The State of Minnesota’s Economy: 2018

Minnesota’s economic growth continues to be unimpressive

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In 1973, Time magazine famously labeled Minnesota “The State that Works.” This is still true. As shown by statistics on labor force participation and workers per household, Minnesotans are a hard working bunch of people.

And it is this work ethic, not state government policy, which is the key to their apparent prosperity as seen in figures for GDP or Personal Income per capita. Through sheer effort, Minnesotans have managed to elevate their per capita levels of GDP and Personal Income above national averages while their per worker levels have been below national averages.

This shortfall in Minnesota’s productivity has real implications for the state. Remedying it could have great benefits. If Minnesota’s workers were as productive as the national average, our state’s GDP would have been 9.2 percent larger in 2017 than it was. GDP per capita would be $5,800 or 9.2 percent higher.

But we do not have the policies in place to do that. Quite the contrary.

Our state faces the economic headwind of an aging population. We need to maximize the share of the younger labor force which is working, but we have minimum wage policies blocking young workers from the labor market. We have excessive rates of personal taxation pushing the state’s productive workers out and deterring them from coming here from elsewhere. We have high rates of business taxation which deter investment, entrepreneurship, and small business formation.

To boost the productivity of Minnesota’s workers so they can generate more output and enjoy the higher standards of living they deserve, these policies need to change. Until then, our economic performance will remain unimpressive.

A full copy of the report can be viewed here.