in the country.
 
The June 2021 issue of Minnesota Economic Trends offers a look at Minnesota’s labor market and employment trends. Why can’t employers find workers?

• It’s More than Simple Supply and Demand: explores ways employers can recruit, hire, and retain workers.  
• Reemployment After COVID-19 Layoffs in Minnesota: Early Findings: early findings on employment status of those laid off during the first months of the pandemic.
• First Quarter Forecast: A Rapid Rebound:  all things considered, forecast suggests job recovery will continue remain strong.

 
It is clear that there is a lack of alignment of job seekers with the right interests, skills, scheduling availability, and other requirements with the types of openings that employers need to hire for now. Employers will need to reach out in new ways, perhaps expand eligibility criteria and provide on-site training.

Finally, the “benefits cliff.” Some people “can’t afford” to go back to work. This is real, people, and is inordinately impactful for single mothers and People of Color, who carefully balance public assistance with income. Because any increase in income might subsequently reduce benefits – and actually reduce their income.  The Fed – Richmond recorded a podcast in January discussing this. 

As I review economic and workforce forecasts, they are largely very optimistic. But I remain concerned about alignment between the workforce and the jobs available. My encouragement? The best successes I have seen come from companies who are following the “hire for talent, train for skill” approach.
 
See you in the trenches.
​
B

​MDH reported on Friday that the positivity rate has dropped to 1.8%.
As of Saturday, 45.4% of the U.S. population is fully vaccinated. For Minnesota, we are at 50.2%.  And the slog continues, as weekly vaccination number continue to decline. It’s increasingly unlikely that Minnesota – or the U.S. – will meet its July 70% vaccination goal. As of Friday, approximately 65%^ of Americans have received at least 1 dose.
 
CDC: Delta variant now 10% of US COVID-19 cases. This variant first was identified in India, and is sweeping through the UK now. Is highly transmissible, with a risk of more severe illness.
 
Nearly all new MN COVID cases, hospitalizations and deaths were unvaccinated. State and federal data shows the chances of contracting the coronavirus after being fully vaccinated are miniscule and getting a severe case or dying are even smaller. 

Minnesota’s May Jobs Report: Minnesota added 14,800 private sector jobs in May. For the 5th straight month, Minnesota gained jobs. Unemployment rate is now down to 4.0% with labor force participation up to 67.9% (over the long term, Minnesota had carried nation-leading numbers of over 74% pre-pandemic).  U.S. unemployment rate is 5.8%, with labor force participation rate at 61.6%. Minnesota lost 416,300 jobs from Feb-Apr 2020, and has since gained 249,700 jobs.
 
The Small Business Administration recently suffered a court defeat over its ability to prioritize minority- and women-owned businesses in its $28.6 billion Restaurant Revitalization Fund. The Targeted EIDL Advance grant program could be next.
 
More on The Spector of Inflation, tracking on our conversation from last week’s blog. And the stock market reacts as the Fed indicates the potential for an interest rate increase in late 2022.
 
This was an interesting read for me: “U.S. Spending Patterns Signal Commitment to Cars and Gas, Brightening Outlook for Suburbs.”

Deal finally struck for businesses damaged by riot, but is it enough? The just-released jobs/economic development bill includes $150M in business relief: $80M for a new “Mainstreet revitalization program” (allowing for loans up to $2M and up to $750K in grants for rebuilding projects), and $70M for COVID losses; makes youth workers eligible for unemployment benefits starting in July of 2022, . The bill also is allowing for businesses that were missed in 2 previous rounds of state aid to enter into a lottery for grants ranging between $10-25K.
 
Tax cuts prevail over tax hikes at Capitol. A proposed budget agreement will total about $52B, with no new taxes and tax cuts – the bulk of which comes from waived state taxes on federal assistance during COVID-19. It involves forgiven PPP loans for businesses and extra unemployment aid received by workers. Interesting notes in this Pioneer Press article on the “rollercoaster narrative” of the economic impact – worth a read.
 
We’re still watching: what will a proposed bonding bill include?
 
