Minnesota Emergency EmploymentDevelopment [MEED) Program

FINAL REPORT .I July 1, 1983 - December 31. 1985

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This document is made available electronically by the Minnesota Legislative Reference Library as part of an ongoing digital archiving project. http://www.leg.state.mn.us/lrl/lrl.asp

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MESSAGE TO THEMINNESOTA STATELEGISLATURE

As commissioner of the Minnesota Department ofJobs and Training, I am pleased to present this 30­month final report on job creation activitiesauthorized under the Minnesota EmergencyEmployment Dev~lopment(MEED) Act for theperiod July 1,1983, through Dec. 31, 1985.Among its accomplishments, MEED hasshown private sector acceptance of abusiness/government partnership to createpermanent jobs. In the 30 months, 30,500 peopleenrolled in MEED, with more than 60 percentfilling private-sector jobs. Over 14,000 privatesector jobs were created.

From July 1, 1985, through Sept. 30, 1985, all newjob placements were in the private sector.Approximately 80 percent of placed participantsretained their positions 60 days after the 6 monthsub~idy ended.

The program also has worked as an economicdevelopment tool. MEED has provided businesseswith immediate expansion capital and thenecessary resources for creating new jobs.

MEED has succeeded in reaching unemployedindividuals who are ineligible for unemploymentinsurance or workers' compensation benefits.

As a result, projections indicate that the entirepublic investment in the program will be repaid byDecember 1988. Employing these workers throughMEED has increased tax revenues and decreasedgeneral assistance expenditures.

With your support MEED can continue to be a costeffective means of promoting economic growth andcreating new jobs for Minnesotans.

Thank you for your support.

~samargiaCommissioner

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INTRODUCTIONMinnesota Emergency EmploymentDevelopment (MEED) Act, enacted by the stateLegislature in 1983, completed its two-year periodof authorization on July 30, 1985. The 1985Legislature extended the program for anadditional six months with a sunset date ofDecember 31, 1985. The law provided incentivesto employers to hire and retain unemployedMinnesotans who were ineligible forunemployment or workers' compensationbenefits.For each MEED worker, the state subsidized upto $4 an hour in wages and up to $1 an hour infringe benefits. Employers who retained theworkers for one year or more beyond the six­month subsidized period were not required torepay the subsidy. For any lesser period aportion of the subsidy was repaid.The program succeeded in bringing together theprivate and public sectors. MEED stipulated thatpriority be given to private-sector placements "tothe extent eligible businesses apply," and that 40percent be private-sector placements.

However, by the second year of operation,private sector participation was dominating theprogram and the Legislature raised theplacement goal for private jobs from 40 percentto 60 percent. This assured a minimum of 60percent of placements would be in long-term,permanent jobs. The MEED program actuallyreached a 70 percent private-sector placementrate in the second year.In two and a half years, MEED's goal was toaverage 46 percent placement in private-sectorjobs. The actual average placement was 60percent. .

To continue the successful MEED program, andto take the place of the original legislation, the1985 Legislature created a permanent MinnesotaEmployment and Economic Development(MEED) Wage Subsidy Program. The new lawfurthers the cooperation that had beenestablished among the various segments of thepublic and private sectors.The present MEED program targets two newpriority groups: farmers or members of farmhouseholds that demonstrate severe financialneed; persons eligible for or receiving Aid toFamilies with Dependent Children (AFDC)benefits. Those people receiving generalassistance and households with no source ofincome remain as priorities under the program.

This report demonstrates that MEED met itsgoal of being simple and effective with lowadministrative costs. State and Localadministrative costs amounted to less than fivepercent (4,795,553 or 4.4%). The cost foradministering the State MEED Office was lessthan one percent ($5'77,158 or .5%).This report outlines the achievementsaccomplished over the 30 month period from July1, 1983, through Dec. 31, 1985, and providesevidence that a public/private partnership canwork in job creation and retention efforts.

