Clark Sieben, Minnesota
Department of Economic Development Commissioner
Minnesota's economic incentives are modest, but necessary for attracting
A Civic CaucusFocus on CompetitivenessInterview January 17,
John Adams, Dave Broden (vice chair), Paul Gilje (coordinator), Randy
Johnson, Sallie Kemper, Dan Loritz (chair), Paul Ostrow, Dana
Schroeder, Clarence Shallbetter, Katie Clark Sieben, Fred Zimmerman.
By phone: Janis Clay.
to Department of Economic Development (DEED) Commissioner Katie Clark
Sieben, Minnesota must offer economic incentives when trying to
recruit new businesses to move to the state or to convince businesses
that are already here to stay and expand here. She maintains that the
business incentives Minnesota can offer are "very modest" compared to
what other states, particularly Texas and many southern states, are
offering. Loans from the Minnesota Investment Fund are capped at $1
million per company, as are rebates from the newly created Minnesota
Job Creation Fund.
Clark Sieben points out
that Minnesota will have a worker shortage of 86,000 people by 2020,
due to the retirement of the baby boomers and strong job creation in
the state. She says Minnesota must grow its own workers, as well as
recruit new people. Minnesota has one of the most productive
workforces in the country, she reports, which is part of the reason
for a number of recent business expansions in the state, with more
companies working with DEED on possible moves to Minnesota. Another
strength is the diversity of the state's economy.
Clark Sieben discusses
DEED's work with K-12 and higher education on workforce development,
its joint program with the Minnesota Department of Transportation to
upgrade trunk highways that are tied to economic development
expansions and its new Made in Minnesota database, which includes
information about 600 manufacturers in the state.
Katie Clark Sieben was appointed Commissioner of the Minnesota
Department of Employment and Economic Development (DEED) in October
2012. She previously worked for Target Corporation in human resources,
campus recruiting, the internship program, community relations and
marketing. Prior to that, she served as director of community
relations for a startup wind energy developer, National Wind, and as
finance director for Mark Dayton for a Better Minnesota. Clark Sieben
served as the Executive Director of the Minnesota Trade Office prior
to her appointment as commissioner.
Clark Sieben serves on
advisory boards for the University of Minnesota's Center for
International Business Education and Research and the University of
Minnesota Carlson School Global Institute. A graduate of the
University of Minnesota, she was honored in 2012 as a recipient of the
MSP Business Journal's "Forty Under 40" Award.
Issues to address.
of the interview, the Civic Caucus asked Clark Sieben to address the
following major issues: (1) the steps needed to better assure a strong
workforce in coming years; (2) how Governor Mark Dayton and his
cabinet approach the issue of how the state should distribute its tax
dollars to advance its competitiveness; (3) what states or regions
represent Minnesota's greatest economic competition and whether other
states have economic development tools Minnesota doesn't; (4) whether
Minnesota should be investing more in incentives to attract
businesses; and (5) how Minnesota's structures for economic
development, including state and local governments and for-profit and
nonprofit sectors, measure up with those of other states.
The Department of
Employment and Economic Development (DEED) interacts with other
agencies at the commissioner level and through subcabinets. An
interviewer started the meeting by asking how DEED interacts with
other agencies that provide areas of foundational competitiveness,
such as E-12 education, higher education, transportation and others.
DEED Commissioner Katie Clark Sieben responded that the interaction
happens naturally at the commissioner level, where commissioners are
constantly sharing information and collaborating. She said it is also
happening through subcabinets on areas like the status of the mining
community and Minnesota Business First Stop, which has nine different
agencies that interact with business involved in conversations about
improving efficiencies to provide quicker responses.
Minnesota has one of
the most productive workforces in the country.
"That's part of why we're seeing quite a few business expansions in
the state and why businesses are calling," Clark Sieben said. "DEED's
development office is the busiest it's been in a decade at the moment.
We are in discussions with a number of companies that are looking to
move to Minnesota."
She also said the state
has the second highest percentage of people (92 percent) who are high
school graduates in the country. Minnesota is also high in the numbers
of people with bachelor's and master's degrees. "It's not only the
intellect that's here," she said, "it's the productivity of the
workforce that really drives investment here in the state."
Retirement of baby
boomers will result in a worker shortage of 86,000 people by 2020.
said her department is very focused on the decline in the workforce.
She said it's a challenge that is happening at the national level. The
retirement of the baby boomers over the next few years will result in
losing a lot of expertise and institutional knowledge and a worker
shortage. By 2020, the state will have a worker shortage of 86,000
"We must grow our own
workers, recruit new talent to the state, and retain experienced
workers longer," she said. "Job creation numbers are strong. We are
seeing lots of business expansions in the state, so we're going to
have the jobs available."
Minnesota has one of
lowest unemployment rates (4.6 percent) in the country and is one of
18 states that recovered all the jobs lost during the recession.
