• Prioritize diversity and tech talent to ensure a dynamic corporate sector future. This is not a new issue, but it remains the elephant in the room for Minnesota’s business community. This is particularly true for global companies looking across the U.S. and beyond for where best to invest in jobs and offices. See Workforce section.

Business leaders in our discussions have made very clear that diversity and talent are only increasing in importance - and that both will be critical factors in determining whether Minnesota remains a corporate headquarters location long term.

A number of initiatives are already underway to address the dual imperative of diversity and talent, such as Greater MSP’s Make.It.MSP and the People of Color Career Fair. Building on these types of initiatives across the state will be critical this decade.

• Leverage affordability and address business climate concerns. Affordability cuts both ways. Minnesota offers a lower cost of living than many peer states, particularly compared to the nation’s “superstar cities” challenged by soaring housing costs, congestion and gentrification. At the same time, Minnesota’s business climate is less competitive than many fast-growing regions in the sunbelt and mountain west.

Minnesota cannot continue to be successful as a hub for leading companies if it remains both a low population growth and high business cost state. Leveraging the state’s relative affordability, while improving its business climate could be a critical success factor over the next decade.

• Develop focused efforts to retain investment and capture greater shares of the job and business expansion of existing leaders and rising stars. Business location decisions make headlines. But a greater numbers of jobs is undoubtedly won or lost each year in the decisions Minnesota companies make about where or whether to expand and grow nationally and internationally. We’ve heard directly from headquartered companies that acknowledge not choosing Minnesota as a place to add new jobs or invest capital. In some cases diversification or market development drive those decision. In other cases, it is access to talent or the ability to source employees from other, deeper talent pools. Some businesses choose to keep management functions in Minnesota, while growing production or operations in states with larger talent pools or more favorable business climates.

Capturing a greater share of investment from these companies – whether existing leaders or fast-growing startups – should be a top priority for Minnesota. Coordinated efforts to retain a greater portion of the jobs and/or capital investments Minnesota companies make elsewhere could be a major economic growth strategy for the state. Programs like the Minnesota Chamber of Commerce’s Grow Minnesota!, can play a critical role by help Minnesota’s top employers and fastest growing companies connect to resources and overcome barriers that might otherwise prompt them to invest capital or grow jobs elsewhere, instead encouraging those companies to grow in Minnesota.

• Foster the next Fortune 500 by helping rising stars stay and grow in Minnesota. A number of startup funding and support initiatives have emerged in recent years. These investments are critical to Minnesota’s ability to continually build its pipeline of high growth-potential companies. Medtronic was once a startup. United Healthcare was once a startup. Even 3M and Mayo Clinic were once startups. Minnesota’s newest company with that compelling new idea could be the Medtronic or United Healthcare of the future. What do they need? What resources and support mechanisms would be helpful? How can we facilitate and support their future growth and success? States that successfully support entrepreneurs and startups are investing in their own economic future. Minnesota should strive to be best in class in nurturing and supporting its rising economic stars.

• Explore remote work as a way to grow corporate sector employment outside the Twin Cities metro. Minnesota’s corporate and financial activities are largely clustered in the Twin Cities metro region. But while the future of remote work is still uncertain, Greater Minnesota communities should be aggressively seeking to leverage remote work as a trend to their benefit. This could occur in two ways.

First, regions and communities could work with existing headquarters companies to help them identify and expand their hiring pools to include their specific region. Doing so could enable some companies to find the workers they need to grow in Minnesota.

A second component could involve promoting Greater Minnesota’s quality of life – and lower costs – to recruit corporate professionals now able to work remotely but who may prefer Greater Minnesota’s lifestyle advantages. This would grow their local economy of smaller communities by attracting well-paid workers to live and work in their region, rather than in the Twin Cities. Attracting two dozen highly-paid technical workers, for example, with the lifestyle benefits of living in a smaller community, would be the rough equivalent of attracting a medium-sized tech or professional services company – benefitting the community’s economy in much the same way. Greater Minnesota should view flexible and remote work arrangements as a growth opportunity – as they very likely will be.

