Minnesota ranked first in the nation for its business survival rate

According to data from the U.S. Bureau of Labor Statistics, about 55 percent of businesses created in Minnesota between 2015 and 2020 were still standing after five years, ranking the state first in the nation for its five-year business survival rate. The national average rate was 50 percent.

“This ranking confirms something we know to be true – people who start things in Minnesota tend to stick to it. It’s part of that Minnesota work ethic that we’re known for,” said DEED Commissioner Steve Grove. “This ranking bodes well for our economy, as we know that small businesses account for 47% of the jobs in the state.”

It is true, Minnesota is a hardworking state. As Center of the American Experiment’s recent report has illustrated, Minnesota’s high levels of per capita income are primarily driven by its high labor force participation. In 2018, for instance, Minnesota had the third-highest labor force participation rate in the nation.

During the pandemic, however, conditions have shifted. People are exiting the labor force both in Minnesota and other states. Persistent unemployment has instead incentivized an increased level of entrepreneurship nationwide. The COVID-19 crisis has not only necessitated increased entrepreneurship but has made it the forefront of economic recovery.

Minnesota needs to create more businesses

While businesses created in Minnesota tend to survive longer than those created in other states, Minnesota fares poorly when it comes to business creation.

This dwindling entrepreneurship has consequences for the state economy, especially when it comes to recovery from the COVID-19 pandemic.

To capitalize on its high rate of business survival, Minnesota needs to become a more business-friendly state. This, among other things, includes cutting taxes and slashing regulations.