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‘Like a recession that happened overnight’: a Q&A with DEED Commissioner Steve Grove

DEED Commissioner Steve Grove
MinnPost photo by Peter Callaghan
DEED Commissioner Steve Grove: "There isn’t a playbook for this."

A month into the coronavirus pandemic, a once rosy outlook state officials had on a stable economy has vanished.

Minnesota’s 3.1 percent unemployment rate in February has given way to more than 220,000 people asking for unemployment benefits in March. For the Department of Employment and Economic Development, a mission to fill 140,000 open jobs in the state has been replaced by the task of shepherding Minnesotans through a stay-at-home order that could leave 28 percent of the state temporarily out of work.

At the helm of the agency is Steve Grove, a former Google executive who was appointed to the job in January of 2019. Over the last few weeks, DEED quickly expanded who is eligible for unemployment, launched a new $30 million emergency loan program for businesses, and worked with the Legislature to start a $10 million program to help small businesses pay back private loans.

In an interview, Grove said DEED’s goal has been to tide businesses and workers over until federal relief can reach them. Congress passed a $2 trillion stimulus bill last week that includes direct payments to taxpayers, as well as other business and disaster loans. “For a small business who is teetering on the edge and needs some help to survive, even just for a matter of weeks, the state wants to move quickly to try and help them,” Grove said.

MinnPost talked with Grove to learn more about how his agency has responded to the COVID-19 outbreak and what the future might hold for Minnesota’s economy. This interview has been edited and condensed for clarity.

MinnPost: Is there anything else left to do to bridge the gap for businesses until federal money gets here?

Steve Grove: Well, we’re always looking for new ways we can help. And I think we’ve got a lot of good ideas in the private sector, too. I do think that the federal government just has such a better set of levers for this kind of recovery given that they can go into debt and print money, all that — things that states can’t do. So I do think that most of our focus in the coming weeks is going to be getting our systems set up to take advantage of those federal dollars. One of the pieces of that is, of course, unemployment insurance. So we moved quickly, more quickly than almost any state, to expand and open up our unemployment insurance program for people affected by COVID. And so that was a good first step. 

But now the federal government has passed additional funding for pandemic unemployment insurance, which essentially pulls from the disaster unemployment insurance federal statutes to get more money to businesses and opens up funding for gig economy workers and those who aren’t a part of the unemployment insurance system. So that’s going to be a big effort because our unemployment insurance system, nor is any states’ unemployment insurance system, set up to deploy that kind of capital. 

And so states across the country are having to kind of rewire their systems from a platform perspective to be able to issue those kinds of payments — which are great and much needed — to ensure that we can get that money out. So a big part of the coming effort is to make sure that and all of its functionality is set up to deploy money to people who it was never built to serve because of the way that unemployment insurance works.

MP: One question that I had was while you’re setting all this up: What is the process behind the scenes like? Are you following another state, or is there a handbook, “In Case of Pandemic?”

SG: Well, I have a researcher who every day is just scouring the web and scouring other states’ activity for any new ideas that are coming up in other states. So we get a steady feed of those ideas coming in to bank off of, and an example of that was we saw what Massachusetts did. They had a similar emergency loan program to the one that we launched, but they only put $10 million in it and they allowed a maximum of $75,000 (per loan) in it, which is almost double what we did. And they ran out of money in three days. So we kind of watched that and we’re like, okay, we need to calibrate a little bit differently. A: we probably need more money per capita and B: we probably need to lower the maximum amount. So every state is kind of learning from each other. 

There’s this kind of laboratory of democracy happening across the country as states figure out different ways, respond. I think the federal government response has really put us behind and so states have had to try stuff, experiment with stuff and so we are tracking other states. You know there isn’t a playbook for this. Obviously this is a global health pandemic unlike anything we’ve ever seen. We do look back at how the state has responded in recessions in the past, which I think gives us some sense of ideas and things that we can tackle. But of course, the fundamentally unique thing that we’re dealing with here is that this is like a recession that happened overnight. It’s not something that sort of happened over time and we had time to build up for. 

