The Brookings Institution Metropolitan Policy Program Amy Liu, Deputy Director

The Brookings Institution Metropolitan Policy Program Amy Liu, Deputy Director Mind the Gap: Reducing Disparities to Improve Regional Competitiveness in the Twin Cities Forum on the Business Response to Close Disparities November 16, 2005

Main Findings of the Report 1. The Twin Cities region is blessed with a number of assets 2. Yet, underneath these broad regional successes are stark social and economic disparities 3. Reducing these disparities matters to the economic and fiscal future of the region 4. The Twin Cities has an opportunity now to address these disparities so it can remain an economically, high-quality region

First, the Twin Cities possesses enormous economic assets The region has one of the most highly educated populations in the country Median household income is the 14 th highest among regions in the country; meanwhile poverty is one of the lowest Economy, especially in the two central cities, is diverse and rooted in the right industries The region has enviable natural amenities

However, the broad regional strengths mask severe disparities in the Twin Cities Race Disparities differences among race and ethnic groups Class Disparities differences among income groups Place Disparities differences between cities and suburbs (and among suburbs)

Race Disparities The Twin Cities has the highest high school attainment rate in the country, but the rates among the Hmong, Mexicans, and other Latinos are dramatically lower

Race Disparities High school attainment rates are low, even among younger generations as compared to those of older adults. The exception is Hmong young adults, who made significant gains in high school attainment, but still trail white young adults Share of adults with a high school degree by selected age groups and race/ethnic group, 2000. 100% 80% 60% 40% 20% 18 to 24 year olds 45 to 64 year olds 0% White Hmong Subsaharan African Black, other than Sub. Afr. Mexican Source: U.S. Census Bureau

Race Disparities Educational disparities persist when looking at college attainment rates Share of MSA 25+ population with BA, 2000 50% 40% 30% 20% 10% 0% Asian (other than Hmong) White Subsaharan African Latino (other than Mexican) Black (other than Subsaharan Afri... Mexican American Indian Hmong Total population Source: U.S. Census Bureau

And the divide is even more stark when looking at generational differences. While white 25-34 years olds are more likely to have a college degree than older white adults, the same is not true for most other ethnic groups. Share of adults with a college degree or higher by selected age group and race/ethnic group, 2000. 60% 40% 20% Race Disparities 25 to 34 year olds 45 to 64 year olds 0% White Subsaharan African Hmong Black, other than Sub. Afr. Mexican Source: U.S. Census Bureau

Race Disparities While the Midwest experienced a net out-migration of African Americans since 1975, possibly explaining low college attainment rates among blacks 200,000 Black net migration by region, 1965 to 2000 100,000 0 Midw est South -100,000 1965-1970 1975-80 1985-1990 1995-2000 -200,000-300,000 Source: William H. Frey, The New Great Migration, Brookings, 2004

Race Disparities the Minneapolis-St. Paul metro area has actually been a net gainer of African Americans for the last four decades, attracting 7,600 net new blacks in 1995 to 2000 alone Black net migration Minneapolis-St. Paul metro, 1965 to 2000 15,000 10,000 5,000 0 1965-1970 1975-80 1985-1990 1995-2000 Source: William H. Frey, The New Great Migration, Brookings, 2004

Race Disparities Education matters. Nationally, the more you learn, the more you earn Work-life earnings estimates (millions), 1997-1999 Doctoral degree $3.4 Source: The Big Payoff: Educational Attainment and Estimates of Work- Life Earnings, U.S. Census Bureau Professional degree Master's degree Bachelor's degree $2.1 $2.5 $4.4 Associate's degree $1.6 Some college $1.5 High school graduate $1.2 Not high school graduate $1.0

Race Disparities Thus, with overall lower education levels, minorities have lower household incomes than whites

Race Disparities Minorities also have less access to wealth; region has the 7 th highest homeownership rate in the country, but again not all participate in that asset Housing tenure by race/ethnic group, 2000 100% 80% 60% 40% 20% 0% Total population White Hmong Asian (all) American Indian Latino (all) Mexican Black (all) Subsaharan African

Race Disparities Further, there are severe healthcare disparities; about onethird of all Latinos are not covered by health insurance 40% Share of race/ethnic group not covered by health insurance, Twin Cities MSA, 2004 30% 20% 10% 0% White Black (all) American Indian Latino (all) Source: Center for Health Statistics, Populations of Color in Minnesota Health Status Report 2004

Class Disparities While income disparities are not stark in the region, incomes among the poorest fifth did not grow as fast as the highest earners

The region has the third lowest poverty rates in the country, at 4 percent, but minorities are far more likely to be poor 40% Class Disparities Poverty rate by race/ethnic group, 1999 30% 20% 10% 0% Hmong Subsaharan African Black (all) American Indian Mexican Asian (all) Latino (all) White Total population

Place Disparities While population growth in Minneapolis and St. Paul have stayed the same in the last few decades, suburban growth has been rapid

Place Disparities Currently, the metro area s only concentrated poverty neighborhoods are located in the two central cities Sherburne Isanti Chisago Wisconsin Wright Anoka Washington Minneapolis St. Paul Ramsey St. Croix Hennepin Carver Twin Cities MSA Scott Dakota Minnesota Pierce Poverty Rate of 30% or Higher Source: U.S. Census Bureau, 2000

Place Disparities Minneapolis and St. Paul are also home to the majority of the region s families of color The two central cities have only 23% of the region s population But they have 54% of the region s minority population: 87% of the Hmong population 66% of the black population 55% of the Mexican population 50% of the Native American population

Main Findings of the Report 1. The Twin Cities is blessed with a number of assets 2. However, underneath these broad regional successes are stark social and economic disparities 3. Reducing these disparities matters to the economic and fiscal future of the region 4. The Twin Cities has an opportunity now to address these disparities so it can remain an economically, high-quality region

Reducing social and economic disparities is economically and fiscally smart Helps build a more competitive workforce Helps generate more income and cost savings for the Twin Cities metro Helps the suburbs build wealth

Future Workforce Like many regions, the Twin Cities will need to replace the retiring baby boomers In six years, 2011, the first of the baby boomers will begin to retire. The rest will hit retirement by 2029. By 2029, the region will have to replace 776,000 retirees. Most of those retiring are highly educated 46 percent have at least a college degree In other words, by 2029, the region will have to replace 350,000 highly educated workers

Future Workforce The replacement workforce will be more diverse. While the minority share of the metro s population is small, it has doubled between 1990 and 2000 Black 3% Asian 3% Latino 1% Black 5% Asian 4% Latino 3% White 92% White 85% 1990 2000

Future Workforce Those trends will likely continue: the region added another 63,000 minorities since 2000

There are three sets of strategies to reduce disparities Tailor the basics: Make sure education, healthcare, and public safety meet the needs of the region s 21 st century population Increase income and wealth: Help minority groups close the gap on economic measures (e.g., access to EITC and food stamps, homeownership, financial literacy) Continue to act regionally: Increasingly diverse households are also found in the suburbs