The Ownership Society (Part 1):

Defining the Problem

November 8th, 2017

There has been a lot of commentary about the income gap and wealth gap in America. While many of the solutions need to be initiated at the federal level, we must roll up our sleeves at the state level to do what we can to build a stronger middle class. This paper—which is the first in a series—starts by defining the problem.

I should note that I was appointed as Chair of the Federal Reserve Board’s Consumer Advisory Council in 2006.  I was appointed to the Council by Alan Greenspan.  I quickly realized that we saw the economic problems of America through different lenses.  Let me give you my perspective.

The Ownership Society and Economic Flotsam

The Income Gap.  When I was a child in the 1960s, almost 55% of U.S. householdsfell into the category of “middle class,” earning in today’s dollars $35,000 to $100,000 per year.[1]  Today, about 45% of all householdsdo.  The statistics do not show the real change, however, in large part because other members of the household have been added to or stayed in the workforce since the 1960s.

First, women in large numbers entered the workforce in the 1970s, 1980s, and 1990s.  Median householdincome rose even though the incomes of individualsdid not.  The climb ended in 1999.  Since then, median householdincome has fallen.[2]

Second, a significant share of middle class households—approximately 20%—are now headed by people over age 65.  Some have higher income than their children due to retirement savings and pensions.  Many have not left the labor market.  Middle class householdsin this age group have more than doubled since 2000.  But older Americans are getting pinched due to rising pharmaceutical and health care costs, not to mention housing.

The Social Security Administration recently calculated the salaries of the median employee born in each year since 1932.  A typical 27-year-old man’s annual salary in 2013 was 31% less than a typical 27-year-old man in 1969.[3]

The Wealth Gap.  Income inequality is a major cause for erosion of the American middle class.  But the wealth gap also undermines upward mobility.

Look at the statistics.  According to the Federal Reserve, the wealthiest 5 percent of American households held 54 percent of all wealth in 1989.[4]  Their share rose to 61 percent in 2010 and 63 percent in 2013.  By contrast, the rest of those in the top one-half of the wealth distribution—families with a net worth between $81,000 and $1.9 million in 2013—held 43 percent of wealth in 1989 but 36 percent in 2013.[5]

The lower one-half of households held just 3% of wealth in 1989 but only 1% in 2013.  These 62 million households had an average net worth of $11,000.  One-quarter of these families reported zero wealth or even negative net worth.[6]

Put differently, the richest 1% own 40% of the nation’s wealth. The bottom 80% own just 7%.[7]

The total net worth of U.S. households earlier this year was $94.7 trillion.  This sounds like a record level of purchasing power.  Divided equally among 124 million U.S. households, this would average $760,000 per family. The average means nothing, though, because the bottom 50% of families in wealth average just $11,000 net worth.[8]

The wealth imbalance is growing.  According to Federal Reserve data, working families with a median income of $33,000 spend 15% on debt payments, a higher portion of their income today than three years age.[9]  Total household credit card debt is now at $12.7 trillion, higher than the post-recession peak.[10]The Federal Reserve states that almost one-half of adults can’t pay for a $400 expense without selling something or borrowing money.[11]  The costs of student loans, child care, housing, and health care continue to spiral upward, impeding the ability of people to save money.

The Education Gap.  Education has traditionally been the great equalizer in America, providing a way for people to separate themselves from the circumstances of their birth. In 2014, Minnesota adults between 25 and 64 had the following employment rates:  87% with a bachelor’s degree; 81% with an associate’s degree; 75% with a high school degree; and 58% with less than high school degree.[12]

The data show the dynamic impact of education on income levels.  In 2014, the annual median wage level for Minnesotans was $40,378.  People with less than a high school education had a median wage of $21,937, high school graduates had $30,858, those with associate’s degrees had $36,333, people with bachelor’s degrees had $51,226, and individuals with graduate degrees had $66,580.[13]

Economic inequality leads to an education gap which is getting more pronounced.  The achievement gap between children from high- and low-income families is roughly 30 to 40 percent larger among children born in 2001 than among those born 1975.[14]

The Gordian Knot

In short, we have a Gordian knot.  The education gap contributes to income inequality, and income inequality contributes to the education gap.