Read more updates in our weekly Chamber Advocacy Update. 

Want to get some tips on navigating today’s staffing challenges? Join us virtually on July 8.
Would you like to hear how others Dream Big and Wildly Succeed? Join us virtually on July 14 to listen to Ila Borders, a author, coach, scout, and fighter of gender barriers.  She’s hosted by Mike Veeck of the St. Paul Saints, and you are sure to be inspired.

​Find Your Blue Ocean Strategy. Don’t compete; instead, tap into a whole new market of potential customers by focusing on what’s missing. You might remember the 2005 book, Blue Ocean Strategy, Expanded Edition: How to Create Uncontested Market Space and Make the Competition Irrelevant.  Its principles are even more timely today. And it certainly aligns with our philosophy of abundance: “Instead of struggling to survive in the bloody shark-infested ‘Red Oceans’ of vicious competition, why note move to the ‘Blue Oceans’ where there was little or no competition?” Though also a bit dated, this Forbes 2017 article is worth a read. Your Chamber is thinking through how to do this as well.

Flint Hills Resources Pine Bend Refinery in Rosemount has earned the U.S. Environmental Protection Agency’s ENERGY STAR certification for the second year in a row. This certification signifies that the refinery performs in the top 25% of similar facilities nationwide for energy efficiency. In the past five years, Pine Bend has improved its energy efficiency by 10%. The refinery supplies most of the transportation fuels used in Minnesota. Read Flint Hills Resources’ ENERGY STAR certification.
 
Judge won’t dissolve contract between Ramsey County and Arden Hills over Rice Creek Commons development.  
 
Hillcrest community engagement continues this summer with neighborhood conversations led by the Greater East Side Community Council.  Each session will focus on a single topic and be a solution-based conversation. Click here to be directed to their online registration form; you pick or choose the ones you are most interested in attending.
 
Want to know what’s up with Riverview? Attend a June 23 Virtual Open House to get the latest update. Also, if you would like to participate in the public comment opportunity through June 25, submit through this Online submission form.  View the report summary (PDF) here.

James J. Hill Center will sell its historic St. Paul building to developer.  Breaking news this past week. The buyer is Peter Remes of the Minneapolis development firm First & First, a specialist in repurposing older properties.

My thoughts today spring from this startling statement: nearly 40% of the world’s money supply was added in the last 13 months alone – representing between $2.5 and 3T. Yes, we are “printing money.” What does this mean for inflationary pressure?
 
I recently listened to a portion of the May 2021 Berkshire Hathaway Annual Meeting at which Warren Buffett spoke on inflation: “we’re seeing very substantial inflation…the cost are just up, up, up. Steel costs, every day, they’re going up… the economy is red-hot, and we weren’t expecting it.” Buffett went on to say, “people have money in their pockets and they pay higher prices…the supply chain’s screwed up for all kinds of people…it’s almost a buying frenzy… Meanwhile, it’s a terrible situation for a percentage of the people. It is not a price sensitive economy right now in the least. I don’t know how exactly it shows up in various pricing indices, but there’s quite a bit more inflation going on than people would have anticipated 6 months ago.”
 
At its March meeting, the Federal Open Market Committee (FOMC) forecasted that the U.S. inflation rate will average at 2.4% in 2021, then decrease to 2.1% by 2023 That said, the average consumer is experiencing surging prices today in many different areas. Fundamentally, there is pressure on raw materials like steel, lumber, petroleum inputs. The scarcity factor is real. As one example, low inventory and skyrocketing lumber prices have increased the price of a typical new home by nearly $36,000.  Making it even more personal, the price of food is creeping higher – and will stay that way for a while.
 
I went to my favorite economists: Bank of America, Wells Fargo, and U.S. Bank. To a one they are expressing caution – economic growth should be strong, but so too will be inflationary pressures.
 
The question, then, becomes: how far and how quickly will inflation increase? The Fed is confident in their ability to deal with it. But, as CNBC’s Jeff Cox said so well this past Friday, “If the Federal Reserve’s benign view on inflation prevails, employment will be key”.
 
