Rebecca's RenewMN Vision, part III

The 15-5-2 Plan

A clean energy plan that creates thousands of jobs A universal health plan that puts the provider-patient relationship at the center and saves costs An economic plan that meets the workforce needs of this century as it lifts Minnesota from a low-wage to a high-wage economy

Rebecca Otto's 15-5-2 Plan will renew communities across the state. Tweet This With a $15 minimum wage phased in over 5 years and 2 years free Higher Ed, it opens the doors of opportunity to every Minnesotan.

Download pdf


One of the biggest challenges facing our state is growing economic inequality. Unemployment is low and that should be driving wages up, but that's no longer happening. As more and more jobs are automated and outsourced to cheap overseas labor, and as collective bargaining power has been eroded, there is a constant downward pressure on wages even as worker productivity soars. The problem is made worse by soaring health care costs, making outsourcing and automation look even more attractive to employers.

During this period, CEO pay has exploded. According to a recent report by the Economic Policy Institute, CEO pay has risen 937 percent since 1978, while average worker pay has risen just 11%. In 1965, the pay ratio of CEOs to employees was 20 to one. In 2016, it was 271 to one. Tweet This

This problem is hitting Greater Minnesota especially hard as farms are automated and consolidated, and as mining and manufacturing are automated, requiring fewer workers. The resulting depopulation makes it harder to support Main Street businesses. It causes the closure and consolidation of schools and hospitals, undercutting a community's identity. Couple that with a lack of child care and reliable high-speed broadband and it makes it difficult to attract young families. Economic desperation makes people more vulnerable to despair, and drug use rises, as do family violence and mental health challenges.

At the same time, manufacturers, contractors, and other employers across Minnesota can't find enough skilled workers. Even offering $70,000 starting salaries, many employers can't find people with the skills needed to do the job. Tweet This A manufacturer in Northern Minnesota, for example, has several $70,000 jobs open they can't fill. There is a huge disconnect in our economy, a skills gap that poses a growing threat to our future prosperity. Tweet This

These challenges are related, and they are not accidental. They are the result of decades of public policy that, in contrast to the high wages of the New Deal, prefers a low-wage economy that not only assumes but accepts that many – if not most – jobs in the U.S. will pay poorly. Rather than try to raise market wages, proponents of the low-wage social contract across the political spectrum prefer to help low-wage individuals through lowering taxes or providing government subsidies.

Rebecca Otto's 15-5-2 Plan will change this failing approach. People don't want low wages and government supports - they want good-paying jobs. Tweet This Rebecca's plan battles the skills gap by educating the skilled, higher-wage workers we need to prosper across the state, in the communities we need them, while protecting other workers against the low-wage downside of globalization and automation. It is a critical piece of the 5-part puzzle of renewing Minnesota.

A pathway to prosperity

Rebecca Otto's 15-5-2 Plan

Graduates

The 15-5-2 Plan invests in the common good

The Topline: Rebecca's 15-5-2 Plan

The 15-5-2 plan ensures Minnesotans can support themselves and that they can make it through two years of college or vocational education without incurring a mountain of debt. The plan:

  1. Gradually raises the minimum wage to $15 per hour, with no tip penalty, phased in over 5 years, Tweet This with protections against wage theft. The policy allows further time for small businesses, nonprofits, and communities in Greater Minnesota to make a gradual adjustment suited to their competitive and operating needs.
  2. Provides 2 years of free higher education. The first two years of college or vocational education are free Tweet This throughout the Minnesota State Colleges and Universities system. Students can enter the workforce without a mountain of debt.
  3. Reconnects workers and employers. Rebecca's plan provides the skilled workers needed for the high-paying jobs Minnesota companies are struggling to fill right now, as well as the tens of thousands more high-paying clean energy jobs generated by her Minnesota-Powered Plan. The result is economic gains across Minnesota, in every community and population.

The 15-5-2 plan is a win-win, making sure workers are paid a fair wage Tweet This , which will reduce poverty, stabilize families, and improve school outcomes for the children of the families, since parents won't have to work two or three jobs to make ends meet. At the same time, we educate Minnesotans for the high-skilled careers of the 21st century.

When combined with the tens of thousands of high-paying jobs Rebecca's Minnesota-Powered Plan and Healthy Minnesota Plan will create, her forward-looking vision will usher in a new era of statewide prosperity. To learn how, read on.

Press the plus sign or category heading of each section to open it and see the details.

Rebecca's Plan in Brief

A $15 minimum wage phased in over 5 years plus 2 years of free college.

Rebecca Otto's 15-5-2 Plan attacks the core problems driving much of today's economic inequality: Tweet This wage depression, underemployment, skills gaps, organized labor losses, wealth redistribution to the rich, and the erosion of the middle class.

Main Street in Greater Minnesota

Depopulation is harming Greater Minnesota communities

The “15” part of the 15-5-2 Plan provides a real, accountable, paid-for plan that guarantees every worker a livable wage of $15 per hour Tweet This , with no tip penalty and reasonable protections against wage theft.