"There's a lot to be proud of," Clark Sieben asserted. "There's a lot
we're doing right in the state." She pointed out, though, that not
every demographic group is doing as well as the state as a whole. The
unemployment rate for the state's African American population is 13
percent and for the Hispanic population, 10 percent. "These are areas
of our workforce we need to remain focused on," she said. "We need to
be sure we're providing training and educational opportunities for
those populations to help them get connected to jobs that have a
competing well with many other states. An interviewer asked
what question Clark Sieben fears the most when trying to recruit a
company to Minnesota. "To be honest," she responded, "I don't
necessarily fear any question. There are areas of our economy that we
need to continue to improve. It's not a perfect environment; no
environment is. But we're competing so well at the moment with so many
She gave the example of
Geringhoff, a German company that manufactures corn loader equipment,
which just decided to invest $20 million in a new manufacturing
facility in St. Cloud, the company's first North American expansion.
The facility will bring in 100 jobs initially, with more growth
anticipated in the future. Clark Sieben said the company felt
comfortable with the culture in the area, noting that St. Cloud Mayor
Dave Kleis speaks German. Another very important factor is that 11 of
the 13 products the company needs for its supply chain are available
She said state
officials have a "fantastic" story to tell about Minnesota's
competitiveness. "We tell companies we have one of the strongest
workforces in the country," she said. "Depending on what industry it
is and what skills they need, if they need engineers, we'll focus on
how many engineers the University of Minnesota is graduating."
She said officials also
talk about the diversity of Minnesota's economy as one of its
strengths. "We recovered from the recession not because of one
industry, but because there are multiple industries that were able to
get back on track," she said. "That helps us recover more quickly than
other economies in the country."
economic development incentives are modest compared to some other
Clark Sieben said the one of the tougher conversations state officials
have with companies is about economic development incentives. The 2013
Legislature passed a "historic package" for economic development, she
said, which included $30 million for the Minnesota Investment Fund (MIF)
and $24 million for a newly created Minnesota Job Creation Fund.
"That's a lot of
money," Clark Sieben said, "but we're competing with states like Texas
that have a $200 million fund. Southern states are not afraid to put a
$40 million proposal in front of a company. Our programs are designed
so we can't give any company more than $1 million. So, when we're
negotiating, I may be up against a $40 million proposal and we've got
$1 million on the table. So, it's talking about all the other
qualities that are here in Minnesota: the workforce, the
transportation network, the supply chain and selling that."
An interviewer observed
that it sounds like Minnesota officials are thinking that since
everyone else is "bribing" people, then we have to "bribe" them, too.
"Is that a healthy way to develop an economy long term?" he asked.
Clark Sieben responded
that with the $1 million cap, Minnesota's programs are "very modest"
compared to what other states are offering. "States are competing and
putting proposals together and often cities are also participating in
those proposals. It is the reality of today's competitive
environment," she said. "The conversation isn't just about economic
development incentives. If we weren't able to put anything on the
table, it could make a difference in how many expansions we're
recruiting to this state."
DEED is working with
K-12 and higher education. Asking about workforce
development, an interviewer wondered how DEED connects with the
state's education systems at all levels to ensure that down the road,
we are in the same position or a better position in terms of having
"We are absolutely
working with K-12 and higher education in multiple ways," Clark Sieben
responded. "There are multiple committees formed and projects underway
we are collaborating on." She said Department of Education
Commissioner Brenda Cassellius leads a P-20 committee looking at how
we're coaching and guiding students towards the jobs that are in
demand. Through its Labor Market Information Office, DEED provides key
labor market indicators, information, and analysis, such as employment
and unemployment data, wage information, occupations in demand, and
key sectors for future job growth.
"This information is
important in better understanding the labor exchange and helps ensure
that we are training and educating workers based on the demands of the
economy," she said. She said the high schools are losing guidance
counselors and it's now every teacher's responsibility to be guiding
students and helping to provide this information to them.
DEED has regional
specialists who must each understand a specific industry, as well as a
geographic region. An interviewer
commented that Minnesota has some pluses in the area of manufacturing,
but we have 100,000 fewer manufacturing jobs than a few years back. He
said there is a significant lack of technical help available from DEED
and asked how many engineers and how many people with six to eight
years of industrial experience are on the staff of DEED. Clark Sieben
responded that DEED has people on staff who have worked in the private
"There is a shortage of
people in the economic development field who understand the businesses
and the technical processes that are going to make companies
competitive," the interviewer continued. Clark Sieben said she thinks
DEED has "an extremely talented team" in the business development
group. She said there are six regional specialists stationed across
the state and one person, soon to be two, focused on the metro market.
Each must understand a specific industry, as well as a geographic
In order to identify
the job skills needed to fill the jobs gap anticipated in 2020, the
business community must be projecting their future needs. An interviewer asked
about the breakdown of the various skills needed to fill the 86,000
jobs gap projected for 2020. "In order to identify the gap, we need
the business community to be projecting their needs down the road,"
Clark Sieben responded. "In Minnesota we do have a strong
public/private partnership across the state." Companies are not always
comfortable sharing information with the government, she said. But
there are economic development groups like Greater MSP, Greater St.
