What 13 years of decreased funding for affordable child care looks like across Minnesota

When parents have consistent, nurturing care for their children, families are more likely to prosper. Unfortunately, child care is getting more expensive — so expensive that many jobs don’t provide a paycheck big enough to cover both the basic necessities and the amount of child care that families need. But fewer Minnesota families are getting the help they need to afford child care through Basic Sliding Fee Child Care Assistance. Compared to 2002, Basic Sliding Fee now reaches about 2,000 fewer families in Greater Minnesota and about 1,700 fewer families in the seven-county metro area.

Basic Sliding Fee supports working families by bringing down the cost of child care. Households who earn less than 47 percent of the state’s median income ($43,000 for a family of four) are eligible to enroll, and pay a co-pay based on their income. Their child care provider receives a payment through their county.

However, funding shortfalls mean that thousands of eligible families go without Basic Sliding Fee. From 2003 to 2005, policymakers made deep cuts to Basic Sliding Fee. Adjusting for inflation, state funding levels remain 28 percent lower than they were 13 years ago. Those cuts mean fewer families can afford child care, particularly in Greater Minnesota.

I created a map demonstrating the decrease in the number of families served by Basic Sliding Fee since 2002. Of the 30 counties with the biggest percentage drop in the number of families served, 29 are in Greater Minnesota. Overall, 54 percent of the decrease in the number of families covered by Basic Sliding Fee since 2002 occurred in Greater Minnesota.

 

Because there isn’t nearly enough funding to reach every eligible family, Basic Sliding Fee has a waiting list with about 5,800 families on it. Furthermore, when families can access Basic Sliding Fee, the rates paid to child care providers are so low that providers may choose not to serve Basic Sliding Fee families at all — particularly in today’s market, when the demand for child care outpaces the supply in many areas.

The basic necessities are the same in St. Peter and St. Paul — parents and children everywhere need affordable child care. This map clearly tells a story about the statewide impact of Minnesota’s under-investment. If that story doesn’t change, the next chapters will only be worse for working families.

-Ben Horowitz

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Census data: More work to do to address racial disparities

According to the latest Census data, Minnesota families brought home bigger paychecks in 2015 than they did in 2014. Minnesota’s $63,488 median household income is considerably higher than the $61,558 reported in 2014, and has returned to pre-recession levels more quickly than the nation as a whole. The big racial disparities in income that have characterized our Census data in the past remain – strong evidence that there’s still a lot of work to do.

The income data demonstrate how far the economy has come since the floor dropped out during the Great Recession that began in 2007. The gains in 2015 mean that Minnesota’s inflation-adjusted median household income is now back to roughly where it was when the recession began, and represents a big improvement from 2011, when it had dipped to $60,016. Our progress exceeds a larger, national trend. The median household income in America increased from $53,723 to $55,755 — an impressive jump, but one that falls well short of the $58,003 reported in 2007.

The Census data also show that fewer Minnesota families are struggling to meet their basic needs when compared to 2014, although more did so in 2015 than in 2007. In 2015, the poverty rate in Minnesota fell from 11.5 percent to 10.2 percent. That’s the third lowest poverty rate in the nation. But more families are still struggling compared to 2007, when Minnesota’s poverty rate was 9.5 percent. For a family of four, the poverty line was set at about $24,000 in 2015. America saw its poverty rate fall from 15.5 percent to 14.7 percent.

The numbers on income and poverty look very different in Minnesota’s communities of color. While the estimated median incomes of Asian, black, Native American and Hispanic or Latino households in Minnesota all rose, the increases were not statistically significant. In other words, while the Census estimated that these median household incomes were higher, the methodology used could not say with certainty that any real change occurred.

Statistical issues aside, the data prove that many communities are still excluded from the state’s overall economic success. For example, while Asian Minnesotans’ median household income is about $5,000 higher than the median household income of white Minnesotans, the poverty rate for Asian Minnesotans is more than twice as high as that of white Minnesotans. And the median household income for black Minnesotans remains less than half that of their white neighbors. The median household incomes for most racial and ethnic categories in Minnesota included in the Census are now statistically indistinguishable from where they were in 2007 although black Minnesotans’ inflation-adjusted median household income remains lower than it was in 2007 by about $4,000.