It's the morally right thing to do, and it's also the economically smart thing to do. Tweet This Economic self-sufficiency reduces crime, drug use, health care costs, and provides a host of other social goods. It is economically more efficient for a society to ensure a livable minimum wage so people have resources to take care of themselves Tweet This than it is to provide taxpayer-funded supports.

In a time of outsourcing, automation, and a chase for the cheapest labor as the rich get richer, we can't rely on market forces alone to make the economy work for Minnesotans. A livable minimum wage is an important economic stopgap that protects the principle of equal opportunity Tweet This that democracy depends upon.

The “5” part of the 15-5-2 Plan phases in the new minimum wage standard over five years with an extended timeline to protect small businesses, non-profits, and Greater Minnesota communities. This policy recognizes the valuable role locally-owned businesses and startups play in the broader health of our statewide economy. It also recognizes the challenges faced by nonprofits providing vital services, and Minnesota businesses located in Greater Minnesota where the cost of living is lower.

The "2" part of the 15-5-2 Plan provides for two years of free college, university, or vocational education anywhere in the Minnesota State Colleges and Universities system, to throw open the doors of opportunity to both recent high school graduates and workers who have been laid off due to outsourcing or automation.

This is not only the morally right thing to do in a democracy, which is about equal opportunity, but it, too, is the smart thing for our economy. Rebecca has heard from people all across this state: People can't find good-paying jobs, and employers paying $70,000 a year can't find workers with the necessary skill sets. We can bridge the skills gaps, and at the same time educate workers for the clean energy economy. Employers will have the skilled workforce they need to grow, and Minnesotans can support their families.

The 15-5-2 Plan addresses the pressures of the 21st Century economy—the downward pressure on wages due to global outsourcing and automation, and the upward demands for higher education and skills needed in today’s job market. It will Renew Minnesota communities across the state and our economy as a whole for years to come.

How the $15 minimum wage works

The 15-5-2 plan recognizes that communities, employers, and jobs are not all the same.

Rebecca wants to strengthen the Minnesota economy across the board, which means phasing in the $15 minimum wage Tweet This over 5 years to allow employers to adjust. It means giving smaller employers and Greater Minnesota communities the flexibility they need to make the plan work for them. Here's how:

Woman and child

Rebecca's 15-5-2 Plan especially helps women and children

Renewing the common good

Under Rebecca's 15-5-2 Plan, Minnesota's minimum wage paid to employees would rise over 5 years to:

  • $11 in 2019
  • $12 in 2020
  • $13 in 2021
  • $14 in 2022
  • $15 in 2023
at which point it would be indexed to inflation. Employers must pay you the full minimum wage even if you are paid tips.

The 15-5-2 Plan has built-in flexibility for smaller employers. Employers with annual gross revenues of less than $500,000 (the current state standard for "small employers") and employers located outside the 7-County Metro Area (except Rochester and Duluth) will have a 7-year phase-in:

  • $10 in 2019
  • $10.50 in 2020
  • $11 in 2021
  • $12 in 2022
  • $13 in 2023
  • $14 in 2024
  • $15 in 2025

Raising the minimum wage to $15 especially helps women and children. Tweet This More than 6 in 10 employees earning the minimum wage in Minnesota are women. Three quarters of Minnesota's Working Family Credit claims, and 97 percent of the funds paid out, go to families with children. Women make up two-thirds of tipped workers, such as restaurant servers, the class of low-wage employees that would see the largest gains. Nationwide, the poverty rate for tipped workers is twice as high as the rate for other workers. This is one reason Rebecca's 15-5-2 Plan ensures tipped workers are entitled to $15 per hour before tips, which are supposed to be for work that is extra and above the minimum, not a requirement to survive.

The 15-5-2 Plan fights poverty. A 2016 study led by Samuel Myers at the UMN Humphrey School, and commissioned by the Minneapolis City Council as it considered raising the minimum wage to $15, found that households with minimum wage earners

  • Are currently less likely than the general public to meet their food needs
  • Are likely to spend $27 more a week to meet their food needs after the proposed increase in the minimum wage
  • Would face food insecurity 4-7% less often under the proposed policy

Imagine a world in which parents no longer have to work two jobs just to keep a roof over their heads and food Tweet This on the table. Where they can make enough money to avoid hunger and homelessness, spend time helping their kids with homework and attend parent-teacher conferences.

That world is possible with the 15-5-2 Plan.

How the 2 years of free college works

You can go to college or vocational education for two years free.

We will reinvigorate the Minnesota State Colleges and Universities system, which has campuses all across Minnesota, to do this important work.

The Minnesota State Colleges and Universities system

The Minnesota State Colleges and Universities system

Renewing the common good

You will get 2 years free college or vocational education at a Minnesota State college or university. Tweet This The Minnesota State Colleges and Universities system is comprised of 30 state colleges and 7 state universities with 54 campuses in 47 communities throughout Minnesota. Attendance for a two-year associate degree, the first two years of a four-year degree program, or a vocational program, at any Minnesota State institution will be tuition- and fee-free to all first-time college students (within 4 years of high school graduation) or to adults outsourced or automated out of a job. When you graduate you will have zero tuition or fee debt from the first two years.