The aspiration of this country is to build an ownership society with a strong middle class.  In every way, shape, and form, we need to promote values premised on achievement, work ethic, and strong education.  In coming papers, I will offer my thoughts on how to do so.












[12]U.S. Census Bureau, 2014 American Community Survey—1-year estimates. 



The Ownership Society (Part 2):

Career and Technical Education

November 16, 2017 

There has been a lot of commentary about the income gap and wealth gap in America.  If a goal in this country is to build an ownership society with a strong middle class, we need to promote in every shape, manner, and form a nation premised on achievement, a work ethic, and a strong education.

This paper, the second in a series, discusses career and technical education. 

Career and Technical Education.   A clay brick is fragile; it shatters when it hits the ground. But a brick combined with other bricks creates an enduring structure that withstands the test of time.   Career and Technical Education (“CTE”) is an important brick in building an Ownership Society. 

Technology has changed the needs of industry, and our demographics have changed the needs of consumers.  According to the U.S. Department of Education, jobs relying on education and training from associate degrees will grow faster than any other training source in coming years.[1]55 million jobs are expected to open by 2020, and many will require some college or a two-year degree.[2] This means that people who have undertaken career or technical training can be positioned for success.  “Ready, Set, Go,” an amalgam of the Minnesota Department of Education, the Minnesota Office of Higher Education, and Minnesota State estimates that by 2020, at least 74% of all jobs in Minnesota will require some form of education beyond high school.[3]

We are now in our eighth year of economic expansion, with the Minnesota economy adding at least 150,000 jobs over the past decade.[4]  Our unemployment hovers below 4%[5]and, as a share of our working age population, a higher ratio of Minnesotans is working than in any other state. 

These statistics present an opportunity for higher education institutions to partner with industry to produce a workforce skilled in CTE that receives higher median incomes. 

The Shortage of CTE Teachers.  The U.S. Department of Education reports that Minnesota has had a shortage of CTE teachers for over a decade.[6]

According to the Minnesota Career and Technical Educator Licensing Task Force, many factors contribute to this deficit.[7] First, the nationwide attrition rate for teachers has been approximately 8% per year.  CTE teachers, who have skills and abilities in high demand, have a higher attrition rate as they leave the profession for higher paying jobs.  

In addition, according to the Task Force, the licensing requirements for a CTE teacher are more complex than a standard teaching license.[8]  Prior to legislative changes this year, the Minnesota Board of Teaching required that a CTE educator have a baccalaureate degree, just like other secondary educators, but also to meet the technical skill components of standard subject area licensure (described as Core Skills for Teachers of Career and Technical Education Standards).[9]  Unlike other secondary teaching assignments, CTE educators are required not only to teach courses but also to have continuing expertise on technical advances in industry. 

Lawmakers in 2011 and 2015 tried to address teacher licensure in a variety of areas, including CTE education.[10]  Commentators, including the Legislative Auditor, found that regulatory overlap and gaps still existed in mandates imposed by multiple regulatory agencies involved in teacher licensing.[11]  Legislation enacted this year created a Professional Educator Licensing and Standards Board to address some of the previous contradictory mandates by the multiple agencies involved in teacher licensing.[12]

The Shortage of CTE Programs. There is also a shortage of CTE programs.  A CTE program, to be qualified for CTE revenue and federal Perkins grant subsidies, must meet standards, including:

  1. An advisory committee that includes business and industry representation.
  2. Teachers with CTE licensure that includes extensive ongoing professional development in CTE content areas.
  3. Program administration that demonstrates fiscal responsibility.
  4. Program assessment that includes the collection and reporting of CTE student and program data, follow up with CTE participants after graduation, and community input on program improvement.
  5. Program design that includes career development, curriculum alignment, dual credit enrollment opportunities, and student leadership organizations.
  6. Resources, which include financial records and maintenance records of CTE specific equipment.[13]

The Demand for CTE Jobs.  According to the Minnesota Department of Employment and Economic Development, CTE occupations are projected to increase the most of all occupations through 2024.  They include computer occupations (projected to increase by over 7,000 jobs, or 8.3%); healthcare practitioners and technical employees (projected to increase by over 20,100 jobs, or 12.3%); healthcare support (projected to increase by over 16,100 jobs, or 17.6%); personal care and service (projected to increase by over 21,800 jobs, or 13.8%); and construction (projected increase by over 8,700 jobs, or 7.7%).[14]