• Expand high-speed rural connectivity. Farming and food production is tech-intensive, and will only be more technology-empowered in the future. Mechanization and automation in food processing will accelerate, both to enhance productivity and to stretch workforce availability. Tractors will move toward autonomous operation. Fields are being monitored by sensors and satellite for optimal crop conditions assessed by analytics. Modern agriculture is empowered by technology and connectivity. That need will grow going forward. Minnesota must ensure that farmers, food producers and rural communities have high-speed connectivity to access the technology they need to grow and thrive producing the food on which we all depend. This includes wide access to quality rural broadband.

• Prioritize regulatory stability. Farming and food production has always included thoughtful stewardship of land and water resources. Farmers are environmentalists by practice in managing and stewarding these critical resources. Regulatory stability, both from a market perspective and from a tax and environmental standpoint, is the thoughtful framework helping farmers succeed. It’s true at the state level, and also of the national and international level relative to stable, reliable inputs and predictable access to global markets. America’s farmers are the most productive in the world. Regulatory stability helps them continue to be.

• Leverage tech transfer to find market solutions for environmental challenges. Technology can also help address environmental challenges when and where they occur. But it may be beyond the ability of individual farmers, even groups of farmers, to access. Facilitating tech transfer that helps farmers manage operations while addressing necessary environmental requirements is a legitimate role for the state. Success in this area not only benefits farmers and ag producers but also the entire state.

• Double down on workforce training to prepare workers for a more technology-based and automated future. Farming and food production is leveraging technology to a much greater degree, but farmers and the food industry may need help with tools and training to succeed in a more technology-based future. Strengthening training relative to applied technology and technical skills in the workplace is an investment that will pay economic awards. It is true across economic sectors, of course, but it may be especially true in food and agriculture, where such skills may not always be resident but will be in ever higher demand.

• Provide greater promotion and support across the food supply chain (e.g. equipment, technology, professional/technical services, manufacturing), not just producers and processors. Food is a major economic sector in Minnesota well beyond the farm. Minnesota is a major food producer and processor, and our economy benefits substantially from our ability to add value beyond the farm via production, processing, engineering, food science and manufacturing. With mining and forestry, food and agriculture is a foundational building block of our economy. Minnesota benefits in myriad ways from the strength and success of this key sector. Providing support and promotion of emerging connections and opportunities across the food supply chain will benefit Minnesota’s economy – and is a positive investment.

• Deepen market expertise, exports and channel expansion in the growth markets of Asia and Africa. A growing population and a growing middle class will mean the future growth markets for Minnesota agriculture will be Asia and Africa. Each is projected to add 400+ million people by 2030. That will result in substantially greater demand for food. Agriculture and food production is a global growth market of tremendous opportunity in the coming decade and beyond. Minnesota food producers should and must continue to deepen their knowledge and expertise in serving Asian and African markets – because they will be the world’s growth markets for food.

• Increase workforce availability through job awareness programs and continued immigration advocacy. Workforce growth, even basic workforce availability, is a concern for Minnesota’s economic future. With an already high labor force participation rate, but an aging population, Minnesota’s workforce constraints likely only increase by 2030. This is also true – or perhaps even more true – across Greater Minnesota and throughout Minnesota’s ag regions. Automation and productivity gains will help. But workforce opportunity awareness, training, and an embrace of immigration will also be required.

• Develop statewide emergency response strategies to ensure continuity of food production, distribution and supply in the event of natural disasters or subsequent public health outbreaks. If COVID-19 and global pandemic taught us anything, it is the importance of our food supply and the tremendous value of the Minnesotans who fulfill those important roles for us all. Continuity of food production, distribution and supply is an imperative, especially in the event of natural disasters or public health outbreaks. Food production and distribution is a Minnesota strength that also enables us to help support and supply the nation. Strong and thoughtful planning and response strategies that seek to ensure that food production remains a stable, reliable strength will benefit us all – and should be part of our future planning.