An example of that is unemployment insurance, the number of people that we employ in that division, at DEED, that always matches the need the state has, right? You don’t want to have too many people in the program if unemployment is at 3.1 percent which is what it was before this crisis began. So we had non-recession level staffing and then suddenly overnight we’re seeing that we’ve had more people apply for unemployment insurance since the start (of the outbreak) than we had in all of 2019. So you can imagine the staffing and resource constraints that provides. But we’re adapting.

I think one of the things we’ve been able to do is pull people from other parts of DEED into the unemployment insurance program. We’ve looked back at who may have worked in the program before. Some of our hospitals are seeing doctors and nurses come in off the bench from retirement to help, we’re kind of doing the same thing at DEED. And so the team is flexing and I would say that there is a real spirit of comradery and creativity inside the department. This is why people get into government to serve. And that that kind of morale is inspiring for me to see at a time of crisis.

MP: When you look at Congress, they’re passing a one-time check for people, they’re able to greatly increase the length of unemployment payments and expand eligibility further. Are those things needed at a state level and can they be done at a state level? 

SG:  States aren’t set up with the kind of revenue streams to get that done. That’s why federal government dollars are so important here. We have to balance our budget in the state. We can’t go into debt, We can’t print money. Those are things that the federal government can do. We’re working very closely with (Minnesota Management and Budget) on this and, of course, they’re tracking our revenues in the state, which are of course going down because business is slowing up and the crisis is decreasing tax dollars that are paid. 

And so, no, I don’t think it would be wise or efficient to look at deploying state money in the same way. It doesn’t mean we’re not considering everything. Of course, we’re looking across everything that we could do, but you really got to be smart and take advantage of those federal dollars, maximize them, increase the speed at which you can get them moving. And that’s what we’re trying to do.

MP: You’ve been talking to businesses. What’s your assessment of the ability for businesses to bounce back and actually exist after this? We’ve heard from a number of industries who are worried about their ability to stick around. And just around Minneapolis places are closing their doors for good already.

SG: I do think Minnesota businesses are resilient, and we’re blessed with having a diverse economy that has in past times of economic hardship been able to bounce back better than other states. But this is difficult and it’s heartbreaking to see businesses closing up shop. There’s no question this is an unprecedented time. There’s been this kind of immediate response that we’ve been engaged in; I think we’re thinking a lot about what the long-term effects of this are and what we can do to help businesses startup with greater speed and efficiency once this passes, because it will pass and this economy will bounce back. 

But the economy probably will look different. … And so we’re beginning to engage private sector leaders on that, we’re beginning to form an economic security working group that’s supposed to be looking at those near term levers we can use to head off the challenges. 

At the same time, I’m looking at when this thing bounces back, what do we need to do to make sure the economy can ramp up again in a way that helps all Minnesotans achieve stability and helps as many businesses who can restart and new businesses enter the market too. So yeah, that is an important question. We’re engaging in it and we’re going to need help in the private sector too, to make sure government’s doing the right thing to make that work.

Comments (11)

  1. Submitted by Bob Barnes on 03/30/2020 - 09:55 am.

    I doubt there will be a bounce back for many years. Who pays for all these forgiven loans? Taxpayers, again. Revenues at all levels is going to collapse. Colorado is already forecasting a 1.5 billion loss in revenue over 3 years and that’s their rosy prediction. Many millions will be jobless. Countless small and medium sized businesses will not survive this. Margin calls are already happening.

    1929 will not look so bad compared to what’s coming this time. 2008 was just a warm up. And this is all self inflicted. Had we just kept businesses open we would have lost some people (which is sad but it’s part of life) but at least we would have an ok economy. Now we have a bunch dead and a depression (which will kill even more via suicide and stress). Once again we tried to avoid the lesser pain and jumped headlong into the greater pain.

    • Submitted by RB Holbrook on 03/30/2020 - 03:11 pm.

      “Had we just kept businesses open we would have lost some people (which is sad but it’s part of life) but at least we would have an ok economy.”

      How many deaths are acceptable to preserve the Dow Jones average?