DEED also prepared a table of education requirements for each of these jobs:[15]


Typical Education




Brick masons and block masons

High School or Less





High School or Less





Vocational Training




Plumbers, pipefitters and steamfitters

Vocational Training




Heating, air conditioning, and refrigeration
mechanics and installers

Vocational Training




Diagnostic medical sonographers

Associate Degree




Registered nurses

Associate Degree




Dental hygienists

Associate Degree




Software developers/applications

Bachelor’s Degree




Computer systems analysts

Bachelor’s Degree




Biomedical engineers

Bachelor’s Degree




Physician assistants

Graduate or Professional Degree




Nurse practitioners

Graduate or Professional Degree




Nurse anesthetists

Graduate or Professional Degree




CTE Initiatives in Secondary and Higher Education.  The state and federal governments have undertaken numerous initiatives to coordinate the delivery of CTE. Agencies and programs that participate in these efforts include the U.S. Department of Education[16], the U.S. Department of Labor[17], the Minnesota Department of Education[18], Minnesota State (formerly called MnSCU)[19], the Minnesota Governor’s Office[20], the Minnesota Department of Employment and Economic Development[21], the Minnesota Office of Higher Education[22], the Minnesota Workforce Development Board[23], the Minnesota Department of Labor and Industry[24], the Minnesota Jobs Skills Partnership[25], individual school districts[26], the Minnesota Department of Revenue[27], Minnesota Pipeline[28],  and individual institutions.  In addition, many building trade unions have been extremely active and effective in training apprentices for the construction trades.[29]

Some of the programs are initiatives within a school district.  Some are programs initiated by one college.  Others are the result of leadership at the state level.  Still others are financed the federal government.[30]  The following list—not meant to be exhaustive—describes some of the many different programs to facilitate technical and career education:

  • Dual Training Competency Grants.  The Office of Higher Education has a $3 million budget to award grants to train employees for specific jobs.  The grants are made to industry participants that train the students and receive up to $6,000 per student for doing so.[31]  The grants have helped to train machinists, welders, quality assurance/food safety workers, agronomists, medical assistants, senior living culinary managers, security analysts, and software developers.
  • SciTechsperience. This program,[32]which is administered through the Minnesota High Tech Association, provides small to mid-size employers that sponsor interns in science, technology, engineering, and math (STEM) a stipend of up to $2,500 per student for the intern’s wages. The state-funded program was created in 2012 with a budget of $2.7 million. 
  • Regional Centers of Excellence. In 2005, the Minnesota Legislature proposed regional Centers of Excellence to create collaboration between higher education facilities and industries.[33]Four centers were formed, including a Manufacturing and Applied Engineering Center in Bemidji; a Center for Engineering and Manufacturing in Mankato; an Advance IT Center at Metropolitan State University; and a Health Force Center in Winona.  Four other centers were created in 2013.  The program appears to have had some success.
  • Greater Minnesota Internship Training Tax Credit Program.  This program gives tax credits up to $2,000 to employers for the wage of student interns in Greater Minnesota[34].  Employers must apply to receive the tax credits, and the program has not generated much participation, leading the Minnesota Department of Revenue to question its efficiency as it is currently structured.[35]
  • Iron Range Engineering and Twin Cities Engineering.Upper-division engineering students at Minnesota State University-Mankato—many of whom are graduates of a Minnesota community college—are matched with employers to handle “hands on” engineering projects.  Employers in paper, mining, and energy production have sponsored these students, who generally work 40 hours a week in an engineering setting where they gain practical skills.  Upon graduation, they receive a B.S. in Engineering that is a cross between what might be traditionally called mechanical engineering and electrical engineering.[36]
  • PIPELINE.   Pipeline is a dual training experience sponsored by the Department of Labor and Industry and funded by grants issued by the Minnesota Office of Higher Education.  Pipeline provides funding for employers to train employees in an occupation for which a competency standard has been identified in one of the four PIPELINE industries:  advanced manufacturing, agriculture, health care services, and information technology.[37]
  • Minnesota Advanced Manufacturing–Partnership.  A dozen community colleges and two universities participate in this program, which seeks to train workers displaced by foreign trade, veterans, and other adults in advanced manufacturing.[38]The program uses both classroom learning and employer apprenticeships.  In September, South Central College was awarded a $15 million federal grant for this program.
  • Minnesota Jobs Skills Partnership.  The Minnesota Job Skills Partnership is a state agency governed by a 12-member board of directors that represents Minnesota businesses, labor, government, and educational institutions.  It administers five grant programs, the first of which was developed in 1983, to train employees of participating businesses.  Another program, called Pathways, was created by the Legislature in 1997 to train people transitioning from public assistance at employer workplaces.  Another program, called the Healthcare & Human Services Training Program, was created by the 1999 Legislature to alleviate health and human services worker shortages.  Another program, called the Low-Income Worker Training Program, was created by the Legislature in 2001 to train people with incomes at or below 200% of the federal poverty level.  Another program, called the Special Incumbent Worker Training Program, was created by the Legislature in 2005 to expand opportunities for businesses and workers to gain new skills that are in demand in the Minnesota economy.[39]
  • Governor’s Workforce Development Board.  This program is mandated and funded by the federal Workforce Innovation and Opportunity Act. The mission is to develop “a strategic integrated plan that supports economic growth and labor force needs intended to grow the capacity and performance of the state's workforce development system.”[40]
  • The Federal College Promise Plan.  The College Promise Campaign is designed to encourage communities to come together to support a tuition-free community college system.[41]The campaign reported in its first year that several communities have taken the initiative, including the state of Tennessee, the Cities of Kalamazoo, Boston, Salt Lake City, Santa Barbara, Houston, Detroit, and the Mohave Community college in Arizona. 