 2015 Median Household IncomeIncrease from 2014Poverty RateChange from 2014
All Minnesotans$63,488$1,93010.2%-1.3%
White (Non-Hispanic) Minnesotans$66,979$2,0747.3%-1.0%
Black Minnesotans$30,306*32.4%-5.2%
Asian Minnesotans$72,344*16.4%*
American Indian Minnesotans$36,863*25.1%-7.1%
Hispanic or Latino Minnesotans$43,380*20.8%*
* indicates a change that is not statistically significant.
Source: American Community Survey.

The data make it clear that policymakers can and must do more to ensure that all Minnesotans can share in the state’s prosperity. Poverty rates may be low for some groups, but about 550,000 Minnesotans overall — roughly 360,000 of them white or Asian — still struggle to pay for child care, cover their health insurance premiums, write their rent checks and keep food on the table. Despite working hard, many families’ paychecks simply don’t stretch far enough to make ends meet, and there are not enough jobs that provide important benefits like paid sick leave.

Additionally, the clear racial disparities in the data — and the long-term, systemic reasons they exist — cry out for a continued spotlight on racial equity during Minnesota’s legislative process. Policymakers took a first step last year by discussing and enacting policies that moved toward addressing our racial disparities; this is an important conversation that must continue.

We know that policy can make a difference because history and research show that the safety net works. When states and the federal government invest in policies that boost the incomes of working families, make affordable child care available, broaden access to health insurance and support workers on the job, families do better as a result. That’s why one alternative measure of how many households struggle to meet their basic needs — the national Supplemental Poverty Measure — has decreased from an estimated 26 percent in 1967 to 16 percent in 2014. The Supplemental Poverty Measure considers the impact of important policies on family income, like the federal Earned Income Tax Credit or Minnesota’s own Working Family Credit.

Minnesota should continue building on the track record of successful state and federal policies until the opportunity to find shared prosperity is available in every corner of the state.

-Ben Horowitz

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New Census data highlight Minnesota’s health care gains

According to Census data released today, Minnesota retained our status as a national leader when it comes to the share of our residents with health insurance. Thanks to our investments in policies that help people who can’t afford private health insurance, fewer people are forced into a choice between paying for either the health care they need or their other basic necessities.

In 2015, only 4.5 percent of Minnesotans went without health insurance, compared to 5.9 percent in 2014 and 8.2 percent in 2013. These decreases mean that 44 percent fewer Minnesotans lacked health insurance last year compared to 2013; it also means that Minnesota ranks fifth in health care coverage rates among the states and Washington, DC. Nationwide, 9.4 percent of Americans lack health insurance, down from 11.7 percent in 2014 and 14.5 percent in 2013.

Medical Assistance and MinnesotaCare are important parts of Minnesota’s health insurance success story. When people are struggling to make ends meet, these publicly-financed options ensure that affordable health care remains within their reach. More Minnesotans qualified for Medical Assistance beginning in 2014 thanks to the Affordable Care Act.

By expanding Medical Assistance, Minnesota took advantage of a federal policy allowing states to save money while providing health insurance and improving the health of more of their residents. The federal government is covering the entire cost of the expansion through 2016. In the future, federal funding will pay for at least 90 percent of the expansion’s price. In states that expanded Medicaid, hospitals are treating fewer uninsured patients — and they are receiving a higher federal reimbursement rate for the treatments provided. Efforts like Medical Assistance that provide a cost-effective health care option pay off in other ways, too. Medicaid has been linked to improved overall health for enrollees and better performance in school for kids.

If Minnesota is going to continue to move closer to being a state where health insurance is within reach for everyone, the state will need to address the persistent racial disparities in coverage rates. From 2013 to 2014, these racial disparities shrank; we’ll know more about their current status when the Census releases additional data on Thursday.

