Minnesota ranked first in the nation for its business survival rate
On December 7th, The Minnesota Department of Economic Development (DEED) announced some good news about Minnesota. Based on data from the U.S Bureau of Labor Statics, Minnesota ranked “first in the nation in its five-year business survival rate (2015-2020). In this period, Minnesota had a business survival rate of 55.4% while the national average was 50.0%.
“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. In fact, a center of the American Experiment report illustrated how Minnesota’s high levels of per capita income are primarily driven by its high labor force participation. In 2018, for instance, Minnesota had the 3rd highest labor force participation rate in the nation.
During the pandemic, however, things have changed. Minnesota, as well as the nation, has faced a decline in labor force participation. 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.
This means, as a state, we can no longer continue to take solace in the fact that we are a hardworking state. What we need going forward is to make Minnesota a friendlier environment for business creation. The fact that we do so well on business survival rates should tell us that the Minnesota economy can benefit greatly from an increased rate of business formation.