The state of the future of Minnesota's labor force

The pundits are right. Minnesota is increasingly going to rely on ALANA (African, Latino, Asian and Native American) communities to meet its labor needs and to support a growing elderly and young dependent population. For the period of 2007 to 2013, using three-year data from the American Community Survey, I found that 2,500 new white workers were added to the state's labor force in aggregate; however, the ALANA communities added more than 70,000 new workers.

Then comes the troubling insight from the data. I looked at the following communities for which comparable data was available — white, black, Latino, Native American and Asian — and three subgroups: Hmong, Mexican and African immigrants.

The black, Latino, Native American, Hmong and Mexican communities experienced an economic squeeze reflected in declining income and homeownership, employment and home equity, combined with low educational levels. The American Indian community had the sharpest decline among all groups during this time period.

At the same time, these ALANA communities continued to fuel the economic engine in Minnesota. Their spending power in the Minnesota economy in 2013 (calculated at 75% of total income) was more than $11 billion, and they paid an estimated $1.7 billion in Minnesota taxes.

People tend to think of these communities as not integral to the economy — as "deficits." However, economic simulations I've done show that if the ALANA workers were to suddenly vanish from the Minnesota economy, we would be candidates for federal disaster aid. For example, recent research funded by the McKnight Foundation showed that African immigrants alone spent more than $500 million in big-box retail and other stores in 2014.

So the data suggest that the groups Minnesota is counting on most to survive the impending demographic squeeze are themselves in an economic squeeze. What can be done about this trend?

There are bright spots in the data. For the period of 2007 to 2012, we have another data set on business formation and growth — the Survey of Business Owners. Analysis of that data show that ALANA firms are growing faster in numbers, sales, job creation and payroll than are non-ALANA firms. This is also true between female-owned and ALANA female-owned firms and veteran-owned and ALANA veteran-owned firms. In fact, if we took all the jobs that ALANA firms created in 2012 — more than 60,000 — this number was larger than the number employed by Minnesota's largest employer, the Mayo Clinic (around 40,000, according to data from the Minnesota Department of Employment and Economic Development).

Black-owned businesses had a 103 percent growth in jobs during the same time that community was experiencing an economic squeeze. The same was the case for American Indian firms and other ALANA firms. So the bottom line is that while these communities experienced an economic squeeze, they were still powering the Minnesotan economy with their spending and tax payment, while at the same time their entrepreneurs were creating jobs for Minnesotans.

In a recent meeting of the Alliance for Metropolitan Stability, I was struck by the fact that the economic squeeze could have been much worse without the active engagement of the nonprofits, foundations and citizen groups who work hard to bring visibility and resources to communities in need.

What else can be done? My research and reflection on economic development strategies local and global lead me to these conclusions:

We need long-term, integrated strategies. I support both the recent editorial in the Star Tribune calling on Gov. Mark Dayton to convene a high-level meeting to address the challenge of the economic squeeze and the specific strategies offered in a recent commentary by Louis King. Any strategy must integrate four elements (of what I call the "policy mandala"): material, physiological, personal and social environments — for example, a job with affordable health, housing and child care and with opportunities for social mobility and personal growth. It does take the active involvement of the whole village to achieve long-term success.

Minnesota has one answer to grow wealth in ALANA communities — entrepreneurship. Yet in a recent survey of African immigrant business owners, a dominant conclusion was that mainstream programs and resources were not reaching them. There is a lot of entrepreneurial energy at the micro-enterprise level, and we need to grow the pipeline and growth trajectory of these businesses.

We need to use the money the state spends on goods and services to grow ALANA businesses and to employ ALANA workers. Average sales of ALANA firms were much lower than those of non-ALANA firms. As they grow, they are also going to hire in our neighborhoods, bringing jobs and economic prosperity.

Over the past two decades, I have been studying the use of minority businesses in the public spending of government agencies, and my general conclusion is that the rate of utilization of these businesses has been extremely low. The governor has indicated strong support, and various departments have responded creatively to his call to increase the utilization of minority businesses and workers in government-funded programs.

We need to operate with cultural intelligence. What works with African immigrants might not work with Latinos, and within those groups, there are differences, too.

We need a special focus on female-headed households, both because of high poverty rates as well as the strong entrepreneurial energy among ALANA women.

We need disaggregated data within ALANA communities to get at the differences in experiences and to ensure that communities with similar needs have access to resources.

We need to close the achievement gap today, not five or 10 years down the line, because today young people are leaving school or college without a passport to success. One simple strategy for schools is for every parent to take their student's MCA test result to their schools and develop a plan with the school to ensure that the next time the student takes the test, any gaps are eliminated.

Finally, we need something that does not cost money — a change in policy perspective from considering these communities "deficits" to viewing them as "assets." Such a shift would release a tremendous amount of emotional energy that would transform Minnesota for the better.

Bruce Corrie is a professor of economics at Concordia University-St. Paul. Data and a one-minute video can be found at http://www.chaimn.com/?p=821.