Jobs and Labor budget prioritizes government, not Minnesotans

The majority’s Jobs and Labor budget and policy package, SF 1832, today passed out of the Senate on a vote of 35-30. Instead of focusing on creating higher-wage, in-demand jobs and supporting economic growth, the bill expands government, increases regulations and sends millions to private organizations. As a result, Minnesotans are left with fewer opportunities and higher costs. 

JOBS SECTION: BIG SPENDING, MISSED OPPORTUNITIES 

The Jobs and Economic Development omnibus budget bill spends $318 million from the general fund over the next two years, about 0.48% of the state’s $66 billion budget, along with $154 million from the workforce development fund. Despite the large investment, the bill fails to build strong pipelines to high-wage, high-demand jobs and instead sends significant funding to nonprofits. 

“The primary mission of DEED is to expand employment opportunities and strengthen Minnesota’s economy. This bill hands out a lot of money but fails to create real pipelines to high-paying jobs,” said Senator Rich Draheim (R-Madison Lake), Lead Republican on the Jobs Committee. “We owe it to Minnesotans to set the right priorities. That means making sure every dollar delivers results that help families and drive growth in our economy.” 

The bill includes a step toward nonprofit accountability by requiring grant recipients to report back to DEED on outcomes such as the number of Minnesotans placed in living-wage jobs. However, Republicans offered additional amendments to strengthen grant oversight that were not adopted. 

One of the more concerning provisions quietly claws back money that had been set aside to help small businesses comply with the Paid Family and Medical Leave (PFML) mandate set to begin in January 2026. Democrats moved the funds without including the change in the bill text, instead burying it in the fiscal spreadsheet—a move that shielded it from public scrutiny. 

“This was money promised to small businesses, and now the rug is being pulled out from under them,” said Sen. Draheim. “Burying the claw back in the spreadsheet instead of the bill shows they knew it would be unpopular. It is not an honest way to govern.” 

The bill also failed to address key concerns around the Paid Family and Medical Leave program. Senator Karin Housley (R-Stillwater) offered an amendment requiring DEED call centers to be operational on the program’s launch date, January 1, 2026, to help employers and employees navigate the system, but Democrats rejected the amendment. 

Democrats also included some changes related to cannabis, raising the state’s maximum contribution to CanStartup loans from $50,000 to $75,000, and from $150,000 to $200,000 if matched by at least 25% in new private investment. 

Senator Rob Farnsworth (R-Hibbing) offered an amendment to extend unemployment benefits by 26 weeks for Iron Range workers recently laid off. The amendment was adopted. 

Throughout debate, Republicans offered additional common-sense amendments to strengthen the bill, but none were adopted: 

  • Grantee compliance: Requires any grantee that fails to meet the terms of a grant agreement to return the funds and bars them from receiving future grants until the money is repaid. (Sen. Eric Pratt, R-Prior Lake) 
  • Reining in high nonprofit salaries: Prohibits grants to nonprofits paying executive salaries greater than 125% of the governor’s salary (about $187,500). (Sen. Rich Draheim, R-Madison Lake) 
  • Centers for Independent Living: Increases funding to $7 million for the Centers for Independent Living, which helps individuals with disabilities live independently. (Sen. Rich Draheim, R-Madison Lake) 
  • Lead service line replacement: Allocates $6 million per year to replace lead service lines and update aging water infrastructure, funded by transferring money from cannabis grants. (Sen. Rich Draheim, R-Madison Lake) 

While a few constructive provisions made it into the final bill, the overall package still leans toward government growth rather than true economic development and taxpayer accountability. 

LABOR SECTION: WEAKENS ECONOMY, REDUCES EMPLOYMENT OPPORTUNITIES 

This year’s Senate Labor budget totals $100 million, compared to $65 million when Republicans held the majority in 2021–2022. Additionally, the Democratic majority’s first Labor budget was $111 million. They created and funded 22 new appropriations and increased 11 existing appropriations, resulting in a 55% increase in the Labor budget. In doing so, Democrats burned through the $19 billion surplus and expanded the overall state budget by $20 billion in a single budget cycle. 

“This Labor budget spends too much taxpayer money while Minnesotans are already facing higher fees, taxes, and mandates,” Senator Gene Dornink (R-Brownsdale), Republican lead of the Senate Labor Committee, said. “Instead of offering real relief, it adds more costly requirements with no flexibility. Democrats treat all businesses the same, whether large corporations or mom-and-pop shops, but one-size-fits-all policies simply do not work.” 

Beyond just the increased spending, the Labor bill also introduces expensive new regulations that will harm Minnesota’s economy. It adds fines that do not match the violations, weakening the economy and reducing employment opportunities. Changes to the regulation of manufactured homes will also increase costs for one of the state’s most affordable housing options, making it harder for families to find a path to homeownership. 

ESST mandate and small business concerns

During today’s floor debate, Senate Republicans pointed out that the Labor bill fails to provide flexibility for the Democrats’ Earned Sick and Safe Time (ESST) mandate. With a one-size-fits-all approach, the law ignores the diverse needs of Minnesota’s small businesses.  

Key amendments were proposed to offer relief, but unfortunately, the majority rejected all efforts to address these concerns. 

  • Exclusion from ESST coverage for an inmate of a correctional facility performing work for the correctional facility while incarcerated (Sen. Eric Pratt, R-Prior Lake) 
  • Make the ESST law more workable for small businesses by creating an exemption for employers with fewer than 15 employees and providing flexibility for those with more generous PTO policies (Sen. Jordan Rasmusson, R-Fergus Falls) 

Impact on the manufactured home sector 

Additionally, controversial provisions in the Labor bill also impact Minnesota’s manufactured home sector. The bill increases fees and shifts permitting control from local authorities to the state, which could create financial burdens for homeowners and developers. New inspection requirements for selling used manufactured homes could also complicate the process and raise costs for affordable housing.  

In response, Senator Jeff Howe (R-Rockville) proposed an amendment to delay the implementation of new insulation requirements for manufactured homes, aiming to align the timeline with existing building code standards. It was rejected by Senate Democrats. 

Provide flexibility to new break laws

The Labor bill makes several changes to Minnesota’s break laws. It requires that employees receive a 15-minute paid rest break every four hours worked, replacing the current “adequate time” standard. It also mandates a 30-minute unpaid meal break every six consecutive hours worked, replacing the current “sufficient time” requirement. 

A major concern is the bill’s enforcement provision, which allows the Department of Labor and Industry (DLI) commissioner to impose fines of up to $1,000 per employee per day for violations. Senate Republicans highlighted how these steep fines pose a serious risk to employers acting in good faith, especially in industries with variable work schedules or where break timing is flexible by nature. 

In response, Senate Republicans proposed amendments to provide more flexibility for businesses acting in good faith, but they were rejected by Senate Democrats.