Project Overview
Real Prosperity grows from a foundation of public investment in education, health care and smart infrastructure, including roads, transit and development density. We believe we will get the best individual and collective return on our investments if we focus our resources and energy on these three areas of our state's economy, and we think most Minnesotan's would agree.
Growth & Justice worked with a broad cross-section of Minnesotans to develop a proposal for making such a vision of Real Prosperity possible.
Real Prosperity starts with a public investment in education that continues throughout one's life. It begins with school readiness through quality early learning experiences, family education and preschool. Success in skill acquisition (such as language and math skills) predicts success for progress and completion in the K-12 years. Success in K-12 readies youth for success in college. Earning at least a two-year post-secondary degree is strongly associated with higher earning power.
People with Real Prosperity don't just live pay check to pay check. The JOBS NOW Coalition has created a measure of "The Cost of Living in Minnesota," which includes food, housing, health care, transportation, childcare, clothing and taxes. They calculate a "basic needs" budget - above poverty, but well below middle-class expectations. It does not allow for debt payments, skills training, entertainment, restaurant meals, vacation, emergency, retirement or saving for children's college education.
According to their innovative calculator, a family's basic needs budget in Minnesota ranges from $34, 056 (1 adult, 2 children) to $41,136 (2 working adults, 2 children) averaging, roughly, $41,982, depending on the family characteristics. At Growth & Justice, we calculated that roughly 25% of Minnesota families are not making enough to meet their families' basic needs.
Prosperity is not just about income, but also about living well. Most of the policy attention on health matters focuses on how care is delivered rather than on how healthy we are. Healthy life expectancy is the expected number of years of life weighted by years of ill health.
Minnesota ranks 3rd nationally, but we have some solvable pipeline problems that are likely to cost us in future years if we fail to address them. For instance, in the prenatal years, only 75% of expectant mothers receive adequate care, ranking us 27th nationally. Minnesota's youth are suffering from obesity. Over 15% of Minnesota's youth are overweight and nearly 25% of Minnesota's youth are inactive. The number of uninsured children in Minnesota continues to increase each year, and without early screenings and interventions, costs of preventive illness and chronic disease will only escalate.
The idea of economic justice is that growth broadens the capacity of more people in society to create wealth. That's why we envision Minnesota being a leading place to do business. Investment is highly correlated with economic growth, which can offset the supposedly negative effects of higher taxes, including high rates on high earners. From 1980 to 1998, the states with higher income taxes actually grew faster than the states with low or no income taxes.
Prosperity comes with progress in our transit options while remaining good stewards of our environment. We envision better commutes and a better environment by minimizing traffic congestion and reducing emissions by providing more transit options and reducing the distance between home and work.
Invest wisely in Minnesota's people and places
Wise investment in human and physical capital adds to our quality of life as well as to our economic prosperity. Simply put: If Minnesotans are educated, healthy and able to get around without delay, then the state benefits in the form of higher productivity for business, more stable revenue for government and higher incomes and a heightened sense of well-being for its citizens. More people enjoying prosperity reduces the need for state support programs.
Supporting effective methods to build productive capacity in Minnesota's people and places is what separates investment from mere spending. This principle of investing has a much better return than traditional "economic development," like tax breaks to encourage firms to locate in certain zip codes. Investing in the productive capacity of all Minnesota improves both economic growth and economic justice.
There's strong evidence to support this belief:
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When we invest early and for the long term, we experience economic growth. -
There are intense policy debates on how to invest in people. At one end is the universal, free model, such as K-12 education, which is quite costly. At the other end is targeting only the most needy. This may be cost-efficient, but has less political support and ignores the real and growing squeeze on the middle class.
A third model is the principle of affordable access — that every family should have access to quality opportunities to build human capital at a price they can afford. Higher education is financed this way, with scholarships for students from both low- and middle-income families, plus government funding for public colleges as well. Investing to provide access spreads the dollars more widely, based on what families can afford to contribute. This independent study illustrates how the approach could apply to creating access to quality care and early education for all kids 0-4.
When investing in infrastructure, we need to offer more mass transit options and builld additional lanes to end highway bottlenecks. But public infrastructure is expensive. So we need to also address the demand that drives the need for infrastructure and the demand that transportation puts on our environment.
A framework for Real Prosperity
Invest for Real Prosperity provides a strategic framework for increased public investment to increase the state’s capacity to create wealth — and to increase each individual’s opportunity to participate in a growing economy.
The framework is straightforward. Agree on a vision. Invest more in education, health care and smart infrastructure. Raise the money fairly. And maintain fiscal discipline and accountability to ensure that the investment is well spent and achieves the results we expect. This framework gives us a way to discuss the state’s future, make wise choices and be honest with ourselves about what is working and what is not.
We've polled Minnesotans statewide and found a majority support a strategy of increased investment in people and places, provided there's accountability and tax fairness.
Accountability ensures fiscal discipline. It means introducing new measures to insist on cost-effective use of new and current dollars. It means using a process to review what works and fix or remove what doesn't. And, it means building reserves by putting enough money away in good times to smooth out the effects of the business cycle in bad years.
Fairness means proportional. In recent years, our system of state and local taxes has grown more regressive — meaning that middle income households in particular pay a higher proportion of their incomes in taxes and fees compared to more wealthy earners. Proposals to raise more revenue from user fees, property taxes and higher ed tuition have a disproportionate impact on the middle class.
Our fair share tax proposal suggested raising taxes on those who can afford it, and raising nearly nothing from others. We proposed "a penny on the dollar" in increased state tax — that's 1% of Minnesotans' aggregate personal income. We'd raise two pennies per dollar earned from high earners, and nearly nothing from low earners. That would make the system much more proportional.
Although no legislation has been passed that would increase income taxes, a number of tax bills have been introduced that reflect these principles.
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