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The Partnership

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EMPLOYER EVALUATIONOF MEED

MEED's success can be attributed directly to theenthusiasm exhibited by the private sectortoward the program. Evidence of this successwas reported in a article in The EntrepreneurialEconomy (February 1985):

Whereas most jobs programs must contin­ually struggle to find employers' willing toparticipate in their program, MEED hasMinnesota's small business sector literallygearing up for the opportunity to hire itstargeted workers. Although part of thisenthusiasm can doubtlessly be attributed toMinnesota's history of excellent publiciprivate relations, the size of the subsidy andthe often-noted lack of bureaucratic stringseasily account for the rest. For the small butgrowing firm, an up to $4 an hour wagesubsidy can easily make the difference be­tween business contraction and expansion.

Based on reported results, MEED has had apositive impact on the Minnesota small businesscommunity. Studies by the MassachusettsInstitute of Technology, the Brookings Instituteand the Small Business Administration haveshown that the vast majority of new jobs arecreated by small businesses with fewer than 100employees. A survey conducted by the Jobs NowCoalition, a nonprofit employment advocacygroup, indicated that 95 percent of respondingbusinesses that hired MEED workers had fewerthan 100 employees and approximately 83percent had fewer than 20 employees.

MEED has worked with small businesses in allsegments of Minnesota's economy, includingagriculture (3 percent of total participation);manufacturing (19 percent); construction (8percent); wholesale trade (6 percent); retail trade(25 percent); services (30 percent); finance,insurance, real estate (7 percent); andtransportation, communication, utilities(2 percent).

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Family-owned businesses, such as grocery stores,hardware outlets, manufacturing firms, legalpartnerships and motels, all have joined in thejob creation effort. These businesses have givenparticipants jobs as clerks and administrativeassistants (28 percent of total placement),assemblers (20 percent), precision craft workers(11 percent) and sales people (5 percent).

The program has promoted state economicgrowth; approximately one-half of theparticipating employers sold goods and servicesoutside Minnesota, thus increasing the grossstate product. MEED has assisted high­technology industries of the future (3 percent oftotal participating employers) and export­oriented business, professional and relatedservice industries (24 percent).

Sixty-three percent of the employers would nothave expanded their work forces without MEED,citing a cash shortage as the principal reason.Likewise, 79 percent said MEED enabled them toexpand their production or scale of operation andalmost half said they were able to diversifybecause of the program.

A public program's complexity can deterbusinesses from wanting to participate. MEEDwas designed to be simple and easy foremployers to use. Participating employers citedlack of "red tape" as an incentive to use theprogram.

MEED-THEPARTICIPANTS

The MEED program has helped a large numberof unemployed Minnesotans to secure permanentjobs in the private sector. While the specificparticipant characteristics, data and analysisare exhibited in the latter portion of this report,certain conclusions can be cited here whichclearly indicate that MEED has succeeded increating jobs for those unemployed Minnesotanswho require assistance in becoming economicallyself-sufficient.MEED has reached many of those most in need.Through December 1985, the program servedmore than 30,500 individuals. More than 11,500participants were eligible for public assistancewhile another 7,800 were members offamilieswithout incomes. The program served almost13,000 women.

While minorities represent only four percent ofthe general population, 14 percent of those whofound jobs through MEED were members ofminority groups. A March 1985 report issued bythe Jobs Now Coalition, a nonprofit employmentadvocacy group, indicated that MEED effectivelyserved participants with dependent children.According to their report, approximately one­third of participants had dependent children andthis compared favorably with 1980 Census datashowing that one-fifth of all Minnesota's poorfamilies have dependent children.

A total of 77 percent of Coalition-surveyedparticipating employers provided job training toMEED participants. Most of the training was forskilled occupations, such as clerical andadministrative support, machine operation,electronic assembly and transportation.Many of the permanent MEED jobs haveresulted in employee wages that exceeded the $4an hour subsidy. The average hourly wage was$5.15. Sixty days after the end of a subsidyperiod, more than 83 percent of MEED workersremained on the job.

