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How Strong Is Minnesota’s Economy, Really?

On May 28, the Center’s Peter Nelson had an op-ed in the St. Cloud Times. The op-ed dealt largely with Connecticut, a high-tax state state like Minnesota, which is rethinking its tax policies after an exodus of high-profile businesses, including General Electric. Peter then asked, “Is the same shrill wakeup call on Minnesota’s horizon?”

He pointed out that Minnesota, like Connecticut, has recently enacted a large income tax increase. Also like Connecticut, Minnesota imposes a death tax–only Minnesota’s is higher. And, like Connecticut’s economy, Minnesota’s economy has underperformed in recent years:

Like Connecticut, employment in Minnesota grew slower than the nation the past 10 years. Minnesota growth ranks 29th and Connecticut ranks 30th.

And like Connecticut, Minnesota’s economy grew slower than the nation over the past 10 years.

Fortunately, Minnesota’s under-performing economy still outpaces Connecticut’s, which, to date, has protected Minnesota from the economic and budgetary problems besetting Connecticut.

Nonetheless, these economic data still show Minnesota heading down Connecticut’s path, and economic forecasts project Minnesota will continue to under-perform the nation.

That balanced look at objective data brought a response from Susie Merthan, p.r. person for the left-wing group Alliance for a Better Minnesota (ABM), which is funded by labor unions and rich individuals like Alida Rockefeller Messinger. Did Ms. Merthan’s response take issue with any of the data cited by Peter Nelson? Of course not! Instead, it was the usual happy talk that we hear from the left in Minnesota.

Our budget is balanced and, ABM says, “our economy is stable”–sort of like a hospital patient who has been in an accident. The ABM op-ed resurrects the canard that Minnesota is doing better than Wisconsin, proving that liberal policies are best. Actually, Peter Nelson dealt with that myth on this web site some months ago, a fact of which Ms. Merthan apparently is unaware.

The indisputable reality is that Minnesota’s historically strong economy has been underperforming in recent years. Fact: from 2000 to 2014, Minnesota’s jobs increased at a rate of 3.7%, well below the national average of 5.1%. Fact: Between 2000 and 2014, Minnesota was below the national average in growth of average annual wage. (Those numbers come from the liberal Brookings Institution.) Fact: over the last ten years, Minnesota ranks 35th among the states in growth of disposable income. Fact: in 2014, Minnesota suffered a net outmigration of thousands of families who took with them net household income of $948 million. (You can read all about Minnesota’s net loss of income-generating residents to other states here). People aren’t impressed by liberal op-eds. They are voting with their feet, both by leaving Minnesota and by not moving here in the first place.

We need a serious debate about Minnesota’s economic performance, and how that performance has been impacted by extraordinarily liberal policies in recent years. What we don’t need is more misleading, fact-free happy talk from the Left.

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