MN Economy Not as Good As You’re Being Told

Minnesotans believe that they have a strong and prosperous state economy that should be held as an example for other states.  However, a recent study by Joseph Kennedy, a former chief economist for the U.S. Department of Commerce, says the reality is the state’s economic performance has been mediocre over recent years.

In a commentary in the Star Tribune, John Hinderaker of the Center of the American Experiment states that Kennedy’s paper on Minnesota’s economy will be released this week by the Center of the American Experiment. The paper shows that Minnesota’s economic growth has been average over the past 15 years, below average in private-sector productivity; ranks 30th among the states in per-capita income growth and 28th in the rate of creating jobs.

Compared to the state, the Twin Cities metro ranks average or below average among the nation’s 15 major metropolitan areas in rates of economic growth and job creation.

But the news gets worse.  Kennedy finds that there are an alarming number of leading indicators that point Minnesota’s current performance toward below-average prosperity in the future.  According to the Bureau of Labor Statistics, there is a growing concentration of employment in industries that produce less economic output per job, plus there are fewer Minnesotans working in highly technical jobs than there were 15 years ago.

Minnesota also is experiencing a declines in venture capital, new company formation and entrepreneurship.

In addition, Minnesota is experiencing an exodus.  Every year, thousands of households are moving to lower-tax states.  The Internal Revenue Service data for 2014, the most recent data available, states that of the households that moved from Minnesota, approximately $980 million in net income left the state.  The Census Bureau’s data on migration, issued in March 2016, shows that there was an acceleration of people moving out of the state in 2015.  From this data, it can be concluded that Minnesota is not viewed as a desirable state to live in by people who live in other states and that people who are moving out are not being replaced by people moving in.

Minnesota’s own agencies predict below-average growth for the state from now through 2019.  Minnesota Management and Budget projects that Minnesota’s per-capita income growth and job growth will fall behind the U.S. average.  The 10 year projection of job growth in 19 of the 22 major occupations predicts below average growth according to the Minnesota Department of Employment and Economic Development (DEED). In the past, some of these occupations have been historically strong in Minnesota.

Hinderaker writes that unless changes are made, Minnesota is transitioning from an average present to a below-average future and if we are to preserve the same opportunities for our children, we must do better.