by Carl Goldstein
We're into the tenth year of the nation's longest economic expansion with no end in sight. Minnesota is experiencing the lowest unemployment in a generation and at least its share of stock market driven wealth. Many people are enjoying the best times of their lives. But many others remain mired in poverty.
"Ultimately, I do want a part of the American dream," says Bea Molin-Walker (with John, age 6). "If I could own my home, that would be it, that would be a dream come true for me."
She just doesn't see it happening any time soon.
Photo: Carl Goldstein
She works as a receptionist at Conseco Finance in Eagan. The job pays pretty well; she gets $10.75 an hour. But as a diabetic, she's only able to put in 20 to 30 hours a week, and working less than full-time means no health benefits.
What with the cost of MinnesotaCare health premiums, food and clothing for two children, Molin-Walker says her $950 monthly pay is barely enough. The fact she's able to get by at all is due to subsidized rent, which is set at $200 a month.
"I've done some research, what would happen if I was to move out and lose my subsidy, would I be able to afford rent, if I was to move out of here, I just wouldn't be able to do it."
Her shaky financial condition illustrates a key fact of life in the economic boom. The U.S. economy has been an incredible job-creating machine. But a high proportion of those positions are in low-end services rather than manufacturing, and that means low pay.
"Wages tend to be tied to the growth in productivity, and productivity in services is much lower than productivity growth in manufacturing," says Louis Johnston, is an assistant professor of economics at the college of St. Benedict and St John's University.
This downward pressure on wages explains why 40 percent of all workers in Minnesota earn less than $10 an hour. The simple fact so many workers are earning so little means they can't afford boom-inflated housing costs.
Caty Royce, director of the Community Stabilization Project in St. Paul, a housing advocacy group, blames the strong economy for the dire shortage of affordable housing. "We have two factors combined giving us the worst housing crisis ever, a booming economy a highly inflated real estate market, and a very low vacancy rate," she says.
That vacancy rate keeps shelters in the Twin Cities full. They serve many people who have jobs, but can't find an affordable place to live. Bea Molin-Walker says she was one step from the shelters three years ago when her old apartment was condemned. But at the last moment she found space in a dilapidated apartment complex on St. Paul's Selby Avenue, right next to the St. Paul Cathedral. "When I moved in here the apartments were in bad need of repairs, there were drug dealers, drug users, the whole bit right outside, had to actually park my way through to get past them, they literally living and sleeping in the halls of these apartments."
Even a success story like the Cathedral Hill Homes doesn't obscure what many
observers say is a broad failure by the state's political leadership to deal
with issues affecting people with low and moderate incomes.
Photo: Carl Goldstein
Yet even a success story like the Cathedral Hill Homes doesn't obscure what many observers say is a broad failure by the state's political leadership to deal with issues affecting people with low and moderate incomes. These include not only affordable housing, but also health care, transportation, and childcare.
"For the past 25 years we've been told there isn't enough money to address the concerns of the poor, and now when resources are available, not to fully devote to those subjects, but to take a gulp out of some of these issues,the interest seems to be in rebates, or returning the money back to the public to assure re-election," according Yusef Mgeni, president of the Urban Coalition, a Minneapolis-based social advocacy and research group.
African-Americans and other people of color have benefitted during the boom from a sizable drop in unemployment. Yet the national jobless rate for blacks remains far higher than the overall average of four percent. Mgeni and others say the improved job picture for blacks and other minorities works against those who would like to see more resources devoted to poverty alleviation. "The perception is that welfare reform has worked, the economy has performed so well that anyone who wants can get a job and pull themselves up by the bootstraps," says Mgeni.
Such sentiments may explain why there's little public pressure on policymakers to devote more resources to expanded social programs. The state budget surplus will likely hit $1.8 billion in the current two-year period.
Some officials, like Human Services Commissioner Michael O'Keefe, say the state ought to do more. "What amazes me at both federal and state level, is we have the strongest economy in decades and yet in state or federal budgeting in last few years, we're behaving as if there's a recession," O'Keefe says.
President of the Urban Coalition
Ventura surprised some advocates for the poor by proposing to spend $169 million on programs for affordable housing, childcare and people leaving welfare. Upgrading the job skills of Minnesota's workers is another thing Ventura has said he'd like to spend more money on.
Louis Johnston of St. Benedict and St. John's says rapid changes in workplace technology mean the education premium that's traditionally gone with a college degree now applies to technical and vocational training programs as well. "I think a lot of the potential if we want to do things to promote wage growth at the lower and middle ends would be to encourage more people to go into those kinds of programs, and not just stop at high school," she says.
But much more needs to be done, and income inequality is still widening. From the late '70s to the late '90s, the poorest 20 percent of the state's families have seen their incomes stagnate at around $16,000 a year. During the same period, household income of the wealthiest 20 percent rose by 43 percent.
When you take into account all assets - like homes, stocks, and savings accounts - the median net worth of families earning below $25,000 actually declined from 1995 to 1998 - precisely the hottest years of America's longest ever economic boom. That's in sharp contrast to the big runup in the value of stocks and property owned by the wealthy and the upper middle class.
"Ultimately, I do want a part of the American dream," says Bea Molin-Walker. "If I could own my home, that would be it, that would be a dream come true for me." She just doesn't see it happening any time soon.