As a re-elected Gov. Mark Dayton and a now-divided Legislature search for common ground in 2015, no priority will be more promising than workforce improvement and alignment, focused squarely on reducing racial and economic disparities.
Evidence continues to mount showing that worsening overall inequality, racial disparities and a skills mismatch between workforce and workplace are damaging our competitiveness. Consensus about this threat is spreading rapidly in the state and national business communities.
Standard & Poor’s, the premier credit-rating agency for businesses and governments, declared in a widely noted report this summer that worsening inequality in wealth and income is limiting U.S. economic growth.
S & P recommended increasing training and education levels to improve productivity. It estimated that “if the American workforce completed just one more year of school over the next five years, productivity gains could add over $500 billion, or 2.4 percent, to the level of GDP relative to the baseline.”
Applying those numbers to Minnesota, we could add a handsome $10 billion more to our GDP by adding that average of one additional year of training and education to our workforce, particularly for jobs actually most in demand at the middle-skill level, and for communities of color that suffer here from one of the nation’s largest racial opportunity gaps.
Impressive as the projections are for growth from additional education, the projections of growth from achieving racial equity, across the state of Minnesota, are even more impressive. According to PolicyLink, Minnesota’s gross domestic product would have been $16.4 billion higher in 2011 if there had been no racial gaps in income.
As Republican and DFL leaders prepare their agendas, it’s crucial to understand the mutuality between two goals that are too often seen as being in tension — growth and equity. These objectives must be woven together to achieve shared prosperity and economic competitiveness.
By growth, we mean the traditional definition used by economists to measure our state’s overall increase in total personal income and productivity. By equity, we mean a healthy distribution of resources and assets among income levels and by race, and the reduction of unsustainably widening inequalities on such measures as employment, income and poverty. Only by combining these two ideals can we maximize competitiveness. A competitiveness strategy that leaves out shared prosperity — or addresses racial equity only as an afterthought — will simply be less effective than one that weaves these goals together from the outset.
Nearly all of our region’s net workforce growth over the next three decades will come from our communities of color. It is dawning on many in a shrinking white majority that equity is a win-win proposition. Investing in diversity as an asset and closing racial gaps in our cities and suburban areas is not just beneficial for communities of color. It will be good for all Minnesotans in the very near future.
So what exactly should we do next? Three things: Set ambitious but realistic goals; better evaluate what’s working best in the public, private and nonprofit sectors to foster workforce equity, and begin by investing in emerging “career pathways” strategies.
In 2015 we need to lift postsecondary success as an official and primary statewide policy goal. Some “college” education — whether a certificate, diploma or degree — will be needed for 74 percent of all jobs in Minnesota by the end of the decade, according to the Georgetown Center on Education and the Workforce.
Although we’ve made some progress expanding college access to students of all backgrounds, more needs to be done to improve lagging graduation rates, especially for traditionally underrepresented students. Amid the recent conflict and risk of deadlock in the Minnesota State Colleges and Universities system over the “Charting the Future” plan, it’s easy to lose track of one basic fact: Only 51 percent of students at Minnesota’s public two-year community colleges graduate or transfer within 150 percent of the standard time allotted for completion. And the rates are much lower for students of color and from low-income households.
Minnesota can learn from the many state legislatures across the country that have shown leadership to prioritize success for all students — specifically low-income students, students of color and students in remedial classes — by better tracking graduation rates for each of these cohorts and pursuing reform strategies that have been shown to improve performance. A top priority for this administration and Legislature should be to provide more incentives for both workforce alignment and success for all students.
Second, we must use better evidence when investing limited taxpayer dollars in workforce development. Two years ago, leaders of Minnesota’s philanthropic community requested an inventory of Minnesota’s workforce programs to guide its strategic investments, which produced a four-page spreadsheet detailing 28 programs, each with its own funding and guidelines. Last year, the Legislature wisely asked the state Department of Employment and Economic Development to evaluate a handful of these programs. In 2015, we should provide additional funding to continue the evaluation; use the results to focus on practices that maximize value, and share outcome information with legislators and the public.
Third, we can dramatically increase the state’s investment in low-income adults and communities of color through evidence-based strategies known in the field as “career pathways.” Recently, the federal Workforce Innovation and Opportunity Act was passed with surprising bipartisan support in Congress, demonstrating that workforce development is indeed fertile ground for state governments under divided partisan control. The WIOA encourages states to further develop career pathways that train low-skill workers, provide faster college credit or industry-recognized credentials, and meet business needs in priority sectors. Minnesota’s own career pathways program, “FastTRAC,” was recognized in Vice President Joe Biden’s recent workforce report as a nation-leading best practice, and it easily can and should be expanded.
Not enough of Minnesota’s discretionary workforce resources go to those who need them most, especially people of color. Simply managing an array of programs does not add up to a strategy. What’s missing is a leadership commitment, and tangible strategies, to shape and align our state’s resources toward a prosperous and equitable future.
In a recent paper published by the International Monetary Fund, researchers Andrew G. Berg and Jonathan D. Ostry concluded that: “Equality of opportunity can make for both more equal and more efficient outcomes. … Effective investments in health and education — human capital — may be able to square the circle of promoting durable growth and equity [and] strengthen the labor force’s capacity to cope with new technology, and thereby not only reduce inequality but also help sustain growth.”
And in making workforce equity job one for Minnesota, we can be assured that on the left and on the right, among business leaders, economists and social-justice experts, there is a growing and powerful consensus that upfront workforce equity policy is an actual investment for long-term growth, not just a trade-off for efficiency.
Bryan Lindsley is executive director of the Minneapolis St. Paul Regional Workforce Innovation Network (MSPWIN), a collaborative of local and national foundations. Maureen Ramirez is policy and research director for Growth & Justice, a policy research organization that seeks economic growth by reducing economic and racial inequality in Minnesota.