In Minnesota the College Occupational Scholarship Pilot Program was established to provide last dollar scholarships to cover tuition and fees not covered by state or federal grant aid for students seeking a credential in a designated high demand program area. A recipient must enroll within two years of high school graduation and maintain a GPA of 2.5. It is blended into several other programs mention above. 

While the Minnesota program is a step forward, it does not make community colleges tuition free.

  • The Minnesota College Occupational Scholarship Pilot Program.  This pilot program[42]was established by Minnesota to pay for tuition not covered by state or federal grants for students in high demand jobs with a 2.5 GPA.
  • Earn and Learn Training.  In 2014 President Obama launched the American Apprenticeship Initiative, in which the U.S. Department of Labor awarded $175 million in grants to 46 public-private partnerships. The goal was to train more than 36,000 apprentices in high-growth, high-tech industries like IT and advanced manufacturing.    Minnesota received a $5 million grant in 2015 to expand apprenticeships in advanced manufacturing, agriculture, health care, information technology, and transportation.[43]  One initiative under the Minnesota grant involved as many as 170 nursing apprenticeships in conjunction with Fairview Health System.  Others include advanced manufacturing apprenticeships at Owens Corning in Minneapolis and Viracom in Owatonna.  Approximately 20 companies have indicated an interest in participating, and the Minnesota Department of Labor and Industry has stated that it hopes to enroll more than 100 employers over the next five years to train 1,000 new apprentices.
  • Certification and Certificate Programs.  Certificationis the recognition by an occupation that a person has achieved a level of competency in the field or profession.[44]  Hundreds of occupations—including pilots, athletic trainers, court reporters, interior designers, and medical coders—provide a form of occupational certification that may or may not require a level of formal education.[45]

A different form of certification involves the intergenerational transfer of knowledge between older workers who want to update their technical skills to younger workers who want to gain expertise. MinnPost  has written extensively on this.[46]  Certificatesare provided by colleges to people who complete a level of skill-based courses.  For example, Hennepin Technical College offers over 70 certificates in over 25 different programs. The certificates do not require the time or expense of a degree and provide employer-relevant training.

  • Dislocated Worker Training Funds. In 2011, the U.S. Department of Labor and the U.S. Department of Education announced $500 million in grants to community colleges to train dislocated workers for new careers.  It appears that only one college in Minnesota received a grant, which was for less than $5 million.[47]
  • Even More Programs.  Individual higher education facilities offer may more programs.  Some have minimal financial support. 