• Retool economic development programs to help manufacturers invest in productivity, not just jobs and facilities. Many existing economic development programs were designed primarily to incentivize job creation and investment in new facilities, with funds being awarded based on these criteria. Yet, the realities of slowing population and labor force growth in many areas of the state mean that local economic vitality is increasingly driven by gains in productivity and value creation, rather than job creation alone. Minnesota would benefit from modernizing its economic development programs to create more flexibility for businesses, and provide greater weight to business investments in productivity measures (e.g. technologies, equipment, technical skills training) that can drive economic activity for local communities in the future.

• Help workforce identify and access careers in manufacturing. While manufacturing employment is projected to see a modest decline, the need for workers in manufacturing remains a challenge statewide with companies reporting openings for both skilled and unskilled positions, even in the depth of the pandemic. Progress is being made to rebuild connections to high schools, and even middle schools, to expose students to manufacturing careers. The benefits of jobs in the trades are seeing renewed visibility, and the “wood shops” in high schools of the 1970’s are now replaced with highly technical manufacturing equipment in some schools. The Minnesota Chamber Foundation Business Education Network partner, the Winona Chamber of Commerce, has developed the REACH program to address the growing gap between employer needs and worker skills, ensuring that students will complete degree or certificate programs in areas where they will have meaningful employment options in manufacturing and other high demand industries. These and similar programs must be replicated across the state to further connect students to manufacturing careers. Manufacturers have a greater challenge attracting adult and incumbent workers to careers in the field. Companies are increasingly investing in education and training to attract workers, providing them transferable skills and a lifelong career path. Efforts to build the image of today’s manufacturing companies as high tech, innovative and engaging workplaces may also help attract incumbent workers who may have an outdated perception of the industry.

• Prepare for a more automated and skilled manufacturing future. Along with career awareness and alignment strategies, Minnesota should double down on programs geared toward equipping workers and businesses to leverage new technologies in manufacturing. This could include everything from basic digital literacy for production workers to training in automation technologies or data analytics and everything in between. We recommend that these programs be designed in partnership with private sector employers and provide flexibility to fit the diverse range of manufacturing processes employed across the state.

• Capitalize on reshoring demand by promoting and connecting the manufacturing supply chain. Recent disruptions in global supply chains have peaked interest in reshoring and nearshoring activities. As we address in the Markets section, Minnesota should continue building programs and tools to highlight manufacturing supply chains in the state, and help create matches between local companies and other businesses looking for domestic suppliers. The Minnesota Chamber’s MN Supplier Match has begun this effort by creating a statewide database of suppliers – inclusive of all industries but with an emphasis on manufacturing – that provides key information on close to 1,200 Minnesota companies. Tools such as this can help Minnesota compete for new investments from companies looking to create shorter links their supply chains.

• Provide relief to hard hit businesses. Local and state lawmakers should work to provide direct assistance to businesses that were significantly harmed through no fault of their own due to the pandemic response. This includes both avoiding policies that further restrict operations or constrain cash flow, as well as directing financial and technical assistance to businesses who need it most.

• Track emerging trends in tourism, hospitality and worker mobility as pandemic and restrictions ebb. The unprecedented events of 2020 raise questions about long term changes to hospitality and tourism activities. Will individuals continue to travel and vacation locally at a higher rate, or will tourism activities return to a pre-COVID norm once transmission of the virus recedes? How will remote work impact where people choose to live in the future, and what might this mean for communities with recreational and lifestyle advantages? Will entrepreneurship and business investment rise as challenges recede, or will the experience of 2020 dissuade risk averse investors and owners from investing in new hospitality and tourism ventures? All of these questions remain unanswered for now. Minnesota should seek to track, measure, and respond to these emerging trends, and develop innovate solutions to address them in the months/years to come.

