The Twin Cities of Minneapolis and Saint Paul don’t get a lot of attention outside of the Upper Midwest. And it isn’t difficult to understand why. Both are pleasant places to live and have plenty of charm. Minneapolis, the larger and livelier of the two, boasts one of the country’s more impressive art and culture scenes. But the American media establishment is largely concentrated in a few coastal cities. When these journalists turn their pens onto the outside world, that world usually isn’t the frozen landscape of central Minnesota.
Nonetheless, Minneapolis managed to get some national press attention in 2015. The Atlantic, a scion of the East Coast media establishment, published two pieces on the “city of lakes.” The first article, titled “The Miracle of Minneapolis,” celebrated the city as one of America’s most livable urban locales, crediting it for an abundance of well-paid white-collar jobs, relatively low rental costs and quality public services. The author highlighted all of the reasons why Minneapolis is indeed a great place to live if you have a college degree and/or in-demand computer skills. What isn’t mentioned is that things look a lot less rosy if you’re an undereducated, less upwardly-mobile person. That could be said about almost any city; nowhere is it especially lucrative to be a semi-educated construction worker or landscape professional. The fact of the matter is, however, that the working class has a harder time making ends meet in Minneapolis than it does in many other major American cities.
That point was duly noted in a response by Jessica Nickrand titled “Minneapolis’s White Lie,” which appeared in the following week’s issue. Nickrand pointed out that while Minneapolis deserves high scores on white collar jobs and affordable housing, it has an abnormally high degree of racial segregation. Additionally, the educational and professional achievement gap between white and non-white residents is one of the widest in the country. What the author failed to do, was offer a convincing explanation.
A third article, this one published by the Washington Post and titled, “If Minneapolis is so great, why is it so bad for African Americans?” also exposed the downsides of the city, but doesn’t say much about why. Both pieces pointed out that the city has seen an influx of immigrants and non-white labor migrants over the past few decades, a development that the existing social structure has struggled to cope with. These groups of people tend to perform more poorly in school and work than their white counterparts. While this point is factually correct, it doesn’t explain what is special about Minneapolis. That requires deeper analysis.
As is well known, Minneapolis is a white-collar city. Contrasted with, say, Houston, Texas or Jacksonville, Florida, its residents enjoy higher salaries (generally) and better public services. But amply-funded public institutions like schools, healthcare programs and transfer payments must be, well, amply-funded. In Minneapolis and the rest of the Twin Cities metropolitan area, that comes from relatively high state income and sales taxes, and municipal property taxes. That cuts into real wages, even if nominal wages are high. Of course, residents of all income levels enjoy quality public services. But those who are unable to use the state’s impressive public sector resources to rise into the ranks of the upper-middle class, are largely left out in the cold.
Higher taxes means lower real wages and, by extension, a tighter labor market. Those forces squeeze low-skill workers who lack a place in the city’s white-collar economy. Minnesota also has a relatively high minimum wage, $8.00 per hour as of 2014, up from the federal minimum wage of $7.25. A higher minimum wage is good for those in the upper bound of the working class who are productive enough to keep their jobs. They take home higher wages and can afford a better standard of living than they otherwise would. It isn’t good for those in the lower bound, however, who are squeezed out of the labor market altogether. Luckily for the Minneapolis’s long-term unemployed, the social safety net is stronger than in most major cities. But that serves more to assuage the symptoms of their problems than to solve them.
Of course, Minnesota’s large public sector employs many blue-collar workers, many of whom are unionized and receive comfortable salaries and generous benefit packages. But one would be hard-pressed to argue that the strength of the public sector labor market offsets the tightness of the private sector. The fact of the matter is, if you live in Minneapolis or the surrounding area and you lack a college degree, there are very few opportunities available to you. And while the cost of living isn’t exorbitant, it’s higher than in many states with lower taxes and looser labor markets.
A useful comparison may be Stockholm, Sweden. While Minnesota’s public sector certainly couldn’t pass for a Scandinavian welfare state, similar forces are at work in both cases. Sweden’s efficient, expansive public welfare and education systems are the envy of most of the world. It was able to maintain inclusive growth even as the country’s economy gradually de-industrialized during the Post-War period. How? Its education system was able to turn many of its blue-collar workers into white-collar ones. But today, in the twenty-first century, it faces many of the same problems Minneapolis does. It’s high-tax, high-regulation economy provides plenty of opportunities for the educated, as well as excellent social benefits. However, that same system apportions very little space for low-skill, blue-collar workers. Today, many such people are immigrants who were allowed into the country but now face essentially zero employment prospects. That isn’t to say that Sweden is a giant Potemkin village, but under the surface of its productive, inclusive economy is a permanent underclass living off of social transfers.
Returning to the discourse in the Atlantic and Washington Post, both authors make persuasive arguments. The Twin Cities are a great place to live if you have a college degree. It’s also a tough place to make it if you aren’t white. But the issue isn’t really about race. It’s about the fact that the structure of the local economy doesn’t leave much room for blue-collar workers.