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How COVID-19 could exacerbate inequalities in Minnesota’s workforce

Those who run some of Minnesota’s largest job-training nonprofits are urging the state to invest in programs to help those who had already been on the margins of the economy. If it doesn’t, they warn, Minnesota could face even worse joblessness among people who can least afford it.

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Photo by Evan Wise on Unsplash

When Olive Angle Wilson was hired in March as an assistant pre-kindergarten teacher in North Minneapolis, the job was a great fit. Wilson, 19, said it was rewarding to help children during a formative time in their life.

Wilson had struggled to find stable work or decide on a career until participating in training programs with the nonprofit Twin Cities Rise and earning the child care gig. But the pre-k job lasted only two weeks. As the COVID-19 pandemic spread in Minnesota, Wilson was furloughed.

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Furloughs and layoffs have become common across industries and around the state, of course, with more than 560,000 people applying for unemployment insurance since Gov. Tim Walz began instituting sweeping public health measures to slow the spread of COVID-19. Yet for those in Minnesota who already struggled to find work prior to the outbreak — including, disproportionately, people of color — the new barriers to work represent a particularly bruising setback.

Olive Angle Wilson
Courtesy photo
Olive Angle Wilson, 19, a furloughed child care worker in Minneapolis.
Wilson, who is black and transgender, said the pandemic has not only disrupted a nascent career, it’s also meant relying on food shelves for groceries, pooling money with roommates to pay for utilities and using unemployment for other expenses.

Now, more than a month into the outbreak, those who run some of Minnesota’s largest job-training nonprofits are urging the state to invest in programs that will help people who had already been on the margins of the economy. If it doesn’t, they warn, Minnesota could face even worse inequalities and joblessness among people who can least afford it.

Who was left out of the previous economy

Before the COVID-19 pandemic, Minnesota’s economy was in good shape, at least according to most traditional measures. Unemployment hovered around 3 percent and there were more than 140,000 open jobs in the state. 

Yet prosperity was not uniform. Black and Hispanic unemployment was around 4.5 percent, and another measure of unemployment, which includes people who are working part-time but want full-time work, was around 5.6 percent.

At the time, a focus of the state’s economic development efforts was trying to help people of color, and those with barriers to employment like the formerly incarcerated, connect with businesses in need of workers. 

One initiative, known as equity grants, directed more than $60 million over several years for nonprofits that provide job training and education services for minority communities. 

Measuring the exact impact of those efforts is complicated, but the state had made inroads before the pandemic: black unemployment had dropped from 6.3 percent to 4.5 percent between March of 2019 to March of 2020.

Tom Streitz
MinnPost photo by Walker Orenstein
Tom Streitz
That progress has now been lost. Since March 15, more than 26 percent of people of color in Minnesota’s labor force have applied for unemployment insurance, compared to 15.4 percent of white workers. 

Tom Streitz, president and CEO of Twin Cities Rise, said roughly 20 percent of graduates in his program went into hospitality jobs. Those positions, along with retail, “went up in smoke,” in the wake of the pandemic. And while there are new opportunities in places like call centers and grocery stores, many students’ lack of technological resources such as laptops create another barrier to getting hired. Meanwhile, public transportation cuts make it harder for people to get to work, and even as many job programs switch online, the people who need them sometimes can’t access them.

Joe Hobot, president and CEO of the nonprofit American Indian OIC, said the people in his programs often need immediate work and have no time for training. Many land in a service sector that has now been crushed. Others may get training and work credentials, landing jobs with meaningful wages, but then are often the first employees to be laid off when businesses make cuts.

Tawanna Black, CEO of the Center for Economic Inclusion, a nonprofit focused on creating a more equitable economy, said people on the “lowest rungs of the economy” may also have worse benefits like health care and paid leave, while also being slower to get federal payments because they may be without bank accounts.