We’ll talk about employment next week.
 
See you in the trenches.

B

As of Saturday, June 12, our 7-day average of cases is at 169 – lowest since April of 2020. This reflects a positivity rate of 1.4%. At the same time, our vaccination rate is at 55.6% (1 dose) and 48.6% (fully vaccinated) of eligible population. The vaccination pace now is crawling.
 
Wealthy countries are pledging to donate vaccines: meetings of the G7 began yesterday, and several of these countries are intending to commit 1B vaccines. The U.S. will buy 500M more doses for donation to 92 lower income countries and the African Union over the next year, towards an anticipated need of more than 10 billion vaccinations. At a cost of $5-7/shot, the need represents $50-70B hugely significant and yet it represents less than 1% of the global economic output this year.

SBA to open Targeted EIDL Advance grant to all eligible businesses – one of the few remaining programs that is funded.   And the SBA aims to raise the loan limit to $2M.
 
Twin Cities Restaurant Roundup: Who's opening, reopening and closing

St. Paul’s City Council is proposing a  Right to Recall ordinance requiring that hotels and event centers give those who lost jobs during the pandemic the first chance to get rehired. Your Chamber wrote a letter of opposition to Ordinance 21-20  because the ordinance is, in a word, nonsensical. Employers are desperate for workers, and no one we know is deliberately passing over qualified employees. Quite the opposite. This action is not in response to “bad actors.” Instead, beyond the logistics and intrusion of city government into the employer-employee relationships, this ordinance amplifies the vilification of businesses in St. Paul. It implies that there is an action so negative that it requires council response. Sponsored by all seven councilmembers, the proposed ordinance certainly has enough support; stay tuned.

Last week marked the formal kickoff of the #WelcomeBackStPL campaign and the return of Lowertown Sounds. Please check out WelcomeBackStPL for upcoming events and join us!
 
And Your Chamber wants to see you - please join us!

• YPro Saints Game, 6/16, 5:30pm 
• Coffee & Convos: Quarantine Transition Plan – going back to the office/restaurants/events? June 17. 

5 ways companies can embrace the ‘future of work’

A recent study from Accenture found that more than 83 percent of workers say a hybrid office is the optimal route forward. 

​Inclusion is not someone else’s responsibility. Mark Benton, a VP of Talent Management and Development at McKesson, talks about how it starts
with individual decisions and behaviors.
 
Cargill investing $6M to support people of color, women students
Target, General Mills, other large companies commit to spend at least 2% of annual media budgets on Black-owned media companies
Customer Expectations for DEI Engagement Are Seeping into the SME Sector

Building capacity for fun -- we are thrilled that the Fair Is On! www.mnstatefair.org

So where are we? Nationally, in May the U.S. added a modest 559,000 jobs, an improvement from April - but still evidence of ongoing hiring struggles.
And the recovery continues to be uneven. According to a small survey recently conducted by Alignable, 35% of small businesses might not survive the summer.

And in Saint Paul? It’s really a mixed bag. Construction is strong in 2020 with new rentals, Green Line Development. And yet, a year after riots, 35 of 270 impacted St. Paul businesses remain closed. The private sector and philanthropic community continue to invest in this regeneration: your Chamber, in partnership with the Midway Chamber of Commerce and the Saint Paul Downtown Alliance, so far has distributed over $1M to many of these companies.  More work is still underway to inject more capital into the local economy from private sector/philanthropic community investments: ​

Governor Walz, House Speaker Hortman, and Senate Majority Leader Gazelka say they’d drop partisan priorities to avoid a state shutdown.

That said, nearly 38,000 state employees have begun receiving layoff notices – just in case. And the budget deal includes several provisions left out of their ‘global agreement,’  including additional tax cuts and funding to help Minneapolis and St. Paul rebuild buildings and property damaged in the unrest following the killing of George Floyd last year. On this last point, your Chamber has sent a letter to state leadership strongly encouraging them of the urgent need for such funding.

Read more updates in our weekly Chamber Advocacy Update.​​