To build on Minnesota’s momentum towards ever-higher rates of health care coverage, policymakers should:

  • Restore eligibility for MinnesotaCare. Other data show that Minnesotans earning 200-275 percent of the federal poverty guidelines ($24,000-$33,000 for a single person) — particularly Minnesotans of color — are much more likely to lack health insurance than those earning more. Prior to 2014, many in this income range would have been eligible for MinnesotaCare; the state could restore that eligibility and may even save money in the process.
  • Address the lack of affordable health care options for undocumented Minnesotans.
  • Protect existing publicly-financed health care options by preserving the provider tax. The provider tax finances MinnesotaCare and a portion of Medical Assistance, but legislation passed in 2011 means the tax is scheduled to disappear in 2020. That would put affordable health care at risk for more than 100,000 Minnesotans.

Today’s news affirms that Minnesota and the nation have made great strides in making health insurance coverage available to more people. With stronger evidence every year that policy choices make a real difference in people’s ability to find health care coverage, Minnesota’s policymakers have good reason to push for even more progress in 2017.

-Ben Horowitz

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Income inequality rising in Minnesota and U.S.

Income inequality between Minnesota’s richest and poorest households continues to widen and is bad for the economy, according to a report from the Economic Policy Institute.

Income inequality has gotten worse in every state since the 1970s, and the highest-income households today hold a much higher share of overall income. Growing income inequality contradicts some of our country’s most deeply held values. Americans believe that hard work should pay off, that people who work full time should be able to support their families, and that everyone should have the opportunity to succeed. Income inequality can also be bad for the economy. When low- and middle-income households have a smaller share of the economic prosperity they help produce, it can dampen consumer spending, which is an important driver of economic growth.

EPI 2016 report graphic

Some of the most distressing findings:

  • As of 2013, the top 1 percent of earners in the United States hold 20.1 percent of the nation’s income. In Minnesota, a similar story prevails where the top earners hold 16.3 percent of income.
  • The income gap is now so wide that the richest 1 percent of earners in Minnesota make almost 20 times more than the bottom 99 percent.
  • In Minnesota, income inequality is worst in Roseau County, where the top earners have incomes 33 times higher than the bottom 99 percent.

Fortunately, Minnesota can take actions to decrease income inequality and to push back on its negative impact on living standards. These include:

  • Increasing the number of good jobs by increasing wage and job quality standards, such as boosting the minimum wage and expanding access to earned sick time;
  • Ensuring our tax system doesn’t make income inequality worse, but instead is fair to Minnesotans of all income levels, through policies like expanding the Working Family Credit; and
  • Supporting lower-wage workers in their efforts to move into the middle class, by making child care more affordable, improving access to affordable health care, and making sure all Minnesotans can get the education and skills training they need.

By investing the right resources in the right places, Minnesota can work to mitigate rising income inequality so that everyone has a chance to succeed.

-Clark Biegler

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Lack of earned leave hurts Minnesota families

Looking back on my childhood, I see that I was blessed. Whenever I was sick, my mom was able to take a sick day and care for me. But what about my peers whose parents did not have earned sick leave?

For many children across Minnesota, this worry is a reality. When they get sick, their parents are not able to stay home with them because they work in jobs that don’t offer earned sick leave. Often, the families least likely to afford time off without earned leave are also the least likely to have it.

We’ve talked about the importance of the ability to earn paid sick time and how it’s good for the economy, and a report from the Minnesota Department of Health takes an in-depth look at who has access to various forms of earned leave, with particular emphasis on sick leave. It finds that when Minnesota employees have access to earned paid leave, there is a positive impact on their earnings, health, productivity and economic security.

Currently over one million – or 4 out of 10 – Minnesota workers lack earned sick leave, and low-income workers who can least afford to take time off work are also the most likely to not have paid time off. Nationally, less than 40 percent of low-income workers have access to earned sick leave, and only 5 percent of private-sector low-income workers have access to paid family leave, according to the report.

