New Voices: Housing restrictions are blocking Minnesota's potential

Opinion editor's note: This article, part of our New Voices collection, was written by a first-time contributor to Star Tribune Opinion. For more information about our efforts to continually expand the range of views we publish, see startribune.com/opinion/newvoices.

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Minnesota is currently tied for the lowest unemployment rate in the nation. For workers, this is good news — it means faster wage growth and more bargaining power with their employers, giving them the confidence to quit a bad job because another will be easily found.

At the same time, Minnesota is struggling to build enough places for people to live. For renters and home buyers, this is rather bad news — it means that the cost of housing is getting increasingly out of reach, while people are left competing for a limited number of units.

More important is the confluence of these two factors. Minnesota's strong labor market makes the state a desirable place for people across the country to move — if our relatively low unemployment rates persist, people will be drawn to the state's economic opportunity. Generally, this ought to be a good thing. But if we continue building insufficient housing, we will create problems for our cities, our state and for the entire country.

Across many Minnesota towns and cities, housing restrictions are making housing more difficult and expensive to build. These restrictions come in many forms, such as minimum lot sizes, zoning that blocks multifamily housing, parking requirements on new developments and aesthetic requirements. Each of these rules biases new housing toward more expensive forms, and in the aggregate they reduce the amount of housing.

If we prevent housing supply from adjusting to increased demand, our cities will become increasingly unaffordable, and both newcomers and incumbent renters will lose out. People who are drawn to Minnesota for its labor market and other amenities are going to need somewhere to live. We can allow for expanded housing supply that can accommodate these newcomers, or we can put them into a cutthroat competition for existing housing supply. In such a competition, we all lose — and the lowest-income people will inevitably fare the worst.

But our diminished housing supply won't just hurt Minnesotans. As recent economic research has shown, barriers to housing supply in economically thriving areas will create problems across the nation. When people can't move to higher-opportunity areas such as Minnesota, they instead remain in less economically vibrant areas, creating ripple effects across the country. For one, this process increases national income inequality by keeping people in worse labor markets. It also reduces national economic growth, because people don't work where they could be the most productive. And it likely worsens the macroeconomic situation in the country by preventing unemployment rates from converging across regions, giving the Federal Reserve a harder time maintaining its dual goals of stable prices and full employment.

Certainly, not all of our problems will be solved by changing regulations and allowing more market activity — these changes must be paired with targeted investments to help low-income residents. But we can make progress on both fronts. Some of this progress is occurring at local levels: Minneapolis made national headlines for loosening the zoning code in its 2040 Plan, while St. Paul successfully eliminated parking requirements on new developments in 2021. These aren't just solutions for core urban areas, however — Rochester, Minn., recently advanced reforms to allow more housing. Meanwhile, Rep. Steve Elkins, DFL-Bloomington, has spent the past couple of years at the State Capitol introducing bills that aim to address these problems, with policy changes such as broadly legalizing duplexes, limiting minimum lot-size requirements and reducing aesthetic requirements.

Our housing challenges are not new, but Minnesota's low unemployment rates will accelerate them. Yet our low unemployment rates also create an opportunity: With better housing policies, Minnesota can open its gates to people seeking a better life. We can foster growth that is mutually beneficial, preventing huge housing-cost spikes while growing our tax base and benefiting the entire country. As Minnesotans, we must do our part.

Zak Yudhishthu is a student at Macalester College in St. Paul.