The Proposal

Government and industry agree on the importance of CTE.  Despite the best of intentions, some of these initiatives appear to be underfunded, duplicative, or unduly restrictive. The success of others has not been evaluated. And the involvement of so many government agencies creates a fragmented and patchy system.

I have heard from teachers, employers, students, and families who are confused about the maze of programs and changing rules.  Many don’t even know programs exist.  And I have heard from employers who want to do their part but who get frustrated by endless reporting, the byzantine applications, government delay, and the low-ball financial incentives for participating.  Because of this, our education system is not always best-positioned to meet the dynamic needs of a changing workforce.

The good news is that there is projected to be increased future demand for employees who are trained to work in fields like information technology, health care, and the skilled trades.  But to meet these needs, Minnesota will need to produce workers with the right skills who will be rewarded for their educational investment with jobs that pay a middle-class income.

At the state level, we should aggressively coordinate the myriad of programs described above.  The coordinator should report to the Governor and have the authority and aptitude to innovate and cut through red tape.  When I say “coordinator,” I am being polite.  Think General George Patton. The coordinator should have the authority to marshal state and federal resources in the most efficient fashion possible in partnership with private industry.  The coordinator should undertake the following steps:

  • Facilitate relationships and coordination between employers, labor organizations, the private sector, and higher education institutions.  Then coax leaders to recruit other industry participants to offer internships and paid jobs.
  • Enable industry to participate in the design of programs and curriculums, with the goal being to identity the areas where there will be job openings and to train people for these jobs.
  • Involve trade associations, industry leaders, labor unions, and workforce investment boards in the development of programs.
  • Run a fluid and dynamic process that makes real-time adjustments based on actual labor needs.
  • Be the State of Minnesota’s ambassador to Washington, D.C. and other states on these initiatives and identify national job shortage areas where Minnesota may be able to recruit employers based on its skilled workforce.
  • In recognition that job needs differ by community, sponsor dialogue among students, employers, labor unions and educators in local communities and on a regional basis to identify the best fields and courses of student to provide technical and career education.
  • Where appropriate, develop a pipeline of talent that employers in a region can depend on for advancement.
  • Tap proven experts to assist in delineating the competencies and skills needed for markets.
  • Consult with participants—who should include students, employers, and educators—to measure the effectiveness of the programs using demonstrable metrics and to improve future programs based on these evaluations.  The aim should be to build on programs that work and to scrap those that don’t.
  • Expedite program approval for educators in the CTE area.
  • Support financially and administratively the establishment of CTE educator programs at higher education institutions. These programs must respect and maintain the expertise required of professionally licensed educators in Minnesota.  Find creative and streamlined ways to subsidize the cost of developing and implementing the technical and career education training programs, cutting through bureaucracy and red-tape for employers.                                                                           

Above all, the coordinator should be a champion for creating opportunities for students to get middle class jobs and be part of the Ownership Society. It is critical that Minnesota align its CTE delivery system so that industry need not look to other states for a skilled workforce. 




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The Ownership Society (Part 3):


December 5th, 2017 

Our goal as a nation should be to create an Opportunity Society in which everyone has the opportunity to climb the economic ladder of upward mobility.  This paper—the third in a series—discusses broadband and its potential for job creation in rural Minnesota.

Broadband.  The definition of “broadband” changes with the advancement of technology and the needs of the economy.  “Broadband” refers to high speed transmission technologies used to access the internet. It can include transmission systems such as cable, fiber optic, digital subscriber lines (DSL), T-Lines, Wi-Fi, wireless, and satellite. 

For instance, three years ago, the standard was 10 mbps download and 1 mbps upload.  For purposes of this paper, “broadband” is any technology which maintains a minimum transmission speed of 25 mbps download and 3 mbps upload.  This is the standard speed established by both the FCC and the Minnesota Legislature. About 85 percent of wireline connections can meet this threshold. Unfortunately, only 14 percent of wireless connections do so.[1]  Satellite connections generally top off at 15 mbps.[2]  (With regard to the footnotes in this paper, please note that technology is rapidly-changing and becomes out of date almost as fast as ink can dry.)

Broadband is an Important Economic Development Tool. “The number one threat to community and economic development in the 21stcentury is the digital divide.”[3]  This is the first sentence in a news release issued on October 31, 2017 by the Blandin Foundation, a Minnesota Foundation that concentrates its work in rural Minnesota.

