U.S. News says Minnesota is one of the top states in the country, but the reality is not so rosy

On Tuesday, U.S. News published its Best States Rankings study for 2023, which ranked Minnesota the fifth-best state in the country. But while this ranking paints a good picture of our state, a deep dive into the details suggests that the reality is much less rosy, especially when it comes to the economy.

The categories

U.S. News ranks states based on how well they do in eight categories. These are crime and corrections; economy; education; fiscal stability; healthcare; infrastructure; natural environment; and opportunity. Out of these eight, Minnesota ranks in the top ten only in three categories. These are infrastructure, natural environment, and opportunity.

Our rankings in the other categories are unimpressive. In the economy and education, for example, Minnesota ranks #15. On the remaining three, we rank #20 and #21.

Certainly, things like infrastructure and the natural environment are important, but the economy is an especially important indicator of the overall well-being of people. So I took a look at how Minnesota’s economy (and other metrics related to the economy) rank.

U.S. News provides economic data under two categories. These are economy and opportunity. Under opportunity, U.S. News ranks how well a state’s economy provides opportunity by looking at three things: affordability, economic opportunity, and equality.

Minnesota does indeed have a higher level of income and a low level of poverty compared to most states — which gives us an impressive ranking on economic opportunity. However, this is a relic of past growth. As of late, Minnesota hasn’t been able to keep up with other states in GDP and income growth. So our high levels of income do not necessarily reflect the current strength of our economy.

Under the other two metrics on opportunity, the rankings are much less impressive. On affordability, Minnesota ranks #32 on cost of living, and #28 on housing affordability. On equality, Minnesota only ranks well on the labor force participation gap by gender. By race, our state has wider disparities, ranking Minnesota #26 on equality.

The economy

While U.S. News ranks Minnesota’s economy as the 15th-best, we rank much lower on two of the three categories. Unsurprisingly, we rank the lowest in growth. Of the three metrics measured for growth, Minnesota ranks #35 for GDP growth, #39 for net migration, and #20 for growth of the young population.

On the economy, Minnesota only ranks in the top ten on employment, but this favorable ranking is likely being propped up by our low unemployment rate and high labor force participation rate — two things that are not indicators of strength. Compared to most states, Minnesota has seen a lower job growth rate. In fact, as American Experiment has shown, while Minnesota has a low unemployment rate, this is mainly due to workers leaving the labor force, and not necessarily due to increasing employment. In fact, Minnesota is only one of a few states which have not gained all the jobs lost during the pandemic. Consequently, US News ranked Minnesota #31 on job growth.

Under Business climate, Minnesota ranked #43 on business creation, #42 on tax burden, and #21 on venture capital. We ranked favorably only on two metrics: the number of top companies headquartered here as well as the patent creation rate. But as American Experiment has noted, while we do have a high rate of patent creation here, the benefits of those patents accrue to other states that do a better job of implementing them.

Conclusion

We at American Experiment have continuously drawn attention to our state economy’s mediocre performance. Even a number 5 ranking by U.S. News cannot hide the fact that our economy is doing a poor job of competing with other states.