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MEED WORKS: Home,Health and HospitalServices and Supplies

Did the Minnesota Emergency EmploymentDevelopment (MEED) Act do what it set out todo?

Ask Rod or Cathy Baudeck, who own andoperate Home, Health and Hospital Services andSupplies in Hibbing. Their firm has beenproviding in-home nursing care and services todisabled and elderly Iron Range residents foreight years. '

With federal cutbacks in social services,Medicare and Medicaid, the Baudecks saw theneed to add to their privately offered services.They went to the Arrowhead EconomicOpportunity Agency for help in expanding theirbusiness. There they learned about MEED.

MEED helped them hire a maintenance worker,an executive secretary, a computer programmerand a registered nurse. Their present staffconsists of 25 professional and paraprofessionalhealth-care service providers.

"I was very impressed with the high quality ofreferrals provided by MEED through theArrowhead Economic Opportunity Agency,"

MEED WORKS: SciMedLife Systems

SciMed Life Systems is a Plymouthmanufacturer of robotic equipment, measuringdevices and other implements used by themedical profession. SciMed employsapproximately 150 workers and is an integralpart of the medical services expansion presentlytaking place in Minnesota. The companyemploys two MEED workers at the present time.

Last year, Pam Gilmer, personnel manager atSciMed Life Systems, had prepared a descriptionfor a job that periodically required liftingmaterial weighing 100 pounds. For help in fillingthe position, she called a job developer atH.I.R.E.D., a job training agency contracted bythe Minneapolis Employment and Training.Program to operate MEED.

Gilmer described the position. The job developersaid the person called for would need to be aweight lifter. Fortunately, the job developer hadan outgoing, enthusiastic candidate who couldhandle the job -Wilson Ingram. '

Cathy Baudeck said. "MEED is a multifacetedprogram referring competent individuals for awide variety of jobs."

"The state MEED Program has been verybeneficial to our business, enabling us to doubleour expansion rate," Rod Baudeck added.

Juanita Soby, who graduated from HibbingCommunity College in 1985 with a certificate inregistered nursing, was one of those hired. She isnow working as a nurse, earning $6.50 an hour.

"Without the MEED Program I would be back onAFDC because I am a single parent supportingtwo children," Soby said.

For the Baudecks the MEED program hasworked extremely well and the future looksbright.

"With a MEED wage subsidy, a new andexpanding business can stay cost effective untilthey are established and turning a profit," CathyBaudeck said.

Ingram had been unemployed for seven months.He previously had held a series of low-payingjobs, which promised no opportunity foradvancement.

Wilson was hired on the spot. His starting wagewas $5.50 an hour. On May 6, 1985 Wilson beganhis new job as an electronic assembler. He choseto work the night shift because it paid 30 centsan hour more than the day shift.Within 90 days, Wilson had been promoted to asupervisory position, with a one-stop raise to$8.10 an hour.

Currently, Wilson is earning $8.36 an hour andhas moved to the day shift. His is just onesuccess story-an example of a qualified workerwho has found permanent employment throughthe MEED program at a salary that exceeded bya considerable amount any he previously hadbeen able to earn.

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Minnesota Emergency Employment Development (MEED) ActAllocation of $108 Million as of December 31, 1985.

Service Base Allocation Base Allocation ·Other TotalDelivery July 1,1983 July 1,1985 July 1,1983 Total Spent ThrouglArea June 30, 1985 Dec. 31, 1985 Dec. 31, 1985 Allocation Dec. 31, 1985