The “digital divide” describes the difference in access to broadband by connectivity, affordability, and familiarity.  About 20% of households in rural Minnesota lack access to fixed, non-mobile broadband service.[4]Nearly one-half of rural residents without a home broadband connection say they are not familiar with its advantages.[5]And rural broadband is expensive: 22 percent of rural residents say they do not subscribe to broadband because it is too expensive.[6]Telecommunications companies often deem infrastructure investment in less populated rural areas unsustainable.[7] 

The digital divide hurts our students, our health care delivery systems, and our businesses.  Students have fewer options for learning, especially when 70 percent of assigned homework and research projects require a broadband connection.[8]Medical technology is also limited, because medical providers require high-speed connections for telemedicine, which can immensely improve health care in rural areas.[9]  Broadband access also makes it easier to start and run businesses, expands the options available for job seekers in rural markets, and can improve agricultural applications.

Broadband accessibility has benefits for both urban and rural economic development.  The benefits to urban businesses are through practical applications such as e-commerce. With technology, these businesses can reach out to rural communities, areas with more modest infrastructure costs, joining an international trend described as “rural sourcing.” The rural communities see benefits with income growth. 

Broadband access also enhances the market reach of rural businesses which were previously restricted to local markets.  With the right technology, a small business can reach across the world to market its services or products. A graphic designer or website developer can maintain a productive business serving an urban area while living in Greater Minnesota.  A health care provider can eliminate unnecessary windshield time by telecommuting.  There are hundreds of reports which document that broadband creates more businesses, increases median household income, and lowers unemployment.[10]

In short, broadband matters.  It can improve the rural economy, rural health care, rural education, and rural employment opportunities.[11]Former Speaker of the House Margaret Anderson Kelliher, the Chair of the Minnesota Broadband Task Force, noted that areas with small numbers of broadband providers or low levels of broadband availability have significantly lower median household income.[12]  A 2015 report by the Internet Innovation Alliance (IIA) claims that access to the internet is associated with an American household saving, on average, $10,000 per year.[13]

The Minnesota Goals.  Minnesota ranks about 27thin broadband connectivity.[14]About 20% of rural Minnesotans do not have access to broadband on an economically-feasible basis. 

Laudably, Governor Dayton and Lt. Governor Smith have set a goal that Minnesota be one of the top five states for broadband access and speed.  

The state legislature also set a goal that, by 2022, all businesses and homes in Minnesota have access to high speed broadband at a level of 25 megabits per second on downloads and 3 megabits per second on uploads.  The legislature also established a goal that, by 2026, all Minnesota businesses and homes will have access to at least one broadband provider that can deliver 100 megabits on download and 20 megabits on upload.[15] 

The Current State of Broadband in Minnesota.  For these goals to be met, state government must significantly intervene in the development of rural broadband. 

The Governor’s Broadband Task Force determined in 2016 that it would cost $900 million to $3.12 billion to fully expand highspeed broadband statewide.[16]  The Obama Administration, through the “Connect America Fund,” initially offered $10 billion in subsidies to the largest telecommunications companies to provide service in rural areas.  Unfortunately, many of the companies declined to participate.  The recent change in the national administration offers little hope for improvement. 

Other issues before the FCC can significantly impact rural broadband development.  For instance, the FCC currently uses the same standard to define broadband as Minnesota, namely 25 mbps download and 3 mbps upload.  Verizon and AT&T, however, have intensely lobbied the FCC against these standards, in large part because smartphone technology can’t meet these requirements.  The newly-appointed FCC Chair Ajit Pai, a former attorney for Verizon, has concluded that rural America only needs slower speeds of 10 mbps download and 1 mbps upload,[17]speeds attainable by wireless technology.  If the FCC Chair succeeds in lowering broadband standards, rural economic development is hurt because the federal government will not support standards that allow seamless access to video and large packet data. 

Moreover, the newly-constituted FCC in April voted to eliminate price caps in much of the businessbroadband market by imposing a new standard that deems certain local markets competitive even when there's only one broadband provider.[18]

Prior to this vote, the FCC limited the prices of Business Data Services (BDS) provided by incumbent phone companies. These services are used for public entities like hospitals, schools, libraries, and police departments. They also connect bank ATM networks, retail credit card readers and provide enterprise business networks with access to branch offices, the internet, or the cloud.