Cloud, Rochester Area Economic Development and APEX in northeastern
Minnesota that are starting to project out at the local and regional
DEED runs federally
funded programs for the unemployed, the underemployed and displaced
Clark Sieben said DEED has 47 federally funded workforce centers
across the state that are staffed for unemployed and underemployed
workers to get assistance, like coaching on interviewing and resume
help. The agency also operates and maintains MinnesotaWorks.net, its
online job bank, where people can post their resumes online and search
for job postings. DEED also runs a federally funded dislocated
Investment Fund (MIF) funds upfront capital equipment loans and the
Minnesota Job Creation Fund provides rebates for job creation and
private investment. In response to a
question, Clark Sieben explained that the incentives funded by MIF,
which have a $1 million cap per company, are upfront loans for capital
equipment costs. The 2013 Legislature appropriated $30 million per
biennium for MIF. Most companies are receiving loans in the $400,000
to $500,000 range.
The Legislature also
created the Minnesota Job Creation Fund in 2013, appropriating $24
million per biennium for the fund. Clark Sieben said the Job Creation
Fund also has a $1 million cap for most deals and is a replacement for
the Job Z program, which will sunset in 2015. "The Job Creation Fund
is much more transparent and highly accountable," she said. "This is a
rebate. A company must create jobs before they see the incentive."
She explained that the
state signs a business subsidy agreement with a company that outlines
how many jobs it's planning to create and what level of private
investment it's planning to make. There must be a minimum of 10 new
jobs and $500,000 in investment. A company has two years to reach its
goals. After it does that, it gets a rebate from the Job Creation
Fund, based on the wage level of the newly created jobs:
New jobs paying between $26,000 and
$34,000 earn the company a $1,000 rebate per job each year.
Those paying $35,000 to $44,000
earn a $2,000 rebate per job each year.
Those paying $45,000 and above earn
a $3,000 rebate per job each year.
The company must retain
those jobs in order to continue to get the rebate each year, generally
for a three-year period.
On the capital
investment side of the Job Creation Fund program, Clark Sieben said a
company gets a five percent rebate on an investment in the Twin Cities
and a seven percent rebate on an investment in Greater Minnesota. The
rebate can go over $1 million if the project is creating more than 200
jobs and making more than a $25 million private investment in
Minnesota. Then the company can get up to $2 million in rebates.
DEED looks at the
entire incentive package a company is getting from the state and from
local governments. Clark Sieben pointed
out that, in addition to the state, cities sometimes also provide
incentives to companies through tax-increment financing (TIF) or tax
rebates. To receive state money through MIF or the Job Creation Fund,
a company must apply through the city or township, which means the
application must be approved by the city council. She said DEED
business development teams are always in contact with city economic
development teams or mayors and city managers. "We look at the entire
package a company is getting," she said.
and Economic Development (TED) program is a shared program between
DEED and the Minnesota Department of Transportation called.
Its goal is to update the trunk highway system around the state, Clark
Sieben said, but for a proposed update to be funded through TED, it
must be tied to an economic development expansion. "We always have way
more proposals than we can fund," she said. "Staff tries to figure out
the greatest economic impact for each of those expansions."
The Made in
Minnesota database includes more than 800 Minnesota manufacturers.
pointed out that this year DEED rolled out the Made in Minnesota
database, which includes 800 Minnesota manufacturers and is searchable
by region or county. Each company inputs its own information about its
products and services. "Part of the reason we created Made in
Minnesota," she said, "was to enhance the local supply chain, so that
companies thinking of expanding here can see what manufacturers are in
developers and site selectors play a major role in economic
development. An interviewer asked
about the role in economic development of commercial-industrial
developers who put in buildings and then lease them to companies.
"They're playing a major role," Clark Sieben responded. "We're in
constant communication with site selectors and real estate developers.
We give updates and they provide feedback and insights based on what
they're seeing on the ground."
Minnesota must give
economic incentives to businesses considering expanding here. In response to a
question about whether economic incentives to businesses are a good
way for the state to help companies, Clark Sieben said, "We need to
participate in that game, because that's what all states are doing. We
need to have a balance in investments of some modest incentives to
offer and good investments in education, transportation and other
areas where we'll see the greatest return on investment for the
economic competitiveness of the state as a whole."
Sieben concluded the discussion by saying, "We can't rest just because
we have a strong economy. We have to continue looking at the
challenges that are ahead: the baby boomers retiring, making sure
there are opportunities for the different ethnic communities coming
into the state, and figuring out broadband across the state."
The Civic Caucus
is a non-partisan,
tax-exempt educational organization. The Core participants
include persons of varying political persuasions, reflecting years of leadership in politics and
business. Click here
to see a short personal background of each.
David Broden, Janis Clay, Bill Frenzel, Paul Gilje,
Jan Hively, Dan Loritz (Chair), Marina Lyon, Joe Mansky,
Tim McDonald, John Mooty, Jim Olson, Wayne Popham and