Minnesota’s Economic News — W/E 11/25/22
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Hinderaker testifies to Congress that federal tax cuts are already benefiting Minnesota’s economy.
American Experiment President John Hinderaker testified to a key congressional committee in September that Minnesota’s economy is already enjoying tangible positive benefits from the Tax Cuts and Jobs Act only eight months since Congress enacted it.
Hinderaker appeared on a panel of national economic experts that analyzed the effects of the tax legislation in front of the Joint Economic Committee of Congress (JEC). Other panelists included Scott A. Hodge, president, The Tax Foundation (Washington, D.C.); Dr. William C. Dunkelberg, chief economist, National Federation of Independent Business (Washington, D.C.); and Dr. Benjamin H. Harris, visiting associate professor, Kellogg School of Management, Northwestern University (Evanston, Illinois).
Hinderaker said official data already confirm what was obvious from many news reports: Minnesota companies are hiring, raising wages and otherwise contributing to Minnesota’s economy as a result of the act.
Staff at American Experiment used news accounts to identify 34 Minnesota companies that have announced new hiring and wage increases as a direct result of the act.
Although the timing of some state-level metrics, such as GDP, typically lag national data releases, Hinderaker predicted “there is every reason to believe Minnesota’s GDP has expanded sharply, along with the nation as a whole.”
State-based data on employment and wages from the Bureau of Labor Statistics (BLS) showed Minnesota added nearly 20,000 more private sector jobs at the seasonal hiring peak in 2018 than it did in 2017, Hinderaker said, adding that the jump represented “the biggest jobs gain in at least a decade.”
BLS data also reveal that rising wages in Minnesota reflect the “unmistakable” impact of the Tax Cuts and Jobs Act, according to Hinderaker. “Average weekly earnings in Minnesota have risen by 2.7 percent since January 2018—more than double the 1.2 percent increase in the same period of 2017.” Wage growth, which had stagnated during the second half of 2017, took off with the passage of the act, he said.
Hinderaker told committee members The Tax Foundation estimates the Tax Cuts and Jobs Act will add 6,789 full-time equivalent jobs to Minnesota’s economy, and yield a gain of after-tax income of $722.40 for each of the state’s middle-income families.
Hinderaker also noted that Minnesota’s Office of Management and Budget (OMB) expects the Tax Cuts and Jobs Act to boost Minnesota’s GDP growth. In February 2017, the office’s forecaster predicted the act would drive robust GDP growth, he said. In November 2017, amid doubts that Congress would pass the bill, the office lowered Minnesota’s fiscal forecast, predicting a deficit of $188 million for the current biennium. When the law ultimately passed in December, OMB revised its forecast again, this time upward. Instead of a deficit, it predicted a surplus of $329 million.
Congress established the Joint Economic Committee and the President’s Council of Economic Advisers (CEA) in 1946 to help provide federal policymakers with a non-partisan review of economic conditions and to recommend improvements in economic policy.
Chairmanship of the committee alternates between the Senate and House every Congress.
Committee Chairman Representative Erik Paulsen (R-MN), ran the hearing.