• Help communities leverage their assets to attract investment and talent to their regions. Related to the point above, communities can begin developing programs and initiatives to take advantage of emerging opportunities brought about through the pandemic. For example, what might communities near Minnesota’s north shore do to attract young professionals who work remotely in a large urban center but who may want the amenities and outdoor activities that the region has to offer? What would the implications of such a strategy be for local housing, infrastructure, and schools? Aside from more novel initiatives, communities around the state should continue developing and promoting their recreational and natural assets to attract visitors, talent, and business investment. These activities have the double benefit of increasing the quality of life for existing residents, while spurring new economic activity.

• Address long-term workforce needs through local partnerships and immigration. Workforce availability challenges have mounted in recent years for hospitality businesses. Often times, this industry provides young workers with their first jobs, and that introduction can lead to career opportunities in the hospitality industry. For example, the Minnesota Chamber Foundation partnership with the Brainerd Lakes Chamber to invest in the Pro-Start program, a two year curriculum in culinary arts and food service management to provide workers for area resorts. The Hospitality Minnesota Foundation also sponsors Pro-Start along with a Hospitality Tourism and Management program in some schools across the state. Those career development opportunities aside, this industry will likely continue to face shortages in their workforce as the economy recovers, like many others across the state. Those shortages can be mitigated through greater employment by immigrants and individuals with H2B visas. This political nature of immigration reform, and the year to year uncertainty the availability of visas makes it very challenging. Minnesota’s hospitality businesses and other industries rely on foreign workers with H2B visas annually, many returning year after year. Without these workers, these jobs would go unfilled. Immigration reform, including clear guidelines and growing access to foreign workers would help Minnesota’s hospitality industry thrive.

• Promote and connect specialized supply chains. Trade within Minnesota makes up a significant component of the state’s economy. The flow of goods within the state was valued at more than $83 billion in 2017, with intrastate activity helping tie together the state’s diverse economic regions. The state’s supply chain strengths in areas such as medical technology, food and agriculture, machinery and equipment manufacturing, and wood products give Minnesota a competitive advantage for businesses looking to expand in the region. Machinery, food and ag products, and transportation equipment make up a large share of intrastate trade in nearly every region in the state, demonstrating the strong linkages across regions in these sectors. IHS Markit also estimates that firms in sectors such as building construction and furniture manufacturing can obtain up to two thirds of their wood product inputs from Minnesota suppliers. And research from Munnich and Horan found that Minnesota has a significant statewide presence of firms in the medical goods supply chain, reinforcing the state’s competitive advantages in this industry. These strengths are vital tools to support growth and expansion of businesses in related industries. Yet, visibility into the businesses that make up these supply chains remains too limited. Programs like the Minnesota Chamber of Commerce’s MN Supplier Match have begun to address this need, and can play a role in reducing asymmetric information in the marketplace. This is particularly timely as global trade disruptions from tariffs and COVID-19 have led firms to move away from sole source supplier arrangements and are seeking to reduce risk in their supply chains.

• Identify supply chain gaps. Additionally, more research should be conducted to identify supply chain gaps, particularly in key industry clusters and emerging growth sectors. Organizations like the Agricultural Utilization Research Institute and others have conducted recent studies to identify and respond to such gaps. Clear identification of supply chain gaps could be used to attract targeted businesses into the state in the coming decade

• Keep the doors open to leading markets, both domestic and foreign. Proximity and size remain key factors in state exports to domestic and international markets. A high share of Minnesota’s domestic commodity outflows go to neighboring Midwest states and the nation’s largest states such as California and Texas. In 2017, 53% of the Minneapolis BEA region’s (which covers most of Minnesota) total outflows went to just 9 states. Midwest states play a particularly large role in regional trade of food and agriculture products. Similarly, approximately 44% of Minnesota’s total international exports went to just three destinations in 2019 – Canada, Mexico, and China. Despite recent federal trade disruptions, these countries are likely to remain critical partners for Minnesota in the years to come, particularly as the USMCA trade agreement provides long-term stability to North American trade. While many companies have looked to counties like Vietnam and Thailand as an alternative to China, Mexico’s long-term growth prospects and close proximity could present advantages for firms looking to nearshore or diversify their supply chains in the future. The state should continue fostering relationships, distribution channels, and support infrastructure to further develop these important end-markets for Minnesota goods and services.