Because of the April vote, the price caps will be eliminated in a county if 50 percent of potential customers "are within a half mile of a location served by a competitive provider." A county would also be considered competitive if 75 percent of Census blocks have a cable provider. Fewer than 10 percent of potential customers will be protected from price gouging under the new rule. The impact?  AT&T immediately announced a price hike of 15% on business previously protected by the rule.[19]

Another issue is “net neutrality,” which assured equal quality access to the internet by users.  

There is also concern that the new federal administration will not provide the necessary financial support to the “Connect America Fund.” While the President says he supports rural broadband, the budget he proposed in April slashed rural development.  It should be noted, however, that the President now states that he will include broadband in his infrastructure program.[20]

In addition to the cost of installing broadband in rural communities, broadband suppliers must anticipate the nature of future competition.  For instance, there is substantial discussion surrounding technology of utilizing “TV white space,” which arguably could reach a sizable portion of the underserved rural population.[21]Microsoft recently announced that it will begin the implementation of “Airband” technology, connectivity utilized in Africa.[22]   Microsoft claims that using TV white space to deliver broadband internet in rural areas is 80 percent cheaper than fiber optic cable and 50 percent cheaper than LTE wireless technology.

And there is the potential to deliver broadband over or adjacent to power lines, known as “BPL” technology.[23]

With this as background, a broadband provider must weigh the cost of installing long lengths of fiber optic (or copper or T lines) to households or communities where the monthly payments may not be able support the necessary investment in the infrastructure.  Simply put, providers argue that they can’t get a return on investment when: 1) there is lower population density with fewer customers to generate revenue, 2) greater distance between customers means a greater expense in broadband, and 3) the cost of the “last mile” may be high.[24]

This is no different than the issue facing Franklin Roosevelt with rural electrification, rural telephones, and rural roads.[25]

The more things change, the more things stay the same. 

How Do We Achieve These Goals?  Many broadband programs have been launched which embrace the economic compact of opportunity, participation, and prosperity. 

Governor Dayton’s Task Force on Broadband Technology has supported programs modeled on the success of rural electrification, including:

  • “Dig Once” programs that invest in infrastructure.
  • Grants and loans through the Border-to-Border Development Grant Program.
  • Aligning low income subsidies for telephone use with the National Lifeline program.
  • Discounted connection rates to community anchor institutions, including libraries and schools.
  • Training programs.
  • Subsidies provided for acquisition of end-user equipment.
  • Subsidies to municipalities that develop broadband connectivity.
  • Favorable treatment for cooperatives comprised of multiple government units.[26]

The Minnesota Office of Broadband Development was launched in 2014.  In 2016, it managed a $35 million investment called the “Border to Border Broadband Development Program.”  The $35 million was used as a matching inducement with private investment to leverage over $65 million in broadband development in approximately 72 projects.[27]Eight public-private partnerships were highlighted at a recent broadband conference sponsored by the Blandin Foundation.[28]  The cooperative relationships vary from the Mille Lacs Energy Cooperative to the RS Fiber Cooperative serving Renville and Sibley Counties.[29]

The Governor’s Broadband Development Task Force, chaired by Former Speaker Anderson, recommended last year that the state legislature appropriate $200 million for an infrastructure grant program and use the funds on a dollar-for-dollar matching basis to wring out $400 million in broadband development. As noted above, the Task Force noted that it will probably take at least $900 million to build out a broadband cable network for the entire state, and probably $3 billion to build out a complete fiber optic program for the entire state.[30]

In 2016, Governor Dayton recommended funding of $100 million to develop rural broadband.[31]Following the leveraged approach utilized with the first disbursement of the “Border to Border” Development programs, it was hoped that $200 million in broadband development could be achieved.

