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How much do Minneapolis' mayoral candidates care about Minneapolis' business community?

Mayor Betsy Hodges and Council Member Jacob Frey
MinnPost photo by Peter Callaghan
Mayor Betsy Hodges speaking at Tuesday's forum as Council Member Jacob Frey looks on.

That the question had to be asked says something about the tone of the Minneapolis mayor’s race so far.

“Are you seeking the support of business owners and leaders?” Star-Tribune business columnist Lee Schafer asked at a gathering of six mayoral hopefuls at a Tuesday candidate forum addressing business and economic issues held at the University of Minnesota's Humphrey School of Public Affairs. 

Since the campaign is still in the DFL-endorsement-seeking phase, the campaign rhetoric up to now hasn’t been exactly business friendly. So it was apt to wonder whether the candidates would accept — let alone seek  — business support, especially since the Minneapolis Chamber of Commerce was the event sponsor.

The answers from the seven candidates invited to the Humphrey School auditorium ranged from “yes,” to “yes, but” with a single “no.”

One of those “yes” responses came from incumbent Mayor Betsy Hodges. “The success and thriving of business in Minneapolis is one of the reasons that we’re doing well, and it’s one of the keys to the future as long as we make sure we’re doing it the right way,” she said.

Council Member Jacob Frey also said he is seeking and receiving business support “because what we are doing in the 3rd Ward over the last four years has been working.” He said that his ward has had 40 percent of the new construction in the city and “near record numbers” of business starts. 

Former Hennepin Theatre Trust President Tom Hoch, meanwhile, used the question to voice his central campaign theme — that the city under Hodges does not have a plan to differentiate itself and build the economy as do cities like Seattle, Denver and Austin.

Aswar Rahman, who said he comes from an immigrant family filled with small-business people, said that he was seeking business support but that the concerns of business people aren’t much different from the concerns of everyone. “There’s a tendency to make a distinction,” he said. “Business owners live in the city too, most of the time. They care about the issues of police, and they care about education.”

The qualified yeses included former law professor Nekima Levy-Pounds and state Rep. Raymond Dehn.

“Absolutely I’m seeking the support of the business community,” said Levy-Pounds. “However, the reality is that I sometimes speak a truth that the business community doesn’t always want to hear.” 

State Rep. Raymond Dehn also said he is seeking business support, “but we also need to consider that over the past five years, we have seen a lot of prosperity that’s happened in certain parts of our city and other parts that haven’t benefited.”

Only longtime activist Al Flowers said he had no interest in support from the business community. “Business is being taken care of by City Hall and the City Council,” said Flowers. “I’m going after the people who are stressed and undergoing equity concerns.”

How business-friendly is Minneapolis? 

The other topics raised by the event's moderators, Schafer and University of Minnesota professor Larry Jacobs, centered on whether the city was business friendly, including questions about whether the candidates — especially Hodges and Frey — had thought about business impacts of ordinances such as mandatory sick leave, the city-only minimum wage and recent hikes in the property tax.

The challengers often took aim at Hodges, and to a lesser degree Frey. The two are not only the two city elected officials in the race, but are seen as being two of the strongest candidates in the field. 

Levy-Pounds agreed that the city does make starting and running a business challenging. “I believe what’s happening to business owners and business leaders is a microcosm of the challenges that many of us face when it comes to city government being responsive,” she said.

Candidates Nekima Levy-Pounds, Tom Hoch and State Rep. Raymond Dehn
MinnPost photo by Peter Callaghan
Candidates Nekima Levy-Pounds, Tom Hoch and State Rep. Raymond Dehn

Rahman agreed with a question that business people feel their concerns are met with “deaf ears.” “In Minneapolis, business is seen by the government as something to be done to rather than work with,” he said. “It is something we throw laws at and see what sticks.”

Hodges defended her record on business, saying she listened to businesses’ concerns during her first year and then implemented her Business Made Simple program, which is attempting to get rid of outdated regulations and adjust how city officials deal with businesses. “You don’t need a jukebox license in Minneapolis anymore,” Hodges said. “You’re welcome.”

But she sparred a bit not only with the questioners but with Frey on the issue of worker benefits. Rather than describe her initial advocacy for a fair-scheduling ordinance as an example of turning a deaf ear to business, she thinks her decision to back away after hearing concerns should be viewed as an example of listening.

“That’s the definition of being heard,” she said.

City-only mininum wage: 'The right thing' or 'a trap'? 

Frey, however, was critical of Hodges for violating what he considered a pledge by city officials to withhold taking a position on the details of the minimum wage until a series of listening sessions was complete. He said that he’d been in favor of the city going alone on the minimum wage for nearly three years, but that effort was initially thwarted by Hodges, who preferred a regional or state wage plan.

