By WILLIAM MORRIS
BridgeTower Media Newswires
MINNEAPOLIS, MN — Experts agree that the construction industry has bounced back from the Great Recession much faster in Minnesota than in Wisconsin, but not everyone has the same explanation for that difference.
A new report from the North Star Policy Institute, a progressive think tank out of St. Paul, shows that Minnesota has seen stronger growth in both total construction employment and construction wages than Wisconsin since the country’s economy crashed a decade ago.
Using state and federal data, the authors found that both states lost about 32,000 construction jobs, about 25 percent of their total workforce, in the crash. By 2017, though, Minnesota had recovered all but 650 of the jobs lost since 2007, whereas Wisconsin still had about 8,800 to go, the report said.
Wage growth has favored Minnesota workers as well. Although both states saw wages fall in the recession, Minnesota’s average annual construction wage has risen by almost $6,800 since 2010. In Wisconsin, the increase has been only $4,700, according to the report.
The report’s authors believe a series of public projects probably helped Minnesota’s construction industry recover from the recession.
Experts at the University of Minnesota and the Associated Builders and Contractors say they agree with that conclusion but disagree over the influence of certain government policies, specifically policies affecting unions in the two states.
“We don’t have any kind of metric model that we can plug variables into and do analysis on,” Jeff Van Wychen, a tax-policy fellow at North Star Policy Institute and an author of the report, said in an interview.
But the report still lists several contributors to Minnesota’s recovery. Although the authors did not have figures for total infrastructure spending in each state, they noted that Minnesota put money into major infrastructure projects like the Green Line light rail at the same time that Wisconsin was canceling a planned rail connection between Milwaukee and Madison and reducing other public spending.
That spending certainly benefited Minnesota’s construction industry, said Peter Hilger, faculty director of the University of Minnesota’s construction-management program. Even so, it’s impossible to imagine that Minnesota’s expenditures on public projects were enough on their own to shake off the recession, Hilger said in an email.
“My conjecture is that the overall business economy that buys construction services was also perhaps a bit more robust,” he said, noting that Minnesota had benefited from spending on medical centers following the adoption of the Affordable Care Act in 2010. “The public sector alone will not a recovery make. … Private investment must also be there, be it commercial or residential.”
The authors of the think-tank study said they believe several anti-union steps taken by Wisconsin lawmakers hurt that state’s growth, according to Lucas Franco, an author and researcher for the Laborers’ International Union of North America. Those steps include Wisconsin’s adoption in 2015 of a right-to-work law, which prohibits companies from requiring that workers pay union fess, and Act 10, which stripped most public employees of their collective-bargaining rights.
Franco cited research by the Illinois Economic Policy Institute that found right-to-work laws had reduced construction and extraction wages by 5.9 percent on average in Michigan, Indiana and Wisconsin.
“Our construction employment has been significantly stronger in Minnesota than Wisconsin, but what really stands out to me is the difference in wage growth,” he said, noting that Minnesota construction workers earn about $5,300 more than Wisconsin workers.
In 2007, the difference had come to $3,650.
“(Minnesota and Wisconsin) started out with a wage gap, but that gap has grown significantly larger,” he said.
Franco’s interpretation is not universally accepted outside organized labor.
The construction industry in Minnesota has indeed enjoyed a strong recovery, said Adam Hanson, director of government and public affairs for the Associated Builders and Contractors of Minnesota and North Dakota. In fact, Associated Builders and Contractors has found that Minnesota is tied for having the second-lowest construction-industry unemployment in the country, with a rate of 1.9 percent. But the other state with a rate of 1.9 percent — Iowa — can be said to have more in common with Wisconsin, since it is a right-to-work state and has no prevailing-wage laws, he said in an email.
Wisconsin’s falling behind cannot be blamed on a lack of big projects. Hanson said the $10 billion plant that Foxconn Technology Group is building in Mount Pleasant will help improve the state’s numbers in coming years, Hanson said.
Minnesota’s total wage growth also isn’t the full story, Hanson said, noting that Minnesota has higher tax rates and a higher cost of living, as well as a greater union presence in its construction industry.
“How much of the ‘higher wages’ are actual take-home pay versus union political activity, union fair share fees, etc?” he said.
More research is needed to further isolate what exactly has helped Minnesota’s construction economy since the recession, Franco said.
“We’re really trying to understand what has happened over the past 10 years,” he said. “… We’re excited to hear what other interpretations can come out of the data we reveal.”