Bruce P. Corrie, PhD, Economist, Concordia University & ALANA Brain Trust

Investments in the African American economy in Minnesota is not a zero-sum game – rather investments in the African American economy will help the larger economy in Minnesota grow through increases in output, jobs, income, and federal, state, and local tax revenue.

HF784 and SF800 aims to address serious racial disparities experienced by African Americans in Minnesota by proposing comprehensive investments in multiple areas.

The ALANA Brain Trust IMPLAN Economic Model illustrates the positive impact of investments in various sectors of the African American economy on both the African American population as well as the rest of Minnesota.

Closing the $7 billion African American -White Income Gap in Minnesota Will Also Benefit All

The ALANA Brain Trust IMPLAN Economic Model estimates that closing the $7 billion + African American White income gap would support an estimated $10 billion increase in output in the Minnesotan economy, supporting 63,000 jobs and $3.4 billion in wages and $1.3 billion in federal, state, and local taxes.

Investments in African American Cultural Assets

HF 784 and SF 800 call for investments in the cultural assets of African Americans in Minnesota. In a historical context these cultural assets were not invested in the same way as cultural assets of White Minnesotans. For example, only recently was an African American cultural context study was completed in Saint Paul documented important African American cultural assets which in turn sets the stage of receiving historical status and investments such as historical tax credits for development projects. Mainstream museums did not pay attention to arts and cultural heritage of African Americans and other minority communities in Minnesota – hence the growth of culturally specific museums in the African American community for example.

$70 Million Investment in African American Cultural Assets – Creating Cultural Destinations

The ALANA Brain Trust IMPLAN Economic Model estimates that investments in African American cultural assets would support an estimated $108 million increase in output in the Minnesotan economy, supporting 720 jobs and $34 million in wages and $14 million in federal, state, and local taxes.

Investments in African American Businesses

The average sales of an African American firm was around $80,000 compared to $550,000 of a White firm. African American firms because of their small size face barriers to access capital and technical assistance. For example, the recent PPP program hardly reached African American businesses and for those that received it accessed it via nonprofit lenders who can assist these businesses overcome barriers in the application process. There is also the absence of a large African American CDFI that can access larger pools of capital. Some African American businesses need alternative finance products which are hard to come by in Minnesota.

$50 million investment in African American businesses -Growing Entrepreneurship

The ALANA Brain Trust IMPLAN Economic Model estimates that investments in African American businesses would support an estimated $68 million increase in output in the Minnesotan economy, supporting almost 500 jobs and $24 million in wages and $9.7 million in federal, state, and local taxes.

Investments in African American Renters and Homeownership

African Americans are primarily renters and cost burdened because of low-income levels. Yet as renters they have close to a billion-dollar annual infusion of money to property owners in Minnesota. This provides a strong rationale to invest in affordable housing and homeownership so that they can effectively build wealth.

$ 1.5 Billion – Economic Impact of African American Renters in Minnesota – Supporting Renters

The ALANA Brain Trust IMPLAN Economic Model estimates the impact of African American renters on Minnesota who spend $960 million every year in rental payments. This spending would support an estimated $1.5 billion increase in output in the Minnesotan economy, supporting over 5000 jobs and $242 million in wages and $182 million in federal, state, and local taxes.

Closing the African American- White Housing Gap in Minnesota

The ALANA Brain Trust IMPLAN Economic Model estimates that closing the $12.8 billion African American-White housing gap would support an estimated $20 billion increase in output in the Minnesotan economy, supporting 67,000 jobs and $3.2 billion in wages and $2.4 billion in federal, state, and local taxes.

African American Human Capital

African Americans offer Minnesota a strong workforce across the metro and rural areas. It is time to rethink how we view investment in this important asset. The economic analysis below shows if we treat African American youth as assets – a $465 billion dollar asset, and invest in education and skill development which in turn would grow wealth in the African American community and increase jobs, output and tax revenue in Minnesota.

$465 billion – The Economic Value of African American Youth in School and Higher Education Institutions

If all the African American youth in school and higher educational institutions were to graduate with a four-year degree, they would represent $465 billion in lifetime earnings – an estimate of the talent under the stewardship of Minnesota’s leaders.

$2.3 billion – Income Increase If African American Workers Improved their Educational Degrees up One Level. It also grows the Minnesotan Economy.

If current African American workers improved their educational degrees by one level, their income would increase by $2.3 billion.

The ALANA Brain Trust IMPLAN Economic Model estimates the impact the impact of the increase in African American income when existing workers increase their education degrees by one level. This increase in income would support an estimated $3 billion increase in output in the Minnesotan economy, supporting over 19 000 jobs and $425 million in federal, state, and local taxes.

Investment in Community Spaces/Centers

Many immigrant and other communities rely on kinship networks such as tribes or clans to help support their wealth building initiatives. Because of the historical experience with slavery these kinship-based networks best emerge around places for community gathering and networking where people develop shared values and community engagement. These community centers provide an important element for the success of economic development and wealth building initiatives as we can see clearly in Saint Paul and Minneapolis.

Investing in African American Minnesotans will help all Minnesotans as the above estimates illustrates.

Sources for funding for these Investments

It is well documents how redlining both depleted and prevented wealth building in the African American community in Minnesota. To remedy this injustice, a tax of 1 percent on all real estate transactions over $300,000 will provide the necessary funds for long term wealth building/

The ALANA Brain Trust IMPLAN Economic Model uses standard “input-output” economic methodology to get a broad assessment of the economic impact of policy or investment decisions. The IMPLAN group has developed a model of the Minnesotan economy from government and other sources for over 500 business sectors together with data on household income distribution. Typically, the model will be able to assess the economic impact of a decision in terms of increase in total output, jobs, wages, and federal, state, and local taxes. One can look at this model as providing an intelligent estimate of the impact of various investment or policy decisions. The ALANA Brain Trust IMPLAN Economic Model takes the IMPLAN model and applies it to the Minnesotan context depending on the issue analyzed. Dr. Bruce Corrie is an economist at Concordia University and conducts the economic analysis.