• Accelerate trade in fast-growing regions in the U.S. and abroad. While the state’s largest export markets will remain important, Minnesota should look to accelerate trade in regions projected to grow the fastest over the next decade. As IHS Markit notes, the fastest growing economies within the U.S. will be those of the South and West. States like Texas and Washington are already important destinations for Minnesota exports and are projected to continue expanding at a fast rate this decade. Efforts should similarly be directed towards states like Arizona, Colorado, and Utah, that may offer a balance of fast growing markets and reasonable proximity. This should include further research regarding the infrastructure and direct flights needed to fully compete in these growing regions. For example, initiatives like Greater MSP’s Regional Air Services Partnership (RASP) can aid in this effort by collecting information from companies on where they anticipate needing greater flight access to, and communicating this demand to the airlines in an effort add direct flights to these key markets. Minnesota should continue to advance such strategies to ensure Minnesota businesses have the access to move people and goods to these key markets in the coming years. Looking beyond the U.S., global growth is expected to continue shifting toward Asia and the Middle East in the coming years. Asian economies will be by far the fastest growing source of demand over the next decade, and countries like Egypt and Israel are expected to expand at a healthy rate as well. Minnesota’s export orientation would fruitfully shift in that direction. The state already has significant ties to China, but opportunities are also present in fast growing Vietnam and India. The state’s export promotion entities such as the Minnesota Trade Office have already begun building in-roads to these growing markets, helping Minnesota companies export to regions like Israel, India and Southeast Asia. Here too, initiatives like the Regional Air Services Partnership (RASP) have helped build connections between Minnesota and its critical international growth markets. In 2019, Delta began offering non-stop flights from MSP to Seoul, South Korea and Mexico City, two important economic partners for the state. This is in addition to other past efforts to offer direct flights to Dublin and other key markets. The state should look for continued ways to cultivate connections, relationships, and expertise in these regions which will play an increasingly important role in the coming years.

• Lean on innovation in goods and service industries to expand exports this decade. Minnesota’s strengths in electronic instruments, medical goods, machinery and equipment, agriculture and natural resources give the state comparative advantages in the global economy and help drive the $22.2 billion of Minnesota goods exported in 2019. But while harder to track, Minnesota service exports also offer a sizable and fast growing segment of the state’s global trade activities. The Department of Employment and Economic Development (DEED) estimated that Minnesota service exports were valued at $14 billion for 2019, and the Coalition of Service Industries estimates that the state’s service exports grew over 63% from 2008-2018. Such service exports include professional and business services, transportation and travel services, intellectual property (i.e. licensing/fees, etc), financial services and more. As software and digital technologies grow in Minnesota, export opportunities are poised to accelerate as well and with it the need for technical and financial assistance to help Minnesota firms navigate the legal and regulatory components of digital trade. Additionally, aging populations across developed countries have led to rising global demand for health care and wellness services. Some of Minnesota’s major trading partners like Germany, Japan, and South Korea are projected to have among the highest population shares over 65 by 2050. For instance, over 36% of Japan’s population will be over 65 years old by 2050, compared to only 12.7% in India. This means that Minnesota’s medical innovation sector has an opportunity to lead in the export of knowledge and services -- not just goods – to the world’s aging populations in the future. The state is already an exporter of health care services and may be especially well positioned to capture global market share in the next decade. More research should be conducted to examine how Minnesota can leverage this emerging opportunity.

