Minnesota’s dismal outlook
Hinderaker predicts major CAE study will prompt vigorous debate about the future of “blue state” policies.
Center of the American Experiment used a Capitol press conference on August 15 to unveil a report that debunks the belief that Minnesota’s strong economy vindicates the “blue state” policies that have prevailed in Minnesota for a number of years.
“Unfortunately, a systematic review of the facts does not bear this assumption out,” Center President John Hinderaker told the press conference. The data show that Minnesota’s economy has been average, at best, over the past 15 years, he said. “Worse, leading indicators are nearly all pointing downward. If nothing changes, Minnesotans can expect their economy to perform below average in the years to come.”
The report, Minnesota’s Economy: Mediocre Performance Threatens the State’s Future, was prepared over the past seven months by Dr. Joe Kennedy, in close collaboration with Peter Nelson, the Center’s vice president and senior policy fellow. Kennedy was chief economist in the Commerce Department under President George Bush. He received a law degree and a master’s in agricultural and applied economics from the University of Minnesota and a PhD in economics from George Washington University.
Hinderaker hopes the report will spark a meaningful public conversation about the prospects of Minnesota’s economy and what policies should help strengthen it.
Using a broad analysis of economic data, the paper demonstrates that Minnesota’s economic growth is now just average while productivity continues to be below average. Minnesota ranks 30th in per capita income growth, 34th in growth in disposable income, and 28th in rate of job creation. And the Twin Cities ranks ninth out of the largest 15 metropolitan areas in growth in economic output since 2001, and eighth out of 15 in job creation.
Other signals highlight other potential vulnerabilities: Recent job growth has come from less productive jobs; local entrepreneurial activity is in serious decline; and productive Minnesotans are leaving the state. In 2014, the net household income lost in this out-migration was $948 million, a figure that has been rising steadily. Minnesota now ranks 47th among the states as a net destination for households with incomes over $200,000, the paper said.
What’s more, the paper quotes predictions from the Dayton administration that Minnesota’s future performance will be below average. Minnesota Management and Budget projects growth in personal income and jobs to be lower than the national average in each of the next four years. The Minnesota Department of Employment and Economic Development projects that in the ten years from 2014 to 2024, Minnesota will underperform the nation with respect to job creation in 19 of the 22 major job categories.
The release of the Kennedy paper was the first of an aggressive public outreach agenda for American Experiment.
Beyond that, the Center is organizing community-wide town meetings in St. Cloud, Rochester, and Mankato at press time. More are being planned.