It has been nearly 50 years since the Time cover story touting the “Minnesota Miracle” with Governor Wendell Anderson. At that time, Minnesota was recognized for outperforming other states: economic growth was above average and personal incomes were significantly increasing.

But 1973 is now a long time ago - and past achievements do not guarantee future success. Global competition has intensified. Mobility of capital is even more pronounced. Remote work has increased the ability to work from anywhere. And technology has forever changed how we live, shop and work. We have much to be proud of in Minnesota. We have a highly diverse industry base, a talented and hardworking workforce, beautiful natural resources and high innovation. But there are ways in which Minnesota no longer beats the competition. Among this year’s findings: 

• Our economy shows mixed results. Despite historically low unemployment rate that shows Minnesotans are working hard, Minnesota’s GDP and job growth have been below the national average for the past five years. The October jobs report showed positive progress as Minnesota exceeded the national job growth. This may be a short-term uptick as the state’s November budget forecast predicts flat job growth in 2023 and 2024.
   
• The tax climate exacerbates the already-high cost of doing business, and makes us less competitive as 27 other states have reformed their tax codes to attract investment, talent and growth.
   
• Minnesota continues to be a hotbed of private-sector innovation and continues to support its high five-year startup survival rate.
   
• Ongoing strategic infrastructure investment has improved rankings in highway performance, and Minnesota has advantages in shipping and logistics, with total freight rail miles outperforming its size.
   
• The workforce continues to be a simultaneous strength and challenge. Our state has a high-quality workforce, but continues to wrestle with a historic worker shortage and low rate of migration into Minnesota from other states.

This year’s Business Benchmarks report goes beyond the analysis of where Minnesota stands in economic categories. This year, we compare Minnesota to other states that are outpacing us in these categories. What are the trends that sets them apart? What intentional steps are they taking to help their economies grow?

Colorado, Indiana, North Carolina, Tennessee and Utah have all seen economic improvements in several categories. They have similarities to Minnesota in the size of their economy, industry strengths, populations, and natural and cultural amenities. Each of them has a story to tell, in making their state more affordable, improving their workforce, and becoming more competitive overall.

We also examined neighboring states Wisconsin, Iowa and South Dakota (North Dakota’s recent history with the oil industry offers a less comparable analysis). Minnesota employers compete with the economic advantages enjoyed in these states every day. When considerations about growth or expansion are in play, businesses recognize Minnesota’s quality workforce, but may choose a neighboring state because they offer a quality workforce and are more affordable.

There is no silver bullet for economic development. The growth of any state’s economy depends on a complicated and diverse set of conditions, and it’s the cumulative impact that decides whether an economy succeeds or lags behind its competition.

But singular decisions from business leaders and policymakers can make a huge impact on whether Minnesota is an attractive and affordable place to live, work and grow a business. We are providing this deeper comparative analysis to help understand the formula that goes into it.

Make no mistake - Minnesota is an exceptional place to live and raise a family, and start and grow a business. But the data tell us that the state is not living up to its economic potential. Understanding our competitive strengths and weaknesses can determine what is needed to regain our competitive edge.

We urge business and policy leaders alike to read this report and support policies and private sector-led efforts to get Minnesota growing again.

Navigating the 2023 Business Benchmarks report

Download the full 2023 Business Benchmarks report HERE
 

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