What are the forces moving the Minnesota economy? Adam Belz tries to identify the trends and show the connections between Minnesota and the larger U.S. and global economies. You can connect with him on Twitter: @adambelz

Posts about Business trends

Opening Belz, Nov. 11

Posted by: Adam Belz Updated: November 11, 2014 - 9:05 AM

Obama backs competitive broadband market, “net neutrality” – GigaOm
A good refresher on net neutrality – WIRED
This has been a big issue for Al Franken – StarTribune
Several good charts in this State of Rural Minnesota report – RuralMN.org
Town in north-central Illinois opens solar power plant – Rochelle News Leader
Economic mobility is high in this northern part of the U.S. – FedGazette
$1 billion shortfall projected in tax-cutting Kansas – Kansas City Star
Gulf of Maine fishermen face 6-month cod ban – Boston Globe
In Kurdistan, they call the Chrysler 300 the “Obama” – WSJ
100-year anniversary of the Houston shipping channel – Houston Chronicle
Climate change did not cause the Oct. 2013 blizzard in South Dakota – Argus Leader
Italy mulls rebuilding the floor of the Colosseum – Reuters

Twin Cities retail janitors threaten to strike on Black Friday

Posted by: Adam Belz Updated: November 11, 2014 - 3:14 PM

(Protesters outside the Home Depot in Richfield on Tuesday. Photo by Adam Belz)

Janitors who work for companies that clean Home Depot, Best Buy, Kohl's and Sears stores are setting a Black Friday deadline for a strike unless the cleaning companies negotiate with workers trying to organize a bargaining unit under the Service Employees International Union (SEIU).

Several dozen supporters and four workers who are members of the worker center CTUL held a protest in the snow and cold near the Home Depot in Richfield just off Highway 77 and 66th Street on Tuesday.

Only four working janitors made Tuesday's protest, but CTUL says "dozens" of workers are ready to strike on Black Friday if their demands aren't met, and released a video of some of them saying as much. Low wages are among the workers' grievances.

"The wages that we make are so low, we can't survive on these wages," said Luciano Balbuena, a janitor, as the wind whipped through the gathering just north of the Home Depot.

On Tuesday, the janitors were joined by several dozen health workers from the National Association of City and County Health Officials.

Janitors in the Twin Cities and CTUL won a victory in June 2014, when Target Corp. created a "Responsible Contractor Policy" that requires companies contracted to clean Target stores to engage with workers to improve working standards in the industry. CTUL had protested Target several times.

Many other retailers haven't adopted a similar policy, however, and CTUL said in a statement that the company's Target pays for cleaning services "have not seemed to take workers’ concerns seriously." Other cleaning companies have refused to talk with the workers, CTUL said.

The protest on Tuesday will be against both large retailers who don't have a policy similar to Target's, and against cleaning contractors.

CTUL (pronounced SAY-tool) stands for Centro de Trabajadores Unidos en la Lucha, and is a workers' association that works closely with the SEIU. CTUL has been organizing retail janitors for four years.

Worker centers like CTUL have begun to irk some businesses because of their resemblance to organized labor. But the National Labor Relations Board concluded in 2006 that one large worker center, the Restaurant Opportunities Center, was not a union.

Updated throughout.

5 takes on the rural housing problem in Minnesota

Posted by: Adam Belz Updated: November 10, 2014 - 11:26 PM

I had a story in this morning's paper about the shortage of rural housing in places like Roseau, and why it doesn't make financial sense for developers to build new apartments in these towns, despite what city officials describe as a housing shortage.

It really is a complicated problem. I solicited opinions from people I correspond with regularly, and thought it would be interesting to share them. Here are five takes on the rural housing problem, from a writer, a financial planner, a co-op organizer and two former journalists who pay attention to rural issues:

Charlie Quimby, writer, Minneapolis and Grand Junction, Colo.

"If you look at other states with significant rural economies, you’ll hear the same stories, but not necessarily an explanation. Here’s one example:

Harris said the complex problem was fed by the inability of modest-income Kansans to afford a down payment on a house and credit issues some people carry. In addition, lenders are reluctant to get involved with new single-family homes in rural areas due to concern about resale values or new apartment buildings due to potentially high rents.

Here are some of my thoughts:

1. Rural areas don’t have a tradition of financing, building or managing rental housing. It’s rare to find commercial apartments in small towns. Because land is cheap, plentiful and lightly regulated, it’s more likely trailers become the default rental or low-income housing unit. 

2. Small towns have long memories, especially company towns. Polaris years ago nearly folded under the the ownership of Textron, and I’ll bet you’ll find local bankers, workers and officials who remember that, either directly or because their parents/relatives lost jobs. They’ve also seen the company expand elsewhere as it grew. There may be a reluctance locally to place too big a bet on rental housing (which has a longer-term payoff than single family housing) in a company town that does business in a global economy.

3. How would outside investors look at the opportunity in a remote region with few amenities and a not very diverse economy when there’s money to be made (with higher rents, familiar markets, experienced construction firms and greater density projects) right here in Minneapolis?

4. How tied to the region are the people brought in for the work? It takes a special person/family to relocate to a rural community for work. They have to embrace the lifestyle, the schools, the distances, etc. Will they stick if the jobs at the dominant employer go south?

5. The oil patch has “solved” this with man camps and moving highly paid workers in and out of where the work is. (I spent two summers with that life during college. In those days, the career guys had homes elsewhere and hauled trailers to new locations.) Most communities aren’t going to want that sort of housing unless the industry is cranking out a lot more money than recreational vehicles do. So the economics and standards of the particular industry also come into play."

