Family-friendly Policies Build a Strong Workforce and Economy
Emily Fetsch | November 18, 2022
When I was in high school, I could not wait to leave Kansas. I packed up my belongings and moved to Minnesota and then Washington D.C. I never thought I would return to my home state. What made me move back? I moved back because I missed my family, I was enticed by the state’s affordable cost of living, and I wanted to make a difference in my home state, rather than just complain about it from afar.
I think of my experience a lot when I hear lawmakers ask how to get people to move or stay in Kansas. There is a misassumption that if taxes were lower, people would be flocking to the state. Tax rates certainly didn’t factor into my decision. More importantly than my personal story, these lawmakers forget Kansas has already tried to lure migration to the state through experimental tax policy.
In 2012, the Kansas Legislature slashed taxes. But Kansas didn’t see any noticeable inward migration from individuals or businesses clamoring to benefit from the tax cuts. In fact, the 2012 tax cuts created the opposite effect. People already living in Kansas were outraged: funding for the schools critical to their communities was in jeopardy and quality of life was in peril. Teachers fled the state for teaching jobs across the border.
Just this year, Kansas added another significant tax incentive, granted more narrowly focused, to entice businesses and individuals to the state. A roughly $800 million tax incentive package was offered to attract a single business to come to the state. Proponents and skeptics of this incentive exist in both major political parties, think tanks, and the business community.
Why is Kansas taking a nearly $1 billion risk on one company, with the suggestion that Kansas will get $4 billion worth of economic growth?
It might be helpful to consider one of my previous locales when thinking about what it means to be a great state to live in and to encourage individuals and businesses to plant roots here.
Minnesota is known as a state for a high quality of life (although, it should be acknowledged, a COLD quality of life). It also has a robust business community, which boasted 18 Fortune 500 companies in 2021 across a variety of areas, including health care (UnitedHealth Group), retail (Target and Best Buy), financial (U.S. Bancorp, Ameriprise Financial, Thrivent Financial for Lutherans), and food (General Mills, Hormel, Land O’ Lakes). Business presence is even more impressive when incorporating private business and “hidden headquarters” into the analysis.
What entices so many Fortune 500 businesses to have their headquarters in Minnesota? Researcher Myles Shaver found that “any story about corporate headquarters is not about the buildings or the desks—it’s about the people…The one type of talent that's in every headquarters is actually professional management, because those skills are applicable across different industries.”
Shaver continued his research talking to executive recruiters, whose response was: “It's really hard to get people to move to Minneapolis, but it's about impossible to get them to leave.” This leaves Minnesota with having a wealth of a highly skilled, professional workforce.
Shaver surveyed company managers in the Twin Cities and found that they were:
- Highly educated. “More than 90 percent hold college degrees, and more than 40 percent hold advanced degrees” with “nearly 25 percent earned their undergraduate degrees in Minnesota, while 60 percent earned their graduate degrees locally.”
- Parents. “85 percent of those [with] school-age children attend public schools.”
- Home grown, but some boomeranged back home. “Nearly 60 percent of the workforce was raised in Minnesota…[but] only 15 percent of the people surveyed were born, raised, and educated in the Twin Cities area.”
Minnesota has this professional workforce, many with young children (attending public schools). They have roots in Minnesota and often returned after being elsewhere. What brought them back?
- Low tax rates? Ope, sorry but that’s incorrect. Minnesota has one of the highest corporate tax rates in the United States. While Kansas passed tax cuts in 2012, Minnesota raised the state individual income tax on high-income Minnesotans from 7.85 percent to 9.85 percent.
- Tax incentives? Uff-da,! All these Fortune 500 businesses, but tax incentives aren’t really a tool used to recruit businesses.
- An educated workforce? YOU BETCHA! Minnesota has the third highest percentage of population over the age of 25 with a high school diploma (94.1 percent), 38.9 percent have a bachelor's degree or higher, and 13.4% percent have an advanced degree.
Minnesota has seen an increased population compared to Kansas. Kansas’ population went up 3.0 percent from 2010 to 2020, while Minnesota went up 7.6 percent. Policies to increase the quality of life of a location lead to population growth and good paying jobs. Economist Amanda Weinstein says while “catering to families” is not often thought of as “economic development policy,” “it absolutely is. And it is much more effective economic development than tax breaks or anything else policymakers do.”
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A study from the Brookings Institution found: “After estimating quality of life (what makes a place attractive to households) and quality of business environment (what makes a place especially productive and attractive to businesses) in communities across the Midwest, we found quality of life matters more for population growth, employment growth, and lower poverty rates than quality of business environment.” |
Specifically, the analysis found quality of life in small towns is associated with public school spending, “with public school quality and the availability of early childhood education being two of the most important factors for working parents.” These community investments matter to the people living and working there and for those reconsidering relocating there, they make residents happy. And happy residents make happy (and productive) employees.
Tax incentives are a risky bet for local and state governments. Rather than prioritizing public investments on business incentives, we should focus on the areas that keep young Kansans from leaving our state – communities that are built to support a strong quality of life for young professionals, families, and adults as they age in our state.
I loved my time in Minnesota as a college student and young professional. I loved living in a place that made investments in its residents, communities, and beautiful natural landscape.
And I might be biased as a fifth-generation Kansan, but people should want to come to Kansas. For decades, Kansas has been known for good schools and affordable living. It’s essential that Kansas continues to maintain these attributes. If the state continues to make smart investments to strengthen the state by investing in its people (while also ensuring the state is an inclusive place to live), the next generation of Kansans will want to continue to call Kansas home.
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