Is Minneapolis an Economic Success, or Is It too White to Qualify?

Two recent articles In The Atlantic concern themselves with Minneapolis, Minnesota. This is rare in itself. Minneapolis is a large, cultured city, but it doesn’t feature often in the national news media.minneapple
In “The Miracle of Minneapolis,” Derek Thompson asserts that “No other place mixes affordability, opportunity, and wealth so well. What’s its secret?” One important factor is that it has more corporate headquarters per capita than any other city in America.

Minneapolis–St. Paul is the headquarters for 19 Fortune 500 companies—more than any other metro its size—spanning retail (Target), health care (UnitedHealth), and food (General Mills). In the past 60 years, 40 Minneapolis-based businesses have made it onto Fortune’s list. “We’re not like Atlanta, where half of its Fortune 500s moved there,” Myles Shaver, a professor at the Carlson School of Management at the University of Minnesota, told me. “There is something about Minneapolis that makes us unusually good at building and keeping large companies.”

Shaver’s theory, which he’s developing into a book, is that Minneapolis is so successful at turning medium-size companies into giants because its most important resource never leaves the city: educated managers of every level, who can work at just about any company. Shaver looked at the outward migration of employed, college-educated people who earn at least twice the national average income—his proxy for the manager demographic—and found that of the 25 largest American cities, only one had a lower rate of outflow than Minneapolis (although he couldn’t compute data for three others). Among all college-educated workers, Minneapolis also had the second-lowest outflow. “It bears out the old adage: ‘It’s really hard to get people to move to Minneapolis, and it’s impossible to get them to leave.’ ”

Also, importantly, Minneapolis uses a system of redistributive taxation to transfer wealth from its richest citizens and biggest companies to poor neighborhoods.

In the 1960s, local districts and towns in the Twin Cities region offered competing tax breaks to lure in new businesses, diminishing their revenues and depleting their social services in an effort to steal jobs from elsewhere within the area. In 1971, the region came up with an ingenious plan that would help halt this race to the bottom, and also address widening inequality. The Minnesota state legislature passed a law requiring all of the region’s local governments—in Minneapolis and St. Paul and throughout their ring of suburbs—to contribute almost half of the growth in their commercial tax revenues to a regional pool, from which the money would be distributed to tax-poor areas. Today, business taxes are used to enrich some of the region’s poorest communities.

The upshot is that Minneapolis is a great place to live. College graduates have relatively little trouble finding jobs at successful local companies, and the poor have a relatively high chance of moving into the Middle Class. But according to another author at The Atlantic, that’s not enough.

In “Minneapolis’s White Lie,” Jessica Nickrand takes Thompson to task for ignoring the fact that Minneapolis is majority-white. It may be a successful economy, but as other cities have more poor minority residents, what works in Minneapolis won’t work in other cities.

Applying policies that work in a relatively white-heavy city, like Minneapolis, to a more diverse municipality without consideration for racial inequality will make the region vulnerable to economic disaster; poor and working-class residents will be relegated to areas of concentrated poverty, which would contribute to a city’s overall loss of wealth, a diminishing tax base, and a larger number of people dependent on city services.

I think most research now agrees that segregation is bad for white people and minorities alike. But this is the first time I’ve heard that segregation leads to economic disaster. Nickrand compares Minneapolis to Detroit to make her case: “Detroit’s economic problems are directly related to policies and actions that deliberately excluded black residents from the city’s progress. This exclusion occurred while the city was championed as a welcoming middle-class haven that was ideal for people to start their adult lives—much like is Minneapolis today.”

Nickrand assumes that anti-minority policies in Detroit are “directly related” to its economic problems. As far as I can tell, she doesn’t present an argument that this was the case. Detroit’s economic collapse is usually attributed to economic factors, like the fact that its economy was built upon the American automotive industry, which contracted massively, disproportionately hurting working class workers of all races. White workers in Detroit had a higher net worth and were more able to leave the city for the suburbs or for other metro areas where jobs were more plentiful, leaving Detroit a city which is today no more than 11% white.

Here’s the problem: the people who create jobs are usually not poor. The (relatively) well-off employ the poor, which enables them to reach out of poverty toward economic stability. In the United States, because of a sad and bloody history of racial discrimination, it is often well-off white people creating jobs for poor minorities. That doesn’t make it a bad thing.

Nickrand relates troubling statistics about racial inequality–although it seems likely to me that comparing Minneapolis’s minority population (which is disproportionately made up of recent immigrants) to its stable and multi-generational indigenous white population is not a good metric.

Ultimately, Nickrand believes that Minneapolis must reenact “the progressive policies of the 1960s and 1970s” to ensure racial economic equality. She doesn’t go into more detail, but I imagine that involves more wealth redistribution than is already occurring. If you don’t think Minneapolis is a progressive city, do you even know what “progressive” means? For Nickrand, economic success for most people is actually a “lie” unless everybody is doing just as well as everybody else–including immigrants just off the plane who have few marketable skills and are happy to have the low-wage jobs that they do qualify for.

The key to Minneapolis’s economic success is economic: it’s the home to large, smart, diversified corporations like 3M. And if Minneapolis’s economy fails on the scale that Detroit’s has, it will also be because of economic factors–not racial ones.

The question, “is Minneapolis economically successful, or is it too white?” is nonsense. Why do attempts to create a “race-blind” society show us to be as obsessed with race as we ever have been?