Minnesota’s Economic News — W/E 2/23/24
Economic growth KFGO: U of M study shows ethanol generated $6.6 billion in economic activity in Minnesota Star Tribune: Chris Farrell: Productivity growth has led to our economic growth Minnesota…
We have long noted Minnesota’s relatively poor record in nurturing new businesses. Our last report on the state of Minnesota’s economy found that:
…in 2020, New and Young Businesses — those which are five years old or less — accounted for just 31.3 percent of all businesses in our state. For the United States generally, the figure was 37.7 percent and Minnesota ranked 38th. This is lower than in 2000…Between 2000 and 2020, the share of Minnesota businesses which were New and Young Businesses fell by 4.6 percent. As we have seen throughout this report, this move was in the same direction as the national trend but was more pronounced here.
A new report bears this out.
Harrington Group International analyzed federal data to determine where businesses — and employees — are best off across all 50 states and Washington, D.C. They:
…analyzed nine metrics divided across three categories: workforce and consumer habits; business culture; and financial climate. This included factors such as where educated workers are moving, the startup survival rate, GDP growth and income tax burden.
Their key findings are:
The business environment isn’t so bleak at the national level. Employment has risen over the past year, at 4%, while more than a third of business owners say their companies are doing better than usual and compared with a decade ago, startups are more likely to stay in business, with a five-year survival rate of 50.3%.
Overall, Florida, Texas and Tennessee are the best states for business, with above average growth rates for jobs and gross domestic product, strong consumer spending, influxes of educated workers and low levels of corporate and personal income taxes.
Meanwhile, New York, Illinois and Connecticut ranked last overall for a variety of reasons: No. 51 Connecticut has below average job growth and gets a larger share of its tax revenue from income taxes, while Illinois and New York are both losing educated workers to other states.
How does Minnesota compare? Not well, as we’d expect. Our state ranks 34th overall, with middling scores for Business Culture (23rd) and Financial Climate (25th), and a lowly 49th for Workforce and Consumer Habits. This measure comes from:
Job growth: Year-over-year percent change in nonfarm employment from Aug. 2021-2022 (Bureau of Labor Statistics)
Consumer spending: Year-over-year percent change in personal consumer spending, 2020-2021 (Bureau of Economic Analysis)
Again, it will come as no surprise to those who have followed our work to learn that Minnesota’s record on job growth is below average and that we lose educated workers. This does not bode well for the economic future of our state.
Yesterday, a Twitter (X) account caught my eye, going by the handle of Minnesota Department of Human Services Employees, @Minnesota_DHS. It only has 34 followers, but makes the following claim…
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