Economic lessons from the Bold Rust Belt

The Rust Belt is a symbol of economic deprivation. Closed factories, high unemployment, cities and states that can barely take care of themselves, stuck waiting for the past to return to the present.

Apparently, that’s us, according to the New York Times, which says St. Cloud, Minn., is a model city in the Rust Belt.

Just one problem: We’re not in the Rust Belt, which technically ends in southeastern Wisconsin.

No matter, the Times’ says other cities in the Rust Belt can take a lesson from St. Cloud and Stearns County.

“The sleepy city straddling the Mississippi 65 miles northwest of Minneapolis doesn’t at all fit the tale of woe that spread across the Midwest over the last 50 years,” economics columnist Eduardo Porter writes.

Sleepy city? Nice. You want grape salad with that?

Since 1970, manufacturers in the county have added 5,000 jobs, for a total of 11,600. Total employment has tripled, to 90,000. The population has grown by more than half. And the median income of the county’s households rose 20 percent from 1980 to 2016, after inflation, to $57,728 — a smidgen above the national median.

“When Electrolux announced it was leaving, other employers were saying, ‘When can we get at that labor?’” said King Banaian, dean of the School of Public Affairs at St. Cloud State University. “There’s a tug of war going on, and workers are getting higher wages and performance incentives and bonuses and so on.”

The “Minnesota Miracle,” which shifted education funding from property taxes to the state, isn’t mentioned as a reason why Minnesota succeeds where others fail, although Porter at least gives a nod to the value of education, something that’s getting increasingly hard to find in the state.

Can Decatur or Racine learn from Green Bay, Grand Rapids or St. Cloud? Perhaps the best example to follow would be to invest in education. Places with better-educated workers were generally the ones that managed the economic transformation of the last 50 years more successfully. In 1980, 18.5 percent of adults over 25 in these counties had at least a bachelor’s degree, compared with only 15.1 percent in the counties that stumbled.

For Midwestern states like Illinois, Wisconsin and Missouri, which are starving many of their public universities of funds, the takeaway would be: Stop.

That’s a lesson that’s dead on arrival even in Minnesota, given that it comes in the same week that the chair of an education committee in the Legislature rejected an emergency request for education funding.

But even as Porter plays up the “special” that St. Cloud is, he takes it away by crediting much of it to luck.

St. Cloud isn’t just on the Mississippi. It is on Interstate 94, U.S. 10 and the BNSF Railway — putting it within reach of many markets. What’s more, it produces things like trailers, buses and snowmobile engines, which for some reason are not China’s or Mexico’s forte. Its service industries — a growing part of its economic base — thrive off the underserved rural towns in the western half of the state. Its medical center alone employs 10,000 people.

If the successful industrial counties of the Midwest have a lesson for their less successful peers, it must be that they can’t stop evolving. “It is hard for communities to become something else,” Mr. Berube said. That is precisely what declining industrial cities are being repeatedly called to do. And there is nothing to say that communities that successfully transformed themselves over the past 50 years will succeed again.

And there’s one more lesson that St. Cloud can provide to ailing Rust Belt cities: Don’t be cities in the Rust Belt.

(h/t: Paul Tosto)