Richard Longworth, fellow at the Chicago Council on Global Affairs who blogs at The Midwesterner

"I’ve seen this in a few other Midwest towns where people feel a lack of housing, including executive housing, is hurting chances for investment and development. Often, this seems to be a mystery.

But here are some questions:

Polaris is bringing in temporary workers, which is no incentive to create housing. They say they want to hire more permanent workers. But will this demand continue? If Polaris’ growth and employment demand stalls or wanes, will this create empty houses? This would seem to be a problem endemic to one-industry towns. If that industry flags, there’s nothing else to take up the slack.

What’s the recent history of Polaris output and employment? How much did it suffer during the recession, and do those memories persist?

Possibly the big question – what financing is available? How is Roseau fixed for local banks? Are these banks willing to finance this housing? Possibly, any local banks may be absentee owned, in Minneapolis or somewhere. We’ve seen that when local ownership of small-town banks vanishes, so does a lot of the willingness of the new owners to finance local development."

Kelly Guncheon, financial planner, Minnetonka

"Regarding the Roseau housing situation, I think that sustainability is an issue.  It’s the ripple effect of companies having zero loyalty with employees.  So when the economy starts heading south, the first thing they do is lay off employees.   They would much rather hoard cash than keep their staff working, so they have layoffs.  That means those who are in whatever new homes have been built will move, leaving those houses empty.  If they’re renters, the landlords are left footing the bill.  If they own, the houses will be foreclosed.  Either way, it’s a losing situation.  It why you find few line workers and middle managers that are loyal to their employers, and job mobility and short tenures are so commonplace. It will happen in a big way in Williston, ND.  They will build for the boom, but once supplies are depleted, it will be a ghost town."

Kevin Edberg, Cooperative Development Services, St. Paul

“(I noticed) the juxtaposition of the Roseau housing story ("local firms can't grow because the region doesn't have housing") and other recent stories about "local/regional businesses can't find skilled workers".   The storyline in both cases is that demand (for labor or for housing) is going unmet; an implication in both is that the public should pay more to subsidize skills development or housing stock.  What's not being discussed with clarity is "at what cost?".   Demand being a whole series of relationships between price paid and volume supplied, it would seem reasonable to ask if businesses are willing to pay high enough wages to entice people to work for them.  There are a number of economists that suggest that the skills gap goes away if wages increase, and that the whole business argument about the skills gap is a rent-seeking attempt by business to move the cost of worker training from a traditionally private expense to a public expense.  Is the same true of housing?  Do the jobs (that are going unfilled in NW MN) pay enough to allow a prudent worker to rent/buy a home in the region?

I don't have a particular ax to grind, and I am not particularly prone to conspiracy theories.  The fact that wages have been so sticky for so long causes me to wonder about why we are not seeing wage increases in the face of unmet demand."{

Bob Franklin, long-time Star Tribune reporter, now retired

"This was a good story when I wrote it in 1996 and it's a good story now.

The basic problem is that the jobs don't pay enough to afford whatever can be built.

The problem dates to the 1980s, when hard times spurred small towns to chase any jobs they could get. So what they got often was low-paying jobs for folks who then couldn't afford housing.

The very best expert is Warren Hanson, who runs the Greater Minnesota Housing Fund (and he can lead you to others). He took me on a tour of some towns in SW Minn. when I wrote the announcement of the fund's formation by the McKnight and Blandin foundations. Hanson is a very bright guy, very approachable, former St. Paul planning official of some sort. He built on work by the Southwestern Minnesota Housing Partnership in part, figuring out some ways to build cheaper housing and do some better financing. (A byproduct of some of the success is that it lowered prices of some existing housing in some towns.)

As for Roseau County, folks have been commuting -- I think -- 50-60 miles for years, perhaps as far away as Grand Forks. There's also a huge mobile home park in Warroad that I found when I wrote about the Loatian community of Warroad a few years ago. One trailer was a Laotian church. Working for Marvin Windows beat the heck out of working in food processing somewhere  -- clean work, training and promoting from within. The Laotian kids played a lot of basketball but hadn't graduated to hockey at that time."

Opening Belz, Nov. 10

Posted by: Adam Belz Updated: November 10, 2014 - 9:25 AM

South St. Paul loses the last of its meatpacking jobs – Pioneer Press
Is LeBron James transforming the Cleveland economy? Um, no – NY Times
North Dakota adjusts budget as oil prices tumble – Fargo Forum
Amazon’s cloud-computing arm shops for Twin Cities talent – Biz Journals
“Detroit is poised to exit bankruptcy within weeks” – Detroit Free Press
BNSF completes new double track in northwest ND – Grand Forks Herald
China wields soft power, building “Silk Road Economic Belt” – WSJ
Boston parking attendants, mostly East African, unionizing – Boston Globe
Banks knew bonds were troubled, sold them to Chicago schools anyway – Chicago Tribune
Latinos shun Obamacare for fear of getting relatives deported – LA Times
Map: The places in America where college football means the most – NY Times

U of M is employer with most job openings in Twin Cities

Posted by: Adam Belz Updated: November 5, 2014 - 12:33 PM

Job aggregator Simply Hired, a firm that tracks job openings, has released its November Employment Outlook, and the Twin Cities has the 15th most job openings of any metro area in the country.

The Minneapolis-St. Paul metro area has about 60,000 openings, a 4.3 percent increase from September.

Here are the five employers with the most openings, according to Simply Hired:

1. University of Minnesota
2. Fairview Health Services
3. Target
4. 3M
5. U.S. Bank

Here are the top 10 metros in the country by population. They are also the ten with the most job openings:

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