In May and June 2003 roundtables were held in five cities - Blaine, Duluth, Minneapolis, Saint Cloud, and Saint Paul. Armed with a background paper, participants discussed and rated broad strategic options for achieving the goal of increasing the number of Minnesotan's who can support their families on their wages. Six more roundtables were then held in October and November 2003, with some of the first round participants and some new people. This time, participants critiqued a series of specific policy proposals put forth by Growth & Justice. As a result of the second round of discussions, Growth & Justice modified some proposals, scrapped others, and further research to develop new initiatives for the Workforce First Report. This is a summary of those roundtable discussions.

Roundtable Discussions

There are two basic approaches state policy can pursue to increase the number of Minnesotans who can support their families at a basic-needs level on their earnings. One is to focus on raising the wages of people making less than the median wage, and especially on those making less than $10 or $11 an hour. The other is to focus on wage supports (tax credits, subsidies, etc.) so that low-income people can support their families.

In all the roundtables, there was more support for raising wages than for wage supports, because raising wages has a good ROI for the state and the public, and it's better if people can support themselves than if they have to rely on government subsidies.

However, wage supports were viewed as an essential part of the mix, because participants felt that even if progress is made on wages, there will be low-income people who need wage support, and that progress on wages is difficult in this era of globalization.

Workforce Development
Among policy directions for raising wages, the most consistently supported strategy was raising workforce skills.  People were impressed by the high correlation between greater educational attainment and higher income, and by the link between technical skills and wages. Minnesota has had strong economic growth in the past because of its relatively highly educated workforce, and investing in that strategy remains a high priority. 

How should we invest in workforce skills?  The most favored method was public education - pre-K, K-12, and postsecondary.  Of course, we already spend a lot in this arena, but many felt we need to spend more in the early childhood stage, and to do a much better job showing teens and young adults how they can be successful in the workplace and then helping them prepare for that success.  There was also support for skill training for adults and training for specific vacant positions.

Two ideas stood out: (1)  The state should focus on paying for results - i.e. reimburse the hiring company and/or the training provider only after the trainee gets a good job, with additional rewards for retention.  (2) Where high-paying jobs are going unfilled and there's a waiting list of candidates willing to train for them - such as nursing - the state should ensure that capacity is expanded to meet the demand. 

While workforce development was widely supported, one nagging fact made participants question how far it can take us toward the goal:  about two-thirds of vacant jobs in Minnesota require only a high school education and pay less than a living wage. So, if everyone gets more skilled, what work will they find, and who will do the low-wage work?

Incentives to Business
Providing incentives to business to raise wages had some support. Participants strongly preferred that incentives should directly reward the creation and retention of living-wage jobs. Given the substantial ROI for moving people up the wage ladder from $5 to $10 an hour, some thought incentives could be made large enough to have real impact. There was much less enthusiasm for incentives to capital investment, and strong disapproval of incentives that "unlevel the playing field" by offering negotiated deals to companies to lure them to specific localities. Enterprise zones had virtually no support.

Minimum Wage
Raising the state minimum wage above the federal $5.15 an hour had some support as well, and produced interesting comments from unexpected quarters.  For example, while some business people opposed mandates as distorters of the market for labor, some small business people praised them because as long as everyone in the state had to pay them, they would help companies that really would like to pay more but feel they can't, and they would give consumers more money to spend, fueling business growth.  At the same time, while many liberal participants favored raising the state minimum wage, others wrote it off because the highest state minimum in the nation is only $7.25, so why waste all the political capital it would take on such a controversial proposal if the end result is far from a living wage?  (Living wage laws, on the other hand, which produce higher wage requirements for companies doing business with or getting subsidies from a local government, generated little support because they affect so few jobs.)

A Swap?  Higher wages for lower business taxes
In one meeting, there was a lively discussion of whether there was any way to get a state minimum wage of $10 or $11 an hour. Of course, the first reaction was "no way" - it would sink a lot of businesses and make Minnesota uncompetitive in many industries. But then we asked: what if we could lower business expenses somewhere else?  Eliminating the business's responsibility for health coverage would be one way, although it gets us into the big, complicated arena of health care.  Lowering business taxes would be another approach. There was a lot of interest in exploring this big idea. In a way, a substantial tax credit for higher wages, previously mentioned, is a related idea - except that it would be optional, not mandatory.

Wage Supports
While supporting people with low wages got less support than working on the wage side, it still generated lively debates.  In some roundtables, the favored support was earned income tax credits and their Minnesota counterpart, the working family credit. Participants felt it was more dignified to give low-income people money and let them decide how to spend it. In others, however, subsidies were better-received, because they focused attention on key drivers of family expense, such as health and child care.  A few people pushed the envelope, asking why we couldn't lower family expenses not with income-linked support but with universal health care and child care, available regardless of income.  In response to the argument that we can't afford it, one said, "start small, just as Social Security did." 

During the discussions, participants offered a number of other ideas and observations, including these:

• We should provide incentives for family-friendly employment practices, to make it easier for low-income people to meet their job and child-rearing obligations and to reduce reliance on child care.
• We need to encourage high-skill, high-wage industries to choose or grow in Minnesota. We should support industries such as biotechnology and alternative energy, for example. The University is critical to this.
• We suffer from woefully inadequate data. For example, what characterizes companies that pay low wages and how does their compensation policy correlate with their success? How much of the money we spend on workforce development is producing results? What happens two years later to employees who are trained for new jobs?
• Employee benefits are an important part of the picture.
• Minnesota alone can't do anything about it, but globalization is putting substantial downward pressure on wages. Not only manufacturing jobs have left the country, but good service jobs, too.
• Even though negotiated deals aren't good policy, it's hard for a local official to avoid them when jobs are at immediate risk.
• Statewide policies run the risk of ignoring major regional differences.  For example, affordable housing may be critical in one part of the state but not another.
• Unemployment insurance should be restructured to reward people for retooling themselves for high-wage jobs.
• We need to take into account the increasing number of immigrants in the workforce.
• We should not assume that all companies know how to engage in best human resource practices - they need help to develop wage ladders, support training, pay enough to minimize turnover, etc.
• We need to get more middle and high school students interested in the skilled trades and technical jobs.
• Unions obtain higher wages for workers, so strengthening laws protecting organizing and collective bargaining would help.
• What CEOs make compared to what low-wage workers make is a failure of the market, which government should address.
• Self-employment is another route to higher income that we need to support.
• Meetings like these that bring together people with a wide range of perspectives are very promising. "This is the kind of discussion that should be happening at the Legislature."