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Black said state officials must prioritize poorer residents and people of color to avoid a repeat of the uneven recovery from the Great Recession. White unemployment in Minnesota has not been above 5 percent since 2012, and peaked around 7 percent in 2009. Black unemployment, however, was nearly 25 percent during the heights of the recession and at least 10 percent from 2002 through 2015.

Workforce nonprofits ask for help

To ease racial disparities and carry out a mission of job training and education, the state government has increasingly relied on funding nonprofits like American Indian OIC rather than running its own programs.

Joe Hobot
Joe Hobot
Hobot said having the Legislature helping their groups now, primarily through more grant money, is critical to digging out of the pandemic recession. 

In mid-April, the Legislature’s House Jobs and Economic Development Finance Division held a remote hearing to hear feedback from workforce development nonprofits. Hobot, representing a partnership of more than two dozen organizations, told lawmakers that the nonprofits will have to re-engage with many people who found work and then lost it, “skill them up,” and get them into new jobs. All while facing a “multitude of barriers.”

The partnership is asking for about $10 million this year, along with more flexibility in how state grant money is used, Hobot said. One request is for nonprofits to use grant money booked for training services to be spent on basic operations.

Hamse Warfa, deputy commissioner of workforce development at the Department of Employment and Economic Development, said his agency has agreed to give many organizations flexibility on meeting grant requirements, though they don’t have power under state or federal law to meet every request.

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That $10 million request this year should be just a start, Hobot said. More money later on is key to ensuring fewer people are reliant on government subsidies, Hobot added. What the Legislature puts into economic recovery efforts “is what you will get out of it,” Hobot said.

The committee’s chairman, Rep. Tim Mahoney, DFL-St. Paul, was sympathetic, but he also warned Hobot the state has no extra money and will likely face deficits during the economic crisis. “If we as a committee give to one, we have to take away from another right now,” Mahoney said. “Those are the instructions I’ve gotten from the Speaker of the House.”

The initial state response

Workforce nonprofits aren’t the only ones trying to help the vulnerable or unemployed. DEED held a virtual job fair with close to 600 participants recently, Warfa said. The agency is also investigating how it can run or facilitate digital training programs for people to earn skill certifications that help them get work during the pandemic.

Democratic lawmakers in the DFL-controlled House have introduced legislation to pump $100 million into a rental assistance fund and proposed giving a $500 one-time payment to recipients of the Minnesota Family Investment Program welfare subsidy. Party members also want to spend money to build out broadband access.

Republicans in the GOP-led Senate want to extend some state tax deadlines, expand tax credit eligibility for families of children in K-12 schools and those giving to charity or investing in small businesses. Other GOP proposals would give more money to an emergency loan program for small businesses and cap an eviction ban at 30 extra days while putting $30 million into a fund to help people pay mortgages and rents.

Tawanna Black
Tawanna Black
Black, from the Center for Economic Inclusion, said state leaders in the Walz administration have so far acted with racial disparities in mind and included people of color as they begin to make decisions about how to approach recovery efforts.

But she said the crisis should spur the state to rethink how it spends money to create jobs, and only use public funds to develop “good jobs” with “family sustaining wages” that provide benefits and a racially inclusive workplace. Those jobs are often created by small and midsize businesses, she said.

It’s also important to create jobs close to population centers so people can access them with public transportation, Black said. Amazon’s fulfillment center in Shakopee has struggled to attract some workers because of its suburban location, for instance, Black said.

Wilson, furloughed from the child care job, ultimately expects to return as a pre-k teacher for the Family Partnership, a nonprofit that aims to reduce opportunity and achievement gaps for families in poverty.

Wilson understands that restrictions on the economy are best for public health, but they have also made life less stable. Wilson also sees a heavy impact on people of color and the transgender community. “This whole epidemic, it’s almost disproportionate how people are being displaced,” Wilson said.

Wilson and roommates have tried to find odd jobs like making and selling art, but that’s not helping much. “None of us have income right now,” aside from unemployment, Wilson said.

Instead of establishing a child care career, Wilson is now “just kind of bumbling around I guess, waiting for things to get better.”