“For about a year and a half, up until Mayor Hodges flipped her position to suddenly be for a minimum wage in an election year, it did not look like we would be able to get anything done,” Frey said.

Hodges also announced in December that she could not support a local minimum wage that let restaurants include tips to cover part of that minimum (known as a tip credit or tip penalty, depending on whether the definer is for it or against it).

At the forum, Hodges noted that Frey had been supportive of a tip credit and now opposed it, presumably when it became a litmus test for economic justice advocates and the more progressive wing of the city DFL. 

Frey, in turn, said he talked about the tip credit and “about 50 other things” as he was looking at ways to have a wage ordinance that would work.

Hodges, Frey, Levy-Pounds and Dehn all pushed back on suggestions that the minimum wage would harm businesses; that it would lead to an exodus of businesses to the suburbs or cause job losses.

Dehn said that after he voted to raise the state minimum wage, there hasn’t been negative economic consequences. Levy-Pounds said she agreed with Hodges — something she noted wasn’t a frequent event — that it would have been better to act with other governments in the Twin Cities region. 

“But the reality is, we can’t wait for St. Paul, we can’t wait for other cities to do the right thing,” Levy-Pounds said. “At some point as a city we have to become a leader.”

Candidates Aswar Rahman and Al Flowers
MinnPost photo by Peter Callaghan
Candidates Aswar Rahman and Al Flowers

Frey said he did not think there would be any business losses because the City Council will likely adopt multiyear phase-ins. 

Hodges predicted what she called a “transition trough” as businesses and workers adjust to the increases but that the city could manage it. “But I also think the question is, ‘Who’s paying now for the lack of a minimum wage?” she said. “We all are, because of people working two jobs or working full time and still living in poverty,” which contributes to more people needing government assistance and government help. 

Hoch said he wasn’t sure of the impacts — studies of other cities’ wage increases are inconclusive since the ordinances haven’t been in effect long enough. But he did say they next mayor needs to be monitoring the implementation and be prepared to make adjustment if impacts are overly negative.

Only Rahman and Flowers said the city-only minimum wage would hurt business, and hurt people of color disproportionately and the poor disproptionately. Flowers dubbed the minimum wage “the biggest ruse” of the election. “Walmart, Target, these big organizations, they can handle $15 an hour,” he said. “You’ll kill all small business, and everybody up here knows that.” 

Flowers said the city should spend its time on issues that will actually help poor people, such as affordable housing. 

Rahman was also critical of a city-only wage. “Al called it a ‘ruse,’ he said. “It’s also a trap,” because it will make it more difficult for people — especially people of color — to start businesses. The city is 40 percent people of color but only 10 percent of its businesses are owned by minorities, he asserted. “It’s a trap. It’s a way to make sure we cement that gap. And in that gap is where poverty thrives; it’s where crime thrives; it’s where unaffordable housing thrives.”

“That is the way to make sure Minneapolis stays an impoverished city for 40 percent of us,” Rahman said.

Under fire for property taxes 

Hodges also took shots for the recent increases in city property taxes. Levy-Pounds and Rahman said that property taxes are a factor in rent hikes that are displacing some residents.

Dehn, however, said much of recent increase in tax bills are due to the recovery in property values after the Great Recession. “We have lots of wealth and sometimes it’s OK to raise taxes on some folks who can afford it,” Dehn said. And it is a hot market that is as much to blame for rent hikes as property taxes, he said, suggesting that the city could investigate ways to abate taxes on some apartments in return for owners agreeing to keep rents lower.

Frey said that much of the construction is in his Ward 3, and that the development builds the property tax base without raising taxes on others. But Hodges noted that the value of new construction doesn’t automatically turn into tax revenue. To do that, the city has to increase its levy amount, Hodges said. And she defended her backing of a long-term plan to repair and maintain parks and streets, much of which will be funded by property taxes. 

While the forum was intended to focus on business and economic issues, Flowers at one point objected to even using that premise for an event. “The biggest issue in this city is about people dying,” he said in reference to gun violence, especially among young people. 

But the city won’t focus on that, he said, because it is responding to business concerns about violence downtown, especially with the Super Bowl coming in February. “They spent time on the downtown plan, to prevent people from coming downtown, but they did nothing about the violence on the north side,” Flowers said. “But it all go together. If you don’t fix that, then you’re going to have problems downtown forever.”

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Comments (5)

Whats the next shoe to drop?

I think it was a very appropriate question to ask this group - and I wonder if business owners would have agreed with the candidates self-assessments.

The City has heard from the business community, on these workplace issues, and pushed past their objections and concerns with plans that are pretty much intact from when they started the discussions. This happened with sick time and it's happening now with the minimum wage.

