By Jake Rossen
By Jesse Marx
By Michelle LeBow
By Alleen Brown
By Maggie LaMaack
By CP Staff
By Jesse Marx
THERE'S A RIPPLE of panic at the top of the food chain in St. Paul. One of Mayor Norm Coleman's chief aides has taken a leave of absence to work full time for a PR firm propagandizing against a jobs initiative on the November 7 city ballot, and last weekend the Chamber of Commerce dispatched a mass mailing to local residents warning in dire terms of the "Job Killer" measure before them.
The object of this full-court press is a proposed ordinance placed on the ballot through a grassroots petitioning effort by groups including ACORN, the New Party, and the Minnesota Alliance for Progressive Action. It stipulates that all businesses receiving city aid in excess of $25,000 must show a net increase in jobs created for city residents within two years' time, must hire workers referred by a community hiring hall wherever possible, and--here's the kicker--must make those new jobs pay enough to meet the federal poverty guidelines for a family of four, presently about $7.21 an hour.
Backers of the jobs ordinance point out that the intent is not to impose strictures on business so much as to establish guidelines on where the millions the city hands out in loans, grants, and tax breaks should go: to those enterprises that figure to provide the greatest return to St. Paul citizens. To date it hasn't worked that way. Two statistical snapshots tell the story. In the past decade unemployment has declined by two points; during the same period the percentage of families living in poverty has more than doubled. A revision of the city's standards for putting businesses on the dole is obviously in order.
But to a business establishment accustomed to having its way with the treasuries of beleaguered city governments, it's pure blasphemy. Coleman and the Chamber have stopped short of calling the ballot measure the moral equivalent of kiddie porn on the Internet, but just barely. The flier mailed out last week is filled with alarmist rhetoric and palpably false defenses of the present way of doing business, the most egregious of which is its claim that "Every tax dollar that has been loaned to create jobs over the past two years requires documentation from the business receiving money that they have created jobs. If they fail to live up to this commitment, they are in default and must pay the money back."
In fact, a City Council audit completed last month revealed that the city has no idea how many jobs have been created or saved by its aid to business: Three-quarters of the recipients had not filed the required job impact statements, and in any case the clerk in charge of processing them had long since been laid off.
As the St. Paul Pioneer Press reported on September 17, the city is lucky when it can determine where its redevelopment money has gone, much less whether the borrowers are living up to the terms of the aid. "For 15 years," wrote reporters Dan Browning and Charles Laszewski, "St. Paul's redevelopment agency has been a place where half-million dollar loans slipped off the books the way most people lose change in the living-room couch. Federal, state and local redevelopment money totaling millions of dollars has been misplaced, misspent or misused under the noses of city officials who were supposed to make sure those taxpayer dollars were used efficiently to revitalize the city." The story went on to detail horror stories involving millions of dollars whose disposition no one in city government could account for; St. Paul will likely end up writing off $15-$20 million in bad loans, much of it the result of sweetheart deals and official laxity.
Coleman's administration has taken steps toward cleaning up the bureaucratic mess surrounding the city's loans, but there's no reason to think it will mean any closer attention to jobs and wages as criteria for city aid. In effect the only means test on city assistance to business is the clout of the dealmakers involved. It's a sweet arrangement all around, and the fright campaign concocted to preserve it is based on a familiar premise: Communities challenge the prerogatives of capital only at their own peril. Place limits on business, say Coleman and the others, and it will simply go somewhere else.
To the contrary. Eric Sheppard, a professor of economic geography at UM, says research shows that "these kinds of marginal changes don't have much effect on the locational dynamics of industry. The same argument is made regarding the state of Minnesota: It's often said we drive business to South Dakota, and certainly there have been a few publicized instances of that happening. But when you look at the state of Minnesota's economy generally, it's doing very well. Second to none, really."
Regarding the St. Paul ordinance, "I don't think it would have any ill effect in the short term, and there would be positive effects in the long term. If you look at geographic differences in economic development, the places where long-term growth occurs are the ones with higher wages and higher purchasing power, which creates more local demand for products and more opportunities for firms. Whereas a beggar-thy-neighbor competition between cities usually involves going after low-wage jobs that don't help the community in the long run."