Unfortunately, at the end of the 2016 legislative session, only $35 million was appropriated for the “Border to Border Broadband Development Program.”[32]In 2017, only $20 was appropriated by the state legislature.  This was horribly deficient.  Ironically, many rural legislators (who should be concerned with rural economic development and education) seemed more focused on tax revenue cuts that disproportionately benefit the metropolitan area.[33]

Simply put, economic development in rural Minnesota is greatly dependent on broadband technology.  But it does take investments to do this.  It costs money, and to get the job done we need to explore more avenues of revenue:

  • We need to use (as we currently do) general revenue money in part to finance the Border to Border program.
  • Minnesota should explore whether, as with the Rural Electrification Administration, loans to broadband cooperative ventures can help finance subsidized revenue bonds.    

If Minnesota is to achieve the goals the legislature set forth in statute, it cannot simply pass aspirational laws.  The legislature must put its money where its mouth is and finance the activities that will bring these goals to fruition. 

Why is rural development important? 

Public investment in rural Minnesota serves the whole state:

  • A vital rural Minnesota means that residents may enjoy technology development and participate in the world economy. 
  • A vital rural Minnesota enables its agricultural sector to continue the production and export of high quality food.
  • A vital rural Minnesota helps to restore the environmental quality of the state.
  • A strong economy in rural Minnesota benefits the economy of all of Minnesota.

The development of broadband, in the face of regulatory changes and modern technology, presents substantial challenges to state government.  We should not hesitate to embrace this challenge and bring success to the entire state.  Rural Minnesota deserves no less.

[1] - nRlv









[10]Search “broadband economic development” on Google, Yahoo, Bing, or any other search engine.

[11]Kuttner, H. 2012. “Broadband for Rural America: Economic Impacts and Economic Opportunities.”




[15]Minn. Stat. §237.012.










[25] - nRlv









Higher Education and the U.S. Department of Education

July 17th, 2017

I write about higher education.

The cost of a four-year college education has risen 500% in 30 years, while median family income has increased only 20%.  Total student debt tops $1.3 trillion—twice the level of ten years ago—and now surpasses the total debt for cars and credit cards combined.  Over 40 million Americans owe money on student loans, and Minnesota has the 5th highest student loan debt in the country. 

Student loan debt is one of the primary reasons younger people delay marriage, children, and home ownership.  The income of people ages 25 to 34 has fallen every year since 2007 in every field but healthcare.  About 25% of millennials with a bachelor’s degree move back home due to financial hardship, and 60% get financial help from their parents. 

In addition to the ever-spiraling tuition rates, students have been exploited by a number of other factors:

  • The dramatic increase in “for profit” schools that peddle dubious degrees. In 2013, for-profit schools enrolled 11% of students, received 25% of federal financial aid, and accounted for 44% of loan defaults. Almost ¾ of their graduates earn less than a high school dropout.  The average tuition at for-profit schools is about double that of a four-year public college
  • No underwriting standards. At one time, student loan debt was treated like any other debt, even being dischargeable in bankruptcy. This is not the case today.  The result is that student loan companies impose virtually no underwriting standards in granting loans.
  • Aggressive and deceitful activity in the marketing of college degrees and in the loan repayment process by private lenders.

As Attorney General, I have tried to use my limited authority to curb financial abuse of students. I recently concluded what is believed to be the first trial in the country by a state attorney general against a for-profit college, which ended up resulting in the decertification of the college. The college has been ordered to repay the students.

I have filed actions against companies that operate bogus “student loan forgiveness programs.” At the federal level, my office petitioned the U.S. Department of Education to develop guidelines to: 1) require predatory for-profit colleges to post collateral to pay for the discharge of student loan debt for students who were the victims of deceit by the college, and (2) de-bar dishonest student loan companies from participation in student loan programs. Simply put, a company should not participate in student loan servicing if it has a shoddy record in advising students on their best alternatives in taking out and repaying student loans.

Unfortunately, U.S. Secretary of Education Betsy DeVos recently announced that she is looking at junking these reforms.

I encourage you to write to Secretary DeVos and let her know your thoughts on the getting rid of these reforms that protect students.

As an aside, I should also note that some states have initiated “Hope Scholarships,” where a state resident who maintains a “B” average gets a scholarship to attend a state university.  When I went to college, the cost was affordable.  This meant that, with some help and by working three jobs in college, I was able to get a college degree without being laden-down with mountains of impossible debt. I hope that the Legislature might take a look at what other states have done surrounding “Hope Scholarships" and similar efforts. We need to make sure that our next generation of Minnesotans can dream of meaningful opportunities in our economy.