Housing, the living wage, and the economy

A group in Willmar – including my opponent, Fernando Alvarado – is pressing hard for more below-market rental housing in the city. The measure is promoted with politically-correct words like “workforce housing” or “affordable housing”, but make no mistake: it’s subsidized housing, and taxpayers will foot the bill.

It’s not good for Willmar.

In this newest scheme, the gifts go to real estate developers, with grants as high as $1 million and ten-year tax abatements.

The tax-and-spend crowd tells us Willmar housing is too expensive. Yet, in 2014, the Minnesota Board of Realtors’ annual survey of housing costs said the most affordable starter home in any Minnesota city was in Owatonna. The second most affordable market: Willmar. So this is not about the American Dream of home ownership.

It’s about more cheap rental housing for Willmar.

Government cannot change what it cost to build housing. Neither the lumber yard nor the plumber gives discount prices to subsidized housing.

No, the cost of housing in Willmar is not the problem.

The problem is, as everyone should know, Willmar is a $10 per hour wage town.

Willmar’s job market splits out three ways. A third of employment is in agriculture and meatpacking. A third is in government-related employment (the highest-paying job sector in Willmar, by the way). The remaining third is everything else – primarily retail service work.

In the 1960-70’s, the US meatpacking industry was mostly unionized. Adjusted for inflation, meatpacking paid its production workers about $20 per hour in today’s dollars. Today, meatpacking in Willmar is not unionized. It pays an hourly wage of $10-12 per hour, predominantly to Hispanic and Somali immigrants. In Hormel’s meatpacking operation in Austin, the union bargaining agreement provides an hourly wage of about $17 per hour.

The correct goal is to transform Willmar into a $20 per hour wage town.

What would affordable housing in Willmar cost, were Willmar to become a $20 per hour wage town? The average annual wage would rise to about $42,000 a year. An affordable monthly rent or mortgage would rise to $1,000 per month. $1,000 a month could pay the mortgage and taxes on the house that city planner Bruce Peterson described in the August 15 West Central Tribune story on home construction.

So how does Willmar become a $20 per hour wage town? First, diversify Willmar’s economy. Bring in industry and manufacturing that produces high-value-added products, higher profit margins, and better-paying jobs. Second, support the right of Jennie-O’s workers to earn a living wage. Remember, most poor people in Willmar today are working poor, and what their wages don’t pay for, taxpayers pay for. It’s in the best interest of every Willmar taxpayer to support a living wage in meatpacking.

Will Willmar’s business community, and specifically, the Chamber of Commerce support any of this? The Chamber of Commerce represents businesses that are ALREADY here. Willmar’s largest companies comprise the Chamber’s “inner circle”, since they pay the biggest dues. So the Chamber beats the drum for the employers of low-wage workers. The West Central Tribune promotes the same message, and why might that be? The Willmar 15, remember?

This, friends, is admittedly a very big challenge. The system in Willmar has been rigged this way for at least 30 years. The story of 3M having been run out of town in the 1970’s by our powerful insiders has become the stuff of local legend. It has been said that Earl Olson fought the impact a company like 3M would place on the local labor supply and the wages Jennie-O paid its workers. But we have no choice but aim high for big success, for we see what thirty years of the same old thinking has produced in Willmar. We CANNOT afford to fail.

I will release a job growth plan over the coming weeks. If I’m correct, it will create a rising tide that lifts all the boats. Even the yachts.