• Business retention is a first priority. Business retention strategies are a fundamental way to collect on-the-ground insights and respond to the needs, concerns, or growth opportunities of existing businesses in a region. Program’s such as the Minnesota Chamber of Commerce’s Grow Minnesota! program can be utilized to support and grow key industry clusters.

• Use industry strengths to spur entrepreneurship and attract business investment. Regional stakeholders can also leverage industry strengths to spur entrepreneurship and attract new investment. Recent examples of this include accelerator programs like Techstars Farm-to-Fork and OnRamp Insurance Accelerator that use existing Fortune 500 companies to provide resources, connections and training to high growth-potential startups. This approach could be replicated across the state, using leading firms in regional economies to support and partner with startups in related fields. This also includes encouraging spin-off ventures that may come directly out of existing companies. Alternatively, regions may build on existing industry clusters to attract investment and talent from outside the region. Initiatives like Green Seam in Southern Minnesota are prime examples of such an approach. Green Seam builds strategies to promote the region’s national competitiveness in advanced food and ag activities and attract business investment to the region.

• Help legacy industries innovate through tech-transfer and adjacent industry opportunities. Fast changing market trends require continual innovation and adaptation. Minnesota has long benefited from tech-transfer activities that leverage research institutions to find new markets and technologies for key industries, such as agriculture, mining, forestry, and so forth. The University of Minnesota and other research entities should continue to seek opportunities for legacy industries to diversify and adapt to changing circumstances.

• Ensure public policies empower rather than discourage development of key industries Public policies can play an important role in enabling or restricting the continued development of important industry clusters. Regulatory concerns over new developments in mining, agriculture, and energy (among others) should be carefully considered as regional economies look to build on existing industry strengths.

• Innovation Support Services. In addition to strategies that target existing industry strengths, regional economies can foster bottom-up economic growth through entrepreneurship and supporting fast-growing businesses. A number of programs and initiatives have emerged over the past 5-10 years to do just this. Just take a sampling of recent initiatives that aim to spur entrepreneurship and innovation in Minnesota’s regional economies: o Launch Minnesota o Entrepreneurs First (E1) Network o Mankato’s Center for Innovation and Entrepreneurship o MN Cup o Twin Cities accelerator programs (e.g. BetaMN, Techstars, etc) o Southern Minnesota Initiative Foundation’s Rural Entrepreneurial Venture (REV) o LaunchPad Bemidji o gBeta St Cloud o Great North Labs Lean Startup School Again, this is just a small segment of recent initiatives to boost startup activity in Minnesota’s economic regions. Minnesota should continue to evaluate these nascent efforts to identify successful models that could be expanded and replicated throughout the state.

• Build on quality of life advantages to attract talent and entrepreneurs. As mentioned earlier, regions with recreational assets, such as Minnesota’s Central Lakes region, have seen positive population growth in recent years. And research from the University of Minnesota has uncovered consistent in-migration of 30-49 year olds to rural communities in the state, suggesting underlying pull factors that can help attract talent and innovators. Further, while the long-term impacts of COVID-19 on migration patterns are still unknown, early signs suggest that Greater Minnesota communities may benefit from trends such as remote and flexible work arrangements that allow individuals from larger urban areas to work from locations that offer greater affordability or other lifestyle advantages. It is still too early to tell how these trends may play out, but regional economies can start building strategies now to capture such potential opportunities.

• Address barriers to technology-fueled innovation through smart investments in infrastructure, talent, and regulatory changes. As stated earlier, transformative technologies are poised to ripple throughout the health care sector this decade, providing opportunities for value-creation, improved health outcomes, and cost efficiencies. However, these innovations can be unlocked only to the extent that regulatory environments, infrastructure, and workforce capabilities allow. Minnesota has strengths to build on but is lagging in other important areas. Attention to these issues may further Minnesota’s ability to carve out distinct competitive advantages against peers in the U.S. and around the world. o Regulatory barriers to virtual care and interoperability : Minnesota has long prided itself on developing innovative care models and rