After two years of a punishing pandemic that’s disrupted nearly every facet of our lives, Minnesota’s economy finds itself at a unique juncture. We face some extraordinary challenges in workforce, job growth, and racial disparities in our economy. But we also face an extraordinary opportunity – a $9.25 billion dollar surplus to invest in addressing these challenges.
It’s a rare thing to have such strong resources to tackle such big challenges, and how Minnesota meets this moment will determine the course of our economy for decades to come.
The governor and lieutenant governor’s “Budget to Move Minnesota Forward” contains proposals that will put Minnesota’s economy on the cutting edge. This includes investments in talent attraction, our startup ecosystem, broadband, and our workforce in the fastest-growing areas of our economy like manufacturing, agriculture, health care, and technology.
In an intensely competitive and fluid economic environment, the legislature should seriously consider these investments this session to ensure Minnesota can lead the way for post-pandemic global economy.
One of our top priorities is to replenish the Unemployment Insurance Trust Fund. During the pandemic, this program served as a lifeline for 900,000 Minnesota workers and their families. We estimate the benefits we paid out supported over 353 million bags of groceries and $18 million in monthly rent payments. Now, we need to make sure this one-time investment prevents pandemic-related tax increases for our businesses and stabilizes the system for future workers. And we must honor frontline workers who have continued to serve Minnesotans throughout the pandemic; we also propose payments that provide some compensation for their essential and life-saving service.
We also need to finish the job on connecting our entire state to high-speed Internet. Minnesota is home to one of the best broadband incentive programs in the country – enabling providers to serve homes that would otherwise never make sense for their bottom line. An investment of $170 million in this DEED program would, in combination with incoming federal dollars, finish bringing broadband access to all Minnesotans.
Currently, 92 percent of Minnesotans are connected to reliable broadband. This investment is particularly important for Greater Minnesota, which suffers much lower rates of connectivity than the metro. Much like rural electrification in the last century, broadband today is not a luxury but an essential part of our state’s infrastructure and vital for health, education, and economic development.
At the same time, we need to grow small businesses and foster innovation in our state. Since the pandemic began, small business starts are up 41 percent in Minnesota – people are trying new things in the new economy. We need to make sure they succeed here, so Minnesota creates the next Fortune 500s that define the future. That’s been our legacy for decades.
To do this, we need to be aggressive. We need to invest in growing our Launch Minnesota program for startups, expanding to accelerate promising companies who want to scale their endeavors in our rich talent market. We also need to renew the Angel Tax Credit so venture capital keeps flowing to our state.
These programs work. In 2021 alone, the Angel Tax Credit issued $10 million to help more than 80 companies raise $40 million in private investment, while Launch Minnesota grantees leveraged state investments to raise $35 million, with 100% of grantees saying their businesses were propelled forward.
We also need to modernize Minnesota’s policy frameworks for engaging startups. In doing so, we can better leverage the State Small Business Credit Initiative Investment, a $97 million federal influx of capital headed our way that will help promising small businesses and startups get the capital they need to thrive.
As we invest in supporting new businesses and small businesses across our state, we must make sure we have the workforce to support that growth. Since February 2020, Minnesota is down about 87,000 workers. The governor’s budget invests in the most promising sectors of growth.
At DEED, that means training workers for the jobs of the future. A $15 million investment to grow the tech jobs pipeline for youth would help prepare BIPOC youth – one of the fastest growing segments of our workforce over the coming decade – to meet the demands of Minnesota’s dynamic tech industry and prepare young people for this high-paying career track.
A $13 million dollar investment in an Adult Tech Training Program, again with a focus on BIPOC workers, would address racial and gender employment disparities worsened during the pandemic by helping adults transition to a field with a promising future and high pay. And a clean tech workforce program of $8 million will help Minnesota’s workforce prepare for all the clean tech jobs growing in our market as this critical industry booms.
Minnesota’s economy must work for all Minnesotans. Immigrants and refugees will continue to be a vital source of talent that Minnesota companies need to thrive. In fact, New Americans accounted for nearly half of the state’s labor force growth over the past decade.
Investing $470,000 to solidify an Office of New Americans at DEED would support immigrant and refugee integration, reduce barriers to employment, and improve connections between employers and job seekers. Key sectors like health care and manufacturing would face even greater workforce challenges without the immigrants and refugees who now call Minnesota home. Yet we still don’t accelerate or optimize the employment of our newest Minnesotans nearly effectively enough. This office would do just that, addressing critical workforce challenges that currently constrain growth.
These proposals, along with others in the Walz-Flanagan budget to Move Minnesota Forward, would provide a powerful catalyst for equitable, innovative and sustainable growth for Minnesota at a critical time. Let’s meet this extraordinary moment with investments that prepare Minnesota for the future – building a state that all Minnesotans can be proud to call home.
Steve Grove is the commissioner of the State of Minnesota’s Department of Employment and Economic Development.