Region 1 (Northwest) 2,261,652 153,~07 484,222 2,898,981 2,481,622

Region 2 (Northeast) 10,786,186 592,018 2,891,942 14,270,146 12,642,130

Duluth 2,201,929 167,505 1,082,504 3,451,938 2,892,253

Regions 2, 4, 5 (NorthCentral) 9,239,970 681,278 3,069,531 12,990,779 11,979,093

Regions 6E, 7E, 7W(Central) 9,812,452 640,495 542,801 10,995,748 9,059,438

Region 9(South Central) 4,280,011 268,233 500,589 5,048,833 4,929,076

Region 10(Southeast) 7,599,615 485,445 504,642 8,589,702 7,921,787

Regions 6W, 8(Southwest) 3,372,280 237,275 224,537 3,834,092 3,226,969

Minneapolis 6,572,110 726,896 1,443,670 8,742,676 8,046,792

Hennepin County 9,162,725 444,164 1,467,962 11,074,851 10,497,603

Carver County 678,367 28,863 104,354 811,584 780,134

Scott County 935,167 48,518 72,631 1,056,316 878,644

St. Paul 4,968,562 446,602 1,274,996 6,690,160 5,093,136

Ramsey County 3,005,587 146,340 164,047 3,315,974 2,988,488

Anoka County 3,790,725 211,226 702,267 4,704,218 4,229,254

Dakota County 3,446,484 190,689 180,339 3,817,512 3,618,816

Washington County 1,874,097 103,346 447,828 2,425,271 2,155,964

Subtotal 83,987,919 5,572,000 15,254,081 104,814,000 93,421,199

Central Administration 840,000 577,158

Transfer to Article 8 200,000 200,000

Discretionary 2,368,000 2,368,000

Total 108,222,000 96,566,357**

Total allocated includes $222,000 in reallocated payback dollars.Balance of payback dollars to be reallocated is $527,733.

•Other allocations include additional dollars for areas with high unemployment rate, high general assistance populations, Indian Reservations and jobretention incentives.

··The total dollar figure does not represent dollars obligated in employer contracts that were carried over on Dec. 31, 1985.

$8 million of the $27 million was allocated for the period July 1, 1985 to December 31, 1985.

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ApPLICANT/PARTICIPANTSUMMARY REPORT

During the 30-month period ending Dec. 31, 1985,a total of 125,0,155 applicants were declared to beMEED eligible. Of the eligible applicants, 45percent were eligible for general assistance, 5percent were eligible for Aid to Families withDependent Children (AFDC), and 20 percentwere households without incomes. Of the eligibleapplicants, 64 percent were men and 36 percentwomen.Actually enrolled in the program were 30,547individuals, or 24 percent of the eligibleapplicants. Approximately, 21 percent of generalassistance eligibles and 31 percent of eligiblemembers of "households without other income"became participants. Approximately 29 percentof eligible females also were enrolled.Of the total number enrolled, 38 percent weregeneral assistance eligible, 2 percent AFDCeligible and 26 percent were households with nosource of income.

Fourteen percent of those who found jobsthrough MEED were members of minoritygroups. Females enrolled comprised 42 percent.Fourteen percent of the individuals enrolled wereveterans.

Of the 30,547 participants, 60% were enrolled inthe private sector; 40% were enrolled in the publicsector. A total of 14,948 (49 percent) have foundpermanent, unsubsidized jobs earning anaverage wage of $5.07 an hour. Otherparticipants who left the program found otherjobs, returned to full-time school, entered othertraining programs or were unable to continue.Another 2,616 were transferred into the newMEED program.Of the 8,044 individuals who were in a privatesector subsidized job and who received follow-up60 days after completion of the subsidizy, 83%were still employed. These workers earned anaverage hourly wage of $5.15.

Applicant/ Participant Reportthrough Dec. 31, 1985Total MEED Program

Status for Employed Unsubs3,110 Numbe8,044 Emp6,036 In

42 Un682 Other640644

*average hourly wage

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Mary BrunkowDepartment of Jobs and Training418 Third Ave. E.Alexandria, MN 563086121762-2131

CURRENT MEED (WAGE SUBSIDY) SERVICE PROVIDERSSERVICE DELIVERY AREA ADMINISTRATOR

Northwest MinnesotaKittson, Marshall, Pennington, Roseau, Norman, Polk, RedLake

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Rural Minnesota Concentrated Employment Program(CEP) Inc.Becker, Beltrami, Cass, Clay, Clearwater, Crow Wing, Grant,Hubbard, Lake of the Woods, Mahnomen, Morrison"Pope,Stevens, Traverse, Wilkin, Douglas, Otter Tail, Tod~, Wadena