      • Submitted by Bob Barnes on 03/30/2020 - 07:48 pm.

        It’s not about the DOW. The math says about 5% more would have died if we did nothing. But with what’s coming, the Fed is expecting/predicting up to 32% unemployment (worse than the Great Depression)… thousands, maybe millions, of small businesses aren’t going to survive. The suicide rate in 2007/08 went up an estimated 5%. That alone will be another 2,000+ deaths that aren’t virus related. The death toll from doing nothing would not have been as bad as what we will end up with between the virus and the economic problems.

        This is about preventing more loss of life overall. We needed to take the smaller pain to avoid a much larger one. Now we’re going to get the worst of all outcomes. And what do you think happens next fall when Covid19 comes back during Flu season and the dominant strain being more deadly than what we are seeing now?

      • Submitted by Matt Haas on 03/31/2020 - 07:01 am.

        Yeah, I’ve reached the point where I think it’s time we quit attempting to reason with sociopathy. Just note the source and move on with our day. They’re just not like us, and we’ll need to remember to treat them accordingly, limit their ability to harm us, moving forward.

  2. Submitted by William Hunter Duncan on 03/30/2020 - 10:48 am.

    If you count the money the Federal Reserve made up to save the REPO market since September, plus this stimuls plus the Fed announcement of unlimited QE, we are throwing approximately 7 trillion at the big banks, big corp and private equity, and one trillion at small business, working people and the health care industry.

    So look joyward to the .01% buying up the wreckage of this economy for pennies on the dollar. More extreme runaway income inequality. And an increase in all the pathologies beset us after 2008: mental illness, drug addiction, suicide, homelessness , increased pollution, extinction of pollinators….

    Unless we stand up and call foul….

    • Submitted by Bob Petersen on 03/30/2020 - 02:20 pm.

      So what would be your plan?

      • Submitted by William Hunter Duncan on 03/30/2020 - 07:58 pm.

        Thank you for asking, Bob.

        I recommend restoring America’s productive capacity and America’s family and cooperative local food production. A new Jobs Core restoring America’s soils, waterways and biodiversity, and rebuilding America’s infrastructure for a future without so much oil. Make the focus on local production of essentials, and make the new businesses owned by the people working there. Tax pollution, consolidation and automation.

        • Submitted by Bob Petersen on 03/31/2020 - 09:31 am.

          Sounds like much more of a complete change to a progressive society that most people don’t even want and know is unsustainable. People want opportunity and just live their lives. Everything that you mention does not drive us forward but backwards. We know that more regulation and choosing winners during a recovery not only severely hampers that recovery, but actually makes those that had the means to survive even that much more rich compared to everyone else.
          We recently saw what a long, slow, drawn out recovery looked like. The ‘haves’ got more while the rest took a long time just to get back to even water. That is a mistake we should not do again. We need people back to work quickly. It will be less pain on the government, the people, and especially the taxpayer.

          • Submitted by William Hunter Duncan on 03/31/2020 - 10:13 am.

            “Everything that you mention does not drive us forward but backwards”

            Is it backwards to offer people good, meaningful, well compensated jobs restoring the land, water and biodiversity and rebuilding infrastructure? Why is it backwards to focus on small business, coperatives the local and people instead of the focus being on banks, corporations and gazillionaires?

            I also added that there should be a debt jubilee, wiping out student debt and home mortgages, but then I guess it is ok to throw 7 trillion at our elite betters but something of real tangible benefit to tens of millions of Americans can’t be discussed.

            The recovery took so long and never happened for a few ten million Americans precisely because the only future acceptable to talk about is one in which the wealthy are protected no matter what and the rest of us are expected to tread water in rising seas.

  3. Submitted by Tom Crain on 03/31/2020 - 10:11 am.

    The few-strings-attached big business bailout is unconscionable. Republicans – of course – wanted little oversight and few guidelines. Democrats won a fig leaf concession of an IG and ‘oversight panel’ that has already been undermined with a Trump signing statement.

    I have no problem with the other components: direct payments to individuals, UE funding, small business forgiveable loans (strings attached!) and State aid. All of this makes sense

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