Access to and participation in various forms of earned leave also vary greatly by race. For example, while 60 percent of white Minnesota workers have access to sick leave, only 50 percent of Black and 40 percent of Hispanic Minnesota workers have this benefit. This disparity likely reflects the fact that people of color are more likely to be working in low-paying jobs that lack any paid leave. Taking maternity leave, which is generally unpaid, is also correlated with race. While almost 75 percent of white working mothers in the U.S. took maternity leave after their last childbirth, mothers of color are much more unlikely to take time off with a new child. Only a little over 60 percent of Black and Hispanic working mothers took time off after having their last child.

Access to paid leave also varies by industry and employer. Only about 35 percent of service workers in Minnesota have access to earned sick leave. This contrasts with workers in the state and local government sector, 89 percent of whom have earned sick leave, or employees at private companies, at 61 percent.

Workers without earned sick time or family leave have tough choices to make. Do they go to work sick? Will they be able to stay home to care for a newborn? Those who do not have earned leave can potentially lose their jobs if they take time off work to care for a sick child, take an elderly parent to the doctor, or because they are ill themselves.

The effects of lack of access to earned sick leave are clear. There have been just under 3,000 reported foodborne illnesses in Minnesota over the course of nearly a decade. Many of these illnesses could have been minimized had these workers had some form of earned leave to recover quickly, instead of “toughing it out” at work so that they did not lose wages. With earned leave in place, workplaces would be healthier.

The Department of Health’s report also shows that employers benefit from providing earned sick leave. Earned leave can improve employee morale and retention, and helps recruit more skilled laborers. In addition, it reduces the costs due to lost labor and widespread company illness when employees work while sick.

The health and business benefits of earned leave are being increasingly acknowledged by policymakers. Minneapolis recently passed a sick leave requirement. They join five states, one county, 26 cities, as well as the District of Colombia that have laws so more workers can earn sick leave. As the Department of Health report shows, earned leave is both good for workers and good for business.

-Zack Eichten

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Workers across the state get a raise today, but often still can’t make ends meet

Today many Minnesota workers will receive a raise. That’s due to the final scheduled minimum wage increase to $9.50 for large employers (and $7.75 for small employers and young workers).

In 2014, Minnesota policymakers enacted a long overdue increase to the state’s minimum wage. Since then, the minimum wage has seen scheduled, incremental increases to bring it up to $9.50 this year. Starting in 2018, the minimum wage will increase based on inflation (commonly called “indexing”), so that it better keeps up with the cost of necessities, like rent, food and gas.

The minimum wage is an important tool to set a wage floor among all workers so that more workers across the state can better make ends meet. In fact, this climb to $9.50 is estimated to boost the incomes of about 325,000 Minnesotans. The minimum wage increase is also an important racial equity measure, as almost one in three Hispanic workers in the state and about one in five black workers will see higher wages.

However, for many Minnesotans, the wage boost might not be enough. The Minnesota Department of Employment and Economic Development calculates that a single, full-time worker needs to earn $14.46 an hour to earn a living wage and cover their basic needs. A Minnesota family with two earners (one working full-time, one working part-time) and one child needs to earn $17.57 an hour.

Minnesota’s minimum wage for large employers is currently the ninth highest minimum wage among the states and D.C., but this ranking will drop. Other states are implementing scheduled steps toward higher minimum wages, including $15 an hour in several places. While Minnesota’s minimum wage increase was crucial, policymakers can and should do more so that those who work hard can support themselves and their families.

-Clark Biegler

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Missing MinnesotaCare provision could have moved the needle on one of the state’s glaring racial disparities

Final negotiations over the Health and Human Services (HHS) budget ended without the inclusion of an important proposal that could have addressed one facet of the ugly racial inequities that have sat in the legislative spotlight since the release of Census data last September. Unfortunately, a plan to expand access to affordable health care in Minnesota failed to make it into the final supplemental budget bill. Making MinnesotaCare available to more working Minnesotans could have narrowed racial gaps in health insurance coverage because people of color are more likely to lack coverage through their employers.

About two-thirds of working Minnesotans receive health insurance through their employers, but there are drastic racial differences. About three-quarters of non-elderly white Minnesotans are covered by an employer-based plan, compared to less than half of the state’s people of color. This disparity exists nationally but is worse in Minnesota.