What's included:

  • Tuition at any one of the 54 Minnesota State campuses after any other funding from existing state and federal grant programs.
  • All instructional and other student fees.

What you commit to:

  • Maintain a 2.5 or higher GPA.
  • Live full-time and work in Minnesota for 4 years afterwards.
  • Perform 25 hours of community service during your program.
  • Participate in a mentoring program to help you be successful in your chosen field.

Minnesota State campuses are critical employers in their communities. The 15-5-2 Plan makes them stronger. Tweet This A recent report highlighted the unsustainable finances of the Minnesota State program. A decade of underfunding by the legislature has put the system, which educates 376,000 students annually, in danger of deficits and campus closings. Imagine what campus closings would do to the communities where these large employers are located, at the very time we need these campuses the most. The 15-5-2 Plan adequately funds the Minnesota State system, renewing it so it can do its job Tweet This of preparing students to enter the workforce or go on into a 4-year degree program. By properly funding the system and making it available for free to students for two years, we will be improving equality of opportunity across the state and reinvesting in our people to Renew Minnesota.

The 15-5-2 Plan will result in additional dollars circulating through the Minnesota economy Tweet This because families will have more money to spend, with increased incomes and little or no student debt. This also means that Minnesota will take in more tax revenues, which can help offset the expense of providing 2 years of free college.

A pathway to prosperity. But the reason college should be free isn't just economic -- it's moral and philosophical. Tweet This We want every Minnesotan to have an equal opportunity to reach their potential. That's what America is all about. Tweet This Minnesota has some of the highest opportunity gaps of anywhere in the nation. Social mobility has been eroding. And without easy and affordable access to quality higher education, the collective intellectual capital that Minnesota is known for is also in danger of eroding. In an age when high school is often no longer enough preparation to participate in the economy, the 15-5-2 College Plan is the right thing to do, and it's the American thing to do. Rebecca Otto's 15-5-2 Plan is a game-changer, throwing open the doors to upward socioeconomic mobility. Tweet This This is the kind of equality of opportunity America was built on, and that we need to get back to in order to thrive as a state.

Paying for free college in Minnesota under the 15-5-2 Plan will increase state expenditures by just 1/2 percent. Tweet This The Minnesota State system currently has an annual budget of about $1.8 billion. The State of Minnesota provides an annual appropriation of $625 million. Based on the assumptions contained in the 15-5-2 College Plan, we estimate that the State of Minnesota will need to increase its annual appropriation to the Minnesota State Colleges and Universities system by about $229 million to provide free college for two years. The state's 2017 overall expenditures are $41.816 billion, so sending every eligible Minnesotan to college for 2 years free would increase expenditures by just 1/2 percent. We expect this increased expenditure to be partially to fully offset by the increased economic activity and tax collections this and other aspects of the Renew Minnesota Plan will generate. It's not about spending more; it's about spending smarter. In addition to this, we propose meeting Minnesota State's one-time FY18-19 funding request of $168 million to provide the faculty, staff, and IT infrastructure needed to deliver its programs.

Early in our nation's history people could attend many public colleges for free. Tweet This The Morrill Act of 1862, signed into law by Abraham Lincoln, allowed states to establish land-grant colleges so Americans in every social class could get a higher education. The goal was "to promote the liberal and practical education of the industrial classes in the several pursuits and professions in life." California offered free tuition to residents up until the 1970s. Today, public college tuition is so high that many students simply can't afford to attend. As a result, far fewer students from lower-income families attend college than those from upper-income families.

Financial barriers are the largest reason for students dropping out. Tweet This Students who face financial barriers and manage to re-enroll often have more difficulty completing their degree than those without financial barriers, according to the Graduate Minnesota survey. In addition to financial aid, such students could likely benefit from additional support in other areas as well, the report found, such as targeted advising and mentorship. Respondents’ primary reasons for leaving were: Financial burden: 22 percent; Personal/family responsibilities: 21 percent; Other: 18 percent; Job demands: 15 percent. A recent Minnesota State report showed that providing free college can improve graduation rates by as much as 40 percent.

Nine other advanced countries now offer free college. Tweet This A 2015 OECD report lists the countries with free college tuition as of 2013-14: Denmark, Estonia, Finland, Norway, Slovak Republic, Slovenia, Sweden and Turkey. In 2014, Germany eliminated tuition at its colleges and universities. Even Americans can now attend college for free in Germany. The OECD report says this decision "reflects these countries’ deeply rooted social values, such as equality of opportunity and social equity," the values on which America was also founded.

NOTE: $229 million estimate is based on data drawn from Minnesota State Colleges and Universities publications and assumes that: a) Numbers of students are similar to that in FY2016. A large influx of new students could increase this estimate to $300 million. b) Correct number of FT students. c) Correct numbers on annual costs of tuition plus fees, net of existing state and federal grants. d) Correct assumption that 37 percent of students across the system are in the qualified categories to use the program; ie, recent high school graduates or persons recently outsourced or automated out of a job.

 


 

Are you ready?