Do good neighbors make good economies? Minnesota could be a test case
Minnesota's small businesses paid a steep price during the immigration enforcement surge. The community bonds they built may be worth even more.
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Laura Zabel, executive director of Springboard for the Arts in St. Paul, knew something remarkable was happening in her community during the immigration enforcement surge when hundreds of neighbors spontaneously gathered on a frozen lake, toting homemade ice luminaria, as a brass band showed up and played “Down By the Riverside.”
“I was standing there on that lake listening to the music and being with neighbors and thinking about how people had really showed up to take care of people's practical needs — delivering groceries and raising money for rent and driving people to work.”
Over on East Lake Street in Minneapolis, Lito Burrito owner Miguel Hernandez witnessed the same neighborly dynamics at play during the surge.
Neighbors volunteered to sit by the restaurant's locked door to screen for federal agents and let only customers in. "When we'd close around 9 p.m., 10 of them would be waiting for our staff to just get in their cars and go home,” Hernandez said. “Just in case ICE was around.”
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And business owners up and down Eat Street — a stretch of Nicollet Avenue just north of Lake Street known for its restaurant density and diversity — reached out to one another to provide support.
“I saw so many business owners — My Huong Kitchen, Glam Doll, all the places on Eat Street — providing mutual aid, providing space, providing coffee, donuts, water, support,” said Alex West Steinman, cofounder of The Coven, a network of coworking spaces, including one that’s about two blocks from where protester Alex Pretti was killed by federal agents.
In all these cases, people acted on instinct, on a sense of community, on an almost reflexive sense of obligation to one another.
That impulse has a name: “social capital.”
Social capital as an economic asset
Also known as civic capital and civic culture, “social capital is a term that refers to connections that people have with other people,” said Robert Putnam, political scientist at Harvard University. “Social capital is a general term for connecting and trusting other people.”
Economic research highlights that the bonds of trust among neighbors and small businesses aren't just heartwarming — they can be a genuine asset. The stronger those bonds, the more trust and cooperation can flourish, creating a path for raising living standards.
In his landmark book “Bowling Alone,” published 26 years ago, Putnam documented the negative impact on society from the long decline in the social bonds that once stitched American communities together — falling membership in the PTA, the Elks, the Masons, the Jaycees, and, of course, bowling leagues.
In sharp contrast, healthy social capital means there is more trust, more cooperation and more community resilience.
Putnam elaborated on the importance of robust social capital to the economy in “Bowling Alone.”
“By analogy with notions of physical capital and human capital — tools and training that increase individual productivity — the core idea of social capital is that social networks have value,” Putnam wrote. “Just as a screwdriver (physical capital) or a college education (human capital) can increase productivity (both individual and collective) so too can social capital affect the productivity of individuals and groups.”
Local action matters
Economists like Luigi Zingales at the University of Chicago have taken deep dives into what strong community ties can mean for economic life (and vice versa). To be sure, social capital isn't easy to measure compared to land, labor and physical capital.
Social capital is more like a recipe or a software protocol that allows for economic exchange and all kinds of innovation.
Still, economic studies strongly suggest that higher levels of trust can lead to increased commerce, promote financial innovation and even foster economic growth. People who believe in their ability to make a difference and trust their neighbors are more likely to engage with their communities and contribute to the common good.
Zingales said successful societies are often marked by citizens behaving in ways that reflect values, a combination of “‘I want to behave, I have some values, and so I behave in a certain way, and so other people can expect me to behave in a certain way,’” said Zingales.
He added that the vitality of small businesses is critical to the health of local social capital.
Big businesses can easily move money, people and operations around nationally and internationally. Small business owners have a stake in their neighborhood and region. Trust among neighbors and business owners is a currency that promotes local commerce and innovation.
“This sense of 'we're all in it together' makes the dramatic difference,” said Zingales.
That ethos was on display at Bench Pressed, a letterpress studio and retail creative space tucked into Minneapolis' Seward neighborhood. When the immigration enforcement surge began, owners Andy and Jane Shannon didn't close up. They opened their doors.
“We started printing posters and handing out posters. Community members just brought supplies,” said Jane Shannon. “This was just a place where it could be dispersed. So community members brought whistles. I mean, as soon as whistles came in, they went right out. And we were talking hundreds — bags and bags and bags of whistles.”
They were far from alone.
Across the Twin Cities, many small business owners pivoted hard from commerce to community. “Like the coffee shops that turned into warming houses, the barber shops that turned into food banks, the sex shops that have raised millions of dollars, probably, at this point,” she said. “We're a greeting card store and we're redistributing resources.”
Andy Shannon added that the creativity of so many small business owners and their ability to pivot from running a business to becoming a community lifeline was remarkable. The shift also extracted a real cost — in time, money and energy that many owners are still working to recover.
“Small businesses are the backbone of community,” he said. “We just need a little more help to kind of continue fostering these communities, and everyone is trying their absolute best. And it's not easy. Owning is 24/7.”
Measuring the economic damage
The full economic toll of the surge is still coming into focus, and the numbers that are available paint a sobering picture.
North Star Policy Action, an independent research and communications institute, estimates that the federal border enforcement surge reduced the number of employees working 2.8 percent below expectations, dropped total hours worked by 1.9 percent, and caused the number of open business locations in the Twin Cities to fall by 1.7 percent — and those figures only run through mid-February.
Completed home sales in Minneapolis dropped 18 percent in February compared to the year before, according to local realtor groups.
And with owners from African, Latino, Asian, and Native American communities running 1 in every 10 businesses in Minnesota, the potential losses from the surge are anything but abstract and are still deepening.
“When I talk about the economic impact, I think it is quite severe in Minnesota, because it has rippled out deep into communities and also beyond — into workforce, business and tax payments,” said Bruce Corrie, emeritus professor of economics at Concordia University in St. Paul.
Of course, there's nothing automatic about civic energy lasting long enough to make an economic difference. The momentum may fade once the immediate crisis is in the rearview mirror.
Policy makers may let the moment of opportunity pass, especially in a tough election year. And many small business owners are struggling simply to survive these days, facing a race against time to gain access to promised relief money from governments and philanthropy.
Time is the scarce commodity for small business owners who are trying to stay open and keep their workers employed.
"The majority of the business owners that I've talked to around here hadn't even applied for any of the funding that was coming from philanthropy because they're stuck in the kitchen," said the Coven's Steinman. "They don't know how to or how to even find the time to do it."
How to build on existing social capital
There will be differences about what initiatives and reforms would best support small businesses and encourage more people to pursue their entrepreneurial ideas. The Minnesota Chamber of Commerce may well see things differently than the Main Street Alliance or Bruce Corrie.
He has a handful of plans he believes could help channel the civic surge into something lasting, including a neighborhood tax credit, a simplified permitting process and turning "shop local" from a bumper sticker into a genuine consumer habit.
"I just heard of Taco Tuesday and Sambusa Saturday and all those kinds of ideas people are bringing up," he said, "which is very exciting."
The caveats are sobering and skepticism is warranted. Yet the idea remains intriguing: That the trust and informal connections that brought people together during “Operation Metro Surge” could offer a platform for building a stronger economy going forward.
Business owners like Hernandez of Lito Burrito are already thinking past the current damage.
"Things will happen, things that we can make even just a small restaurant sustainably happen through the next months or years will be essential," he said.
He hopes the “explosive energy of community” will sustain.
“I really am hopeful that Minneapolis and Minnesota showed the whole world what we can do for each other,” he said. “And I hope we can make it last."