Northeast Minnesota ,Aitkin, Carlton, Cook, Koochiching, Lake, Itasca,St. Louis (except City of Duluth)

City of Duluth

Private Industry Council (PIC) 5Chisago, Isanti, Kanabec, Meeker, Mille Lacs, Pine, Renville,Sherburne, Wright

Benton, Stearns, Kandiyohi, McLeod

Southwest MinnesotaBig Stone, Chippewa, Lac Qui Parle, Swift, Yellow Medicine,Murray, Lincoln, Lyon, Pipestone, Redwood, Cottonwood,Jackson, Nobles, Rock

South Central MinnesotaFaribault, Martin, Watonwan, Le Sueur, Nicollet, Waseca

Blue Earth County

Brown, Sibley

Southeastern MinnesotaDodge, Fillmore, Freeborn, Houston, Mower, Olm;ted,Goodhue, Rice, Steele, Wabasha

Winona County

Larry BuboltzRural Minnesota CEP Inc.P.O. Box 1108Detroit Lakes, MN 56501218/847-92051-800-/492-4804

Vincent GentiliniArrowhead Economic Opportunity AgencySixth Street and Third Ave. S.Virginia, MN 557922181749-29121-800/662-5711

Julie SmithDuluth Job Training Programs332 City HallDuluth, MN 55802'2181723-3771

Richard FurchtPrivate Industry Council 5P.O. Box 187Clearwater, MN 55320612/558-2223

Dale HeimermannDepartment of Jobs and TrainingP.O. Box67St. Cloud, MN 56302612/255-3266

David ThompsonSouthwest Minnesota PICP.O. Box 1213Marshall, MN 56258507/532-4411

Sandy OppegardSouth Central PICP.O. Box 3327Mankato, MN 56001501/345-1837

Randy GilreathBlue Earth County Employment & Training410 S. Fifth St.Mankato, MN 56001507/625-3031

Leigh HeilmanDepartment of Jobs and TrainingP.O. Box 696New Ulm, MN 56073507/359-2031

Richard HarrisSoutheast Minnesota PIC1530 Highway 52Rochester, MN 55901507/281-1193

Jane SaundersDepartment of Jobs and Training52 E. Fifth St.Winona, MN 55987507/457-5460

West MetroCarver County

Scott County

Hennepin County

City of Minneapolis

East MetroCity of St. Paul

Anoka County

Dakota County

Ramsey County

Washington County

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Jim BroucekCarver County Employment & TrainingCarver County CourthouseP.O. Box 7Chaska, MN 55381612/448-3661

Jean SinellScott County Employment & TrainingCourthouse #320Shakopee, MN 55379612/445-7750

William BrumfieldHennepin County Training & Employment Assistance300 S. Sixth St.Minneapolis, MN 55487-0012612/348-4139

Donna HarrisMinneapolis Employment & Training Program3101/2 City HallMinneapolis, MN 55415612/348-4383

Jacqui ShoholmDepartment of Planning & Economic DevelopmentCity Hall Annex25 W. Fourth St.St. Paul, MN 55102612/292-1577

Jerry VitzthumAnoka County Job Training Center8008 Highway 65 N.E.Spring Lake Park, MN 554326121784-1800

Percy ZacharyDakota County Job Training Programs33 E. Wentworth Ave., Suite 149West St. Paul, MN 55118612/457-0603

Connie PeikertRamsey County Job Training ProgramsFrost Avenue and Manton StreetMaplewood, MN 55109612/770-8900

Bob CrawfordWashington County Job Training Center2000 Industrial BoulevardStillwater, MN 55082612/439-3220 .

Prepared by the State Job TrainingOffice-MEED Program690 American Center Building150 E. Kellogg Blvd.St. Paul, MN 55101612/297-2437 or 1-800-652-9747

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