But for every unemployed Minnesotan, at least five who are working can't support their families at a basic-needs level. In Duluth, two wage-earners with two young children need to earn $10.09 an hour each to meet Jobs Now Coalition's basic-needs budget. A single parent of two young children needs $16.18, well above the area's median wage.

Debate about what (if anything) Minnesota can do about that is polarized. For example, liberals argue for raising the minimum wage, and the business community argues for reducing taxes on business. Growth & Justice, a new think tank with progressive goals for Minnesota's economy and a multi-partisan board, has spent nearly a year researching and discussing the issue, including in two roundtable meetings in Duluth with political, business, union, nonprofit and academic leaders, and one with low-income workers.

Our conclusion: The most effective and unifying strategy is a bold increase in the quality of our work force: tens of thousands more Minnesotans earning two- and four-year postsecondary degrees, and tens of thousands of others obtaining the
market-based skills to move up the wage ladder. Our report "Workforce First," available at www.growthandjustice.org, offers many policy proposals for realizing the vision.

The impact of more education on individuals is well-documented and dramatic. The typical college graduate in America makes nearly double what a high school graduate earns, and is much less likely to be unemployed. But how will that help a region like Duluth, where some college graduates leave for better job opportunities elsewhere? The answer: regional economies with better educated workers generate more economic growth.

A study last year for an organization called CEOs for Cities found that the more college graduates a metro area had in 1990, the faster its economy grew in the '90s. No other factor mattered nearly as much.

And the Milken Institute, in a study last year on best-performing cities, wrote: "A region's most important source of competitive advantage is the knowledge embedded in its people. In the past, firms attracted people; in the current, increasingly intangible economy, concentrations of talent are attracting firms."

Cities are central to this knowledge economy, but they don't have to be big cities. Right now, the Twin Cities and Rochester are Minnesota's primary magnets. But Duluth -- with its strong mix of colleges and universities and its growing health-care sector -- has the potential to play, too. Our state's economy outperformed the nation's from 1960 to 2000 because we outperformed in high school graduation and postsecondary degrees attained.

But there are clouds on the horizon. While we rank eighth in the nation in the percentage of adults older than 25 with at least a two-year degree, we are only 17th in our postsecondary enrollment of young people age 18 to 24, and 29th in the enrollment of older students. Our financial commitment to public higher education has been declining relative to most other states.

The best evidence is that focusing on human capital is more effective than trying to lure business capital with tax breaks, such as in the governor's JOBZ program, which includes 351 acres in Duluth and 4,031 in the region. If we are going to use tax incentives for business, we should make them more direct. Growth & Justice recommends scrapping a sales tax exemption for capital purchases, and using the$200 million a year to directly reward all firms that create a lot of jobs in high-unemployment areas or significantly raise their employees' wage levels.

Of course, there will always be low-wage jobs, and we should put more cash into the hands of people who are working but can't support their families at a basic-needs level. Growth & Justice has concluded that while raising the state minimum wage, say to $7, has its merits, doubling the Working Family Tax Credit is a more efficient way to accomplish the goal. It would provide an average of $500 more to the 200,000-plus working families that need it most.

These proposals would cost the state about $500 million a year, but the return on investment would be high. One of our board members, Erik Peterson of Duluth, describes the opportunity this way: "Advocates from the left and right both talk a lot about supporting living wage jobs. Growth & Justice's proposal begins the much more difficult task of finding the common ground necessary to make living wage jobs a reality for thousands of Minnesotans."

Joel Kramer is executive director of Growth & Justice, a nonpartisan think tank for a prosperous, fair and sustainable Minnesota economy headquartered in Minneapolis.