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Urban and rural areas suffer as Minnesota’s inequality grows

Courtesy of Growth & Justice
This map of poverty rates by county is one of several in the report “Widening Inequality in Minnesota: A County-by-County Analysis.’’ The maps show how economic inequality and distress worsened between 1999 and 2012 in the urban core and in rural counties, while the suburban-exurban ring enjoys relatively even affluence.

Recent articles by MinnPost are establishing with increasing clarity how the underachieving 2015 Legislature has short-changed both rural Minnesota and the Twin Cities urban core.

Citing leading rural advocates, Briana Bierschbach’s recent analysis summarized failures to respond to a long list of public investment needs in transportation, broadband and high-speed Internet service, railroad safety, local government aid and work-force training. Other articles are revealing how low-income communities of color in our urban core were ill served, and are, for instance, paying a “transit time penalty’’ from ongoing neglect of mass-transit infrastructure.

Here’s some important and timely context showing why these outcomes matter, from a report by Tom Legg, recently retired from the finance faculty at the University of Minnesota’s Carlson School of Management, and Ngoc (Jenny) Nguyen, a U of M graduate student in applied economics. Their report, published recently by Growth & Justice, provides maps and fresh documentation that help illustrate for policy-makers exactly why they must bring more equity to both the urban core and Greater Minnesota.

 “Widening Inequality in Minnesota: A County-by-County Analysis’’ provides a sweeping view of worsening inequality in rural and urban counties by comparing median income, poverty rates and gini coefficients (a measurement of inequality) between 1999 and 2012, a period that included two damaging recessions.

Relatively even prosperity in suburban/exurban ring

This research challenges the notion that the inequality divide in Minnesota is essentially between one monolithic Twin Cities metropolitan area and one big Greater Minnesota. Rather, the disparity is better understood as a chasm between a relatively even prosperity in the suburban/exurban ring, and the more distressed spaces within and outside that ring.

This statement in the report’s introduction dramatizes just one statistical measure of that gap: “The highest median incomes are in the counties that comprise the exurban and suburban ring around the Twin Cities metropolitan area. No Minnesota counties inside or outside that ring have a median income as high as the median income in the poorest suburban county.’’

This widening regional inequality is perhaps not surprising to experts and students of geography, demography and economics in Minnesota and the United States.

Most of us have known for some time, at least since President Lyndon B. Johnson kicked off the “War on Poverty’’ in the 1960s by visiting rural whites in Appalachia, that poverty tends to have an urban and a rural face, while suburban and exurban counties remain islands of relatively even prosperity.

The report shows, however, that even the suburban areas in Minnesota suffered during the last decade and a half, as two large recessions rocked our nation and state, and as income and wealth grew disproportionately at the very top, for the 1 percent in particular.

Significant details in report

Dane Smith

Here are some of the more significant details in the report that illustrate the importance of place as inequality worsened in Minnesota between 1999 and 2012.

  • Inequality, poverty rates and declining median incomes worsened significantly in both the two urban core counties (Hennepin and Ramsey) and in rural Greater Minnesota counties between 1999 and 2012, particularly in Minnesota’s northern counties.
  • Although the two recessions of the last decade affected the entire state, low rates of inequality and poverty and the highest median incomes became even more concentrated in the suburban/exurban ring of counties surrounding Hennepin and Ramsey.
  • Between 1999 and 2012: Median income in 66 of 87 counties declined; the number of high-poverty counties (above 14 percent) went from 4 to 16; and the number of counties with high inequality (gini coefficient higher than 0.42) climbed from 17 to 31.
  • Recent economic recovery and growth (from 2009 through 2012) appears to have eased distress and inequality in some western agricultural counties and lifted median incomes overall. But 58 of 87 counties, almost all in Greater Minnesota, continued to experience declining or stagnant median incomes during the early recovery years, even as statewide average income grew by 12 percent.

To be sure, we can find nuance and complexity behind those numbers. The cost of living in rural areas, for instance, is lower, especially for housing and real estate, and lessens the inequality. A few rural counties are doing better in recent years and larger regional centers in Greater Minnesota are holding their own. Rebirth and renaissance in the inner cities has resulted in population growth for the first time in decades. And there are plenty of reasons for hope and confidence in the resilience of the people and communities in both our urban core and Greater Minnesota.

Further neglect, however, and leaving these inequalities entirely to market forces, is not a proven recipe for success. Bipartisan consensus runs strong for smart public investment in education and work-force readiness, infrastructure of all kinds, affordable health care for all our residents, and a cleaner and greener economy.

A lot of money left on the table

The bad news is that the 2015 Legislature left an enormous amount of money and unfinished business for urban and rural Minnesota on the table.

The good news is that the money is still on the table. As legislators and decision-makers prepare to reconvene for a special session on the education-funding bill, and as they continue to negotiate for a transportation package and tax policy for the 2016 session, they must be especially attentive to the investment potential and economic security of both rural Minnesota and the urban core. All of Minnesota, including the prosperous and interconnected suburban/exurban ring, will do better, when we all do better.

Dane Smith is the president of Growth & Justice, a research and policy organization that seeks a broader prosperity for Minnesota.

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Comments (7)

  1. Submitted by Ray Schoch on 05/27/2015 - 03:06 pm.

    Unaddressed

    I’m happy to see this piece. One of the primary structural flaws of “the market” and the sort of “free market” advocated so frequently by those on the right is that, as an economic system, capitalism is inherently inequitable. Disproportionate rewards go to a few, some become comfortable, many hang on by their figurative fingernails, and many others are basically ignored by a system that, by its vary nature, is not fair.

    Yes, capitalism generates great wealth for the society as a whole – it’s the most successful economic system humans have so far devised – but that wealth is increasingly going to the offshore and on-shore bank accounts of a minuscule portion of the population – the 1%, and even more, the 1/10th of 1%. There’s nothing equitable or democratic (with a small “D”) about a society that fosters an aristocracy, which is what the current oligarchy will become if left unattended and unregulated. A fair society will insist that the government’s job include enough tweaks and manipulations of the system to ensure not equality, but fairness. We may have had that at some point in the misty past, though I’m skeptical, but we certainly do not have that sort of system now.

  2. Submitted by Logan Foreman on 05/27/2015 - 05:07 pm.

    The problem Mr. Smith is that

    The cost of propping up out state MN will fall most harshly on the middle class. It makes no sense to subsidize tiny towns and vacant counties.

    • Submitted by Steve Titterud on 05/27/2015 - 08:41 pm.

      Would you call building border-to-border broadband…

      …a subsidy of small towns and vacant counties ??

      There is every reason to believe this will spur economic development where it is currently restrained due to a lack of this infrastructure. Same with other infrastructure needs – they are not pure, unadulterated expense with no economic benefit. Doesn’t this make sense to you ??

      As to who should pay for it, that is a separate question, and only tax fairness can cure the issue you raise of the burden falling mostly on the middle class. But those who have accumulated capital have an inordinate influence on the legislators and regulators who could champion the balancing of the scales, and they use that influence to protect and enhance their aggregation of wealth. The tax cuts proposed at the national and state level always favor the wealthy.

      The taxpayers will be paying a couple billion over the next few decades (including interest costs and upgrades) for sports stadiums here in Minneapolis for the nearly exclusive benefit of the wealthy owners and highly paid athletes.

      If we can give handouts to billionaires for NO public benefit, don’t you think some of those resources could go to the outstate areas as an INVESTMENT, rather than viewing it as the pure, dead expense of “propping up” areas that don’t deserve it ??

      • Submitted by Logan Foreman on 05/27/2015 - 10:24 pm.

        Take a look at the population of out state counties

        19 counties have less than 10 thousand people (some of them with less than 5 thousand people).
        19 more counties have populations in excess of 10 thousand people but less than 20 thousand people. What economic development do you expect in those 38 counties from more infrastructure? How much do you want to spend per person in those counties for more infrastructure? How many miles of paved roads are used by those people on a daily basis? Do you really think that businesses will come to these areas? Will there be people with proper skills? Or suitable housing? I frankly doubt that such investment will occur.

        • Submitted by Steve Titterud on 05/28/2015 - 10:57 am.

          You’ve left out some illuminating facts…

          Your citation of counties with populations less than 5,000 AS EXAMPLES which should be our guide in evaluating this problem misrepresents the population of Minnesota outside of the metro area. Let’s not call this cherry-picking data to support your argument, but rather an incomplete presentation.

          Here is some demographic data (in round numbers) which belies the notion that outstate MN is a demographic desert, as your remarks connote:

          5.3 million: total population of MN (2010 census)
          2.8 million: in the 7 county metro area (2010 census)
          2.5 million: in the 80 counties of the “outstate” area
          431,000: in the 38 counties you reference with population less than 20,000
          2.1 million: in the 42 counties of outstate MN with population more than 20,000

          So you are dismissing the needs of 2.1 million people, or about 40% of Minnesotans, by your comments – just like our Legislature seems to be doing.

          Another thing to note here is that those sparsely populated counties (most of them, anyway) have towns or cities which are population centers with much higher density than the surrounding areas.

          Examples: the city of Waseca has a population of 9,410 – nearly half of Waseca county’s 19,000 total. In Houston County, with total pop. of 18,700, the city of Caledonia has 2,800 and LaCrescent about 4,800 for a sum between the 2 cities of about 7,600, more than 30% of the county’s population.

          So the thesis that all these people are so sparsely distributed that it makes no economic sense to invest in the broadband infrastructure they need does not fully comprehend the facts.

          If you drill down into the publicly available MN demographic data EVEN A LITTLE, it is clear that to characterize these counties as demographic deserts is quite misleading. They are NOT SO.

          Of course, there are challenges serving areas with lower population density. Obviously, we can’t bury a fiber optic line into every single rural home, so some creative thinking with multiple approaches is needed to support NECESSARY services to those areas. Maybe “border to border” will take some incremental steps to implement.

          But to dismiss this many Minnesotans – and this much of Minnesota – out of hand is a huge mistake. In our age, internet connectivity is NECESSARY for the people and businesses of MN, essential to economic well-being and growth.

          We’ve handed out billions to a couple wealthy families, and yet find 2.1 million Minnesotans don’t merit our attention and resources.

  3. Submitted by John Courtneidge on 09/05/2016 - 09:03 am.

    An economic plan for greater equality

    I’m very pleased to see this article and have copied a link it to my Facebook page.

    It relates to our work on an economic plan for greater equality – sometimes called ‘The Fair World Project’.

    Here in the UK, we’ve been promoting a plan – based on the economics and activities of economic co-operation – that is designed to create sustainably prosperity for all.

    In order to point out that socialism existed and was so named – by the eraly co-operators – before Marxism we use the term ‘Co-operative Socialism’ for that evolving, democratic plan.

    More details are forthcoming on a new web-site (under construction).

    For now, the papers’ section at the web pages for the Campaign for Interest-free Money and atthe Occupy London page for Co-operative Socialism might help. The latter has some You Tube videos where I try to explain more.

    A very occasional blog called sustainabilitynotcapitalism has another collection of related items.

    I write this since a key aspect of this plan is a guaranteed ‘Living Income for Everyone’ – for which a Google search led me to the useful article on this page.

    This plan is secular but, as a Quaker and Christian, I’d like also to point to a collection of Quaker published materials – logged at the Network Project as a PDF called ‘The Kingdom of Heven – by Tuesday’.

    I hope that the foregoing helps.

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