Progressive petri dish: Minnesota’s new laws put thousands of businesses on the brink of ruin
Barnini Chakraborty
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The Washington Examiner went to Minnesota following news that the state’s Democrats, known formally as the Democratic-Farmer-Labor Party, had fast-tracked one of the most progressive agendas in the country. What we found was a struggling Republican Party, angry small business owners, and a complete stonewall from Democrats. In this series, the Washington Examiner takes a look at broken promises lawmakers made, how Republicans are trying to control the carnage, and the unintended consequences of some of the bills passed, including one that could wipe out small business owners.
MINNEAPOLIS — Every Wednesday for the past eight years, Jerrilynn Sweeney has either made or bought lunch for her employees at Innovated Building Concepts, a commercial siding business in Burnsville, Minnesota. She did it to build camaraderie between the office workers and those in the shop or working in the field.
“We all sit in one room and eat,” Sweeney told the Washington Examiner. “Everybody knows everybody’s kids. We can laugh, we can joke, but when it comes down to ‘We’re in a load of [trouble], we’ve got to get this done,’ they all stand up and help one another.”
But these days, there’s not much laughing going on.
Like thousands of other small business owners in the state, Sweeney is bracing for new laws passed this year by the Democratic-controlled legislature that has targeted companies like hers and saddled them with huge expenses and a maze of regulations, forcing some to consider closing up shop for good.
Minnesota was part of a midterm wave where voters rejected Republican candidates. The state’s Democrats, known as the Democratic-Farmer-Labor Party, control four of the state’s eight U.S. House seats, both of its U.S. Senate seats, both chambers of the state legislature, and all other statewide offices, including the governor’s mansion. They have pushed through one of the most progressive agendas in the country this year at a breakneck pace, often shutting out the concerns of the people their regulations will affect.
Gov. Tim Walz (D-MN) signed off on the creation of a state-run program that will allow full-time, part-time, temporary, and seasonal workers to take months off work with partial pay after having a child or when the worker or family member has a serious medical issue. Time off will also be allowed for adoptions, the military deployment of a family member, or in some cases, domestic abuse or stalking. Lawmakers capped the time off at 20 weeks with a 12-week limit on the type of leave. Earlier versions of the bill had allowed for workers to take up to 12 weeks for their own health issues and 12 weeks for a family member in the same calendar year.
“The vast majority of nations have this because they know it’s the right thing to do,” Walz said. “They also know it’s the right thing to do to build your economy, to make it resilient and strong and healthy.”
The new law doesn’t go into effect until 2026, but any tweaks are likely to be minimal. Even if Republicans win a majority in next year’s House elections, there is little chance any meaningful change will take place.
“You start thinking about this stuff, and you think, ‘Holy s***, they’re going to put us all out of business,” Sweeney said. “I’ve worked my ass off for this company.”
Innovated Building Concepts, which has less than 20 employees, opened its doors in 1987. Sweeney and her husband Pat bought the place in 2011, and the company’s portfolio includes a Crayola installation, the US Bank Stadium parking ramp, LL Bean at the Mall of America, Dave & Buster’s, and the Killebrew pedestrian bridge.
“When we first started, we didn’t take paychecks. It was 2016 before we actually took a full salary,” she said, adding that she once worked 50 days in a row. Despite the blood, sweat, and tears the couple has poured into the business, their future remains uncertain.
The same can be said for Mike Flynn, a small business owner in southeastern Minnesota, who owns a small ranch, has an interest in the Whitewater Travel Plaza and Restaurant off Highway 190, and is a dentist.
The day the Washington Examiner caught up with him, he was wearing his dentist hat.
“They don’t know the storm that they created,” he said. “To be a legislator, you don’t have to be a business person, and you don’t have to major in mathematics or balance a checkbook. You have advisers who tell you how sweet and perfect this is going to be, but the devil is in the detail. What is the unintended consequence of this passage?”
Flynn said a comparison between Minnesota’s law and those in other states points to some troubling signs.
“The Minnesota one is the most aggressive, loose one in the country, second to nobody as far as how extensive they want this to be,” he said, adding that the state is already facing a labor shortage and small businesses are struggling to hire everyone from “dental hygienists to clerks, cooks, and servers” that are not only “hard to find but hard to replace on a temporary basis.”
Flynn said there are too many questions that still need answering, such as who pays for medical insurance if an employee works two jobs and whether employers will be required to match 401(k) contributions when employees are on leave.
John Reynolds, state director for the National Federation of Independent Businesses, which represents more than 10,000 small business owners in the state, told the Washington Examiner that they feel “betrayed” by their elected officials.
“The idea that they turned their backs on us really captures how most small business owners feel here,” he said, adding that they had to navigate the pandemic and well as inflation and supply chain shortage headwinds. “We had the biggest surplus by far the state has ever had, and [small business owners] feel like that’s the product of their hard work. Being the economic backbone of a lot of parts of the state, I think they thought, ‘Hey, this is going to be a time when we get some relief.'”
For their part, Democratic lawmakers have touted their accomplishments this session and have rebranded themselves as friends of small business.
“It’s a really puzzling conclusion from the session,” Reynolds said. “The taxes are just part of the story. Minnesota is a really expensive place to live and an expensive place to do business… You name it, we tax it.”
Minnesota was ranked the most expensive state for new entrepreneurs, according to a July state-by-state comparison from online small business adviser SimplifyLLC. The state also has the country’s highest corporate income tax rate at 9.8% and has high labor costs.
“I am not surprised,” state GOP Rep. Natalie Zeleznikar told the Duluth News Tribune about the No. 1 ranking, adding that the legislation passed in this year’s session was akin to a “war on small business.”
For Sweeney, it’s heartbreaking to imagine what the next few years could hold for her company.
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“We’re small. We can’t absorb that kind of money,” she said. “Almost everything they passed is going to hurt small businesses. You shouldn’t be allowed to run for legislator unless you’ve run a small business yourself so you know what a real budget is and what it takes. What you take away from us, you take away from the next person and the next.”
The Washington Examiner reached out to Democratic leadership in the state and Walz’s office multiple times for comment but did not receive a response.
Catch Part Two of the Washington Examiner’s Minnesota series tomorrow where we take a look at the state of the Republican Party as it tries to claw back power.