This disparity is clearly seen in the health insurance coverage rate for Minnesotans earning 200 to 275 percent of the federal poverty guidelines (FPG), or $24,000 to $33,000 for a single individual. In this income range, Minnesotans of color are more than twice as likely to lack health insurance compared to their white peers, and are more than five times as likely to lack coverage compared to Minnesotans earning more.

For working people whose employers do not offer health insurance, MinnesotaCare is an affordable health care option. It provides high quality insurance with low out-of-pocket costs and sliding-scale monthly premiums. Prior to 2014, Minnesotans earning 200 to 275 percent of FPG qualified for MinnesotaCare. A task force on health care financeGovernor Mark Dayton and the Senate all have proposed re-instituting eligibility. That could have narrowed the racial inequities in health insurance coverage rates, and the cost to do so would very likely be paid for (possibly entirely) with federal dollars.

MinnesotaCare is also an important health insurance option for entrepreneurs, which has implications for equity, too — the number of businesses owned by people of color in Minnesota increased by 53 percent from 2007 to 2012, even as the overall number of businesses in Minnesota shrank slightly over the same period.

The evidence is clear: our current health insurance system leaves out people of color at an alarming rate. This missed opportunity to bridge our state’s racial disparities by expanding access to MinnesotaCare should be taken up when the Legislature reconvenes next year.

-Ben Horowitz

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Deferred action for parents would improve income and well-being of children and families

Expanding access to a more stable legal status to eligible undocumented immigrants would benefit both the families involved and our economy overall. A recent report from the Migration Policy Institute and the Urban Institute explains how the implementation of Deferred Action for Parents of Americans (DAPA) would improve the financial, psychological and overall well-being of the 10 million people across the U.S. living in households with a DAPA-eligible adult.

DAPA is part of a proposed 2014 executive action by President Barack Obama that would provide temporary work authorization and protection from deportation for parents of U.S. citizens and lawful permanent residents. An estimated 3.6 million unauthorized parents are eligible for DAPA; they have 4.3 million children, 85 percent of whom are U.S. citizens. In Minnesota, an estimated 27,000 unauthorized parents are eligible for DAPA.

In addition to raising their families in the U.S., DAPA-eligible parents have been contributing to and investing in their communities for many years. Seven of every 10 of them have lived in the U.S. for at least 10 years. But they still have significantly lower incomes than U.S.-born Americans and other immigrants. When controlling for other demographics, DAPA-eligible men make 16 percent less per year and DAPA-eligible women make 7 percent less than their counterparts who are lawful permanent residents. MPI estimates that if these parents gained work authorization through DAPA, median family annual incomes would increase by 10 percent, benefiting both their families and their communities and lowering the poverty rate among these families.

Enacting DAPA could provide DAPA recipients with better access to education that would open doors to higher wage jobs and further increases in their incomes. DAPA recipients’ earnings are lower in part due to their limited education and lack of fluency in English. More than half of DAPA-eligible parents have less than a high school education, and 8 in 10 are not able to communicate fluently in English, potentially limiting their earnings and their abilities to access services for their children.

Protection from deportation provides additional benefits for families and children. It would reduce the daily stress and fear associated with the parent’s status, and would enable these parents to be more present in their children’s lives. Family income also would be more stable and reliable.

The MPI report concludes that implementation of DAPA “has the potential to substantially improve the incomes, and living and well-being standards for a sizeable number of unauthorized immigrant families whose children are overwhelmingly U.S. citizens and legal permanent residents.” DAPA-eligible parents and their families recently experienced a setback when the U.S. Supreme Court announced a 4-4 split decision which effectively continued a nationwide delay of DAPA. If this delay is lifted, DAPA will improve the lives of millions of immigrants and their families, as well as our local and national economies.

-Clare Speer

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In Minnesota, full-time workers of color three times as likely to be poor

Most people believe that full-time work should empower somebody to fill their fridge, fill their gas tank and start putting some money in the bank. That belief is less likely to match reality if you are a worker of color in Minnesota.

A new analysis from PolicyLink and the University of Southern California Program for Environmental and Regional Equity shows that working Minnesotans of color were 50 percent more likely to be considered “working poor” in 2012 than they were in 1980. Over the same time frame, the percentage of white working Minnesotans in the same category actually decreased.

PolicyLink defines the working poor as those who are working full time and whose household income is less than twice the federal poverty guidelines. That’s because the federal poverty guidelines generally fall short of describing what a family actually needs to make ends meet. For example, a single parent with a child who earns 200 percent of the federal poverty guideline, or about $32,000, falls $1,700 to $30,000 per year short of what it takes to meet a basic-needs budget in Minnesota depending on their county of residence.

Bar graph depicting the increasing disparity in the percentage of adults who are working poor by race.

Source: PolicyLink/PERE National Equity Atlas analysis using IPUMS; details, including a further breakdown by race and ethnicity, are available at the National Equity Atlas.

When you’re working hard but aren’t paid enough to make ends meet, the results of one misfortune can quickly compound. For example, if your car breaks down and you haven’t got the cash on hand to fix it, you might miss work. At best, the missed hours and auto repair bill may require temporary sacrifices like skipping a few meals. At worst, a missed workday can mean losing your job, likely sending your family into a downward economic spiral.

The impact of living on the economic margins is well-documented in social research. When keeping a roof over your head is a daily struggle, toxic stress accumulates and can even impact children’s brain development. On the other hand, when families’ economic resources increase, children are more likely to succeed in school and, later, in the workforce.

We must do more to make sure hard work pays off by improving job quality standards and supporting low-wage workers so that they can climb into the middle class, regardless of where their economic journey started. If Minnesota’s economy is going to continue to thrum at a level that makes it one of the strongest in the nation, we need to address structural racism, institutionalized in many cases by policies that governed (and in some cases, still govern) the workplace, the housing market, the criminal justice system and other elements of our society.

While there are no quick fixes that will mend these gaps in our economy, there are important steps we can take. PolicyLink has long researched and advocated for policies that would move the country towards a more equitable economy. Closer to home, Minnesota’s own Voices for Racial Justice tracks proposed legislation that would specifically address equity issues in our backyard.

Over the past year, more policymakers recognized the need for focused and direct attention to racial equity. They took a step in the right direction by funding initiatives in this year’s supplemental budget that specifically address racial equity. For further progress to be made, Minnesota’s conversation about building an equitable economy needs to continue — and we need to make sure that the people invited to the table represent the diverse strengths and backgrounds of our state.

-Ben Horowitz

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Five takeaways from state’s July Economic Update

The state received a note of caution – with revenues on track but lower projected national economic growth – in the recent July Revenue and Economic Update from Minnesota Management & Budget (MMB). Here are our top takeaways:

1. FY 2016 ended with revenues slightly ahead of projections. State revenues in FY 2016 were $230 million, or 1.1 percent, higher than projected in the February 2016 Economic Forecast. The largest portion of these higher than expected revenues are from the corporate franchise tax, due to both higher payments and lower than projected refunds.

2. Lower national economic growth projected for 2016 and onward. Economic growth is now expected to slow to 1.9 percent, with slightly higher growth in 2017 to 2019. The start of 2016 showed some of the weakest economic growth in the past few years, due to several factors, including a struggling manufacturing sector and weak global economic growth.

July economic update projections

3. It’s not all doom and gloom. Despite the lower projections, the U.S. economy is showing some positive signs, like higher consumer spending and greater housing activity. And despite last month’s vote by the United Kingdom to leave the European Union (often referred to as Brexit), national economic projections for the U.S. are still solid.

4. Economic forecasters are confident in their projections of economic growth. They only give a 20 percent chance for a more pessimistic scenario where a short recession is spawned by slower productivity and a deep decline in consumer and business confidence. They also assign a 15 percent probability to a more optimistic scenario where higher productivity and foreign growth boost the national economy.

5. The economic update is an important reminder that economic projections can swing. While they are only one factor in the state’s budget outlook, the weaker economic growth projections in the July update hint at smaller state budget surpluses.

-Clark Biegler

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