Mayor Hodges was a vocal opponent to a city-only wage increase, describing the harm that a city-only wage would do to Minneapolis businesses in a metropolitan area where the city is only a small piece of the metro - and then she reversed herself and even doubled-down, opposing a tip credit, making the inevitable wage increase even more of a challenge for the business owners and for the servers who do well today in the tipped economy.

Last years scheduling ordinance which would have been very expansive in the control it exerted over Minneapolis businesses fortunately was withdrawn, but the same advocacy groups that have been pushing for the minimum wage increase and sick time were upset by this being retracted.

How long will it be before City hall reverses itself, again, and pushes yet another mandate onto the Minneapolis business community? Will a few crowd showing up at the City council meetings with megaphones get this back on the fast track to implementation with the same lip-service paid to the concerns that we have seen on this current topic of the minimum wage?

I don't think the behavior of the elected officials over the past few years should give Minneapolis business owners, especially small business owners, much confidence that things will not continue to get more challenging and more and more mandates are layered on their operations.

An outcome as identified as Mr Flowers is that some parts of the city will not be able to adapt as well as others. Some neighborhoods will tolerate those menu price increases or the costs of items in the shop increasing to pay for all these mandates, in the name of livable neighborhoods - but will shops in North Minneapolis have a clientele that can accommodate those same type of increases and a minimum wage 50% higher than across the border in the neighboring suburbs?

Downtown

Despite all the talk about the problems in Chicago; spend a little time in the food and entertainment districts in each city and it is clear to see that Minneapolis is losing the battle. Relentless pan handling, public urination, random gun shots, all contribute to an environment that makes potential customers go away and stay away. It will take a lot of political courage to improve these things. Tom Hoch is the candidate with the most experience and ability from the Hennepin Theater Trust to do something about building a better downtown business/entertainment environment.

City Council knows best how to run businesses

I believe the root cause is single-party governance. Our elected officials are an echo chamber.
I happen to identify with the party that dominates Minneapolis governance. I happen to agree with most of their goals.
But since none of them ever hear any other voices, they are reinforced in the view that they know how to run businesses, better than people who do run businesses.
I have run four businesses. Average number of employees, 181. That's not 3M, but it's not inconsequential, either. Two of the four businesses have employees in more than one municipal jurisdiction. (One of the four in many municipal jurisdictions!)
I well understand, as no one on Minneapolis City Council understands, that conditions of employment should not be legislated or regulated on the municipal level.
But even if you believe municipal level legislation/regulation is proper, how can any reasonable person propose a minimum wage that does not take into account tips?
If you believe in a minimum wage - and I do, though not city by city - then how can you deny that a dollar earned is a dollar earned, regardless of source? A dollar may be earned by wages, by tips, by salary, by dividends. by interest.It spends the same, regardless of source.
Minneapolis and other cities should get out of the business of legislating conditions of employment. But even if they don't, and they won't, they should recognize that a dollar earned is a dollar earned is a dollar earned.
But the echo chamber will never hear this.

The Logical Extension

Of your argument is to vote for the Democratic candidate for governor in 2018. That is, if you really believe that single party control is a bad thing.

Business should be partners in working for a fairer economy

Not sure what the business community has to whine about? From my admittedly cursory on-line reading, there is ample evidence in print media news, on the Met Council website, the Greater MSP website, and the Federal Reserve Bank of Minneapolis website that the state and regional economy are growing at a healthy rate.

From a more progressive perspective, the Minneapolis city council and mayor, (and at a State level both Democrats and Republicans) have been clearly pro-business regarding taxpayer subsidized tax incentives, business support, transportation policy and development projects. The city of Minneapolis has supported small businesses, large housing projects, business group backed transit policies and large sports facilities - all with the assistance of taxpayers. Data shows there has been economic and business growth in Minneapolis and the State. The question is...who reaps the benefits?

These corporate friendly policies, which have clearly benefited the Minnesota business community, haven’t worked for everyone. Data shows that it is small farmers, people of color and the working poor have not benefited from economic growth in the last few decades, let alone the recent "recovery" from the Great Recession. When small farmers are going out of business, unemployed people are unable to find jobs or affordable housing, or people must choose between a rent payment and health care, or those working 40 plus hours a week are still unable to get by, one must ask: "Who is benefiting from this economic growth?"

For corporations and the business community to not want a fairer economy, where everyone shares in the benefits of economic growth is just plain greedy. And, for the business community to try to block efforts to help the working poor and people in poverty, especially people of color who are even more affected by low wages and poverty, is immoral. The progressive economic views of some mayoral candidates are hardly radical, leftist or new. Even Henry Ford (a capitalist if ever there was one), believed in paying higher wages to workers to lower job turnover, help with job satisfaction and enable the workers buy more. Maybe it’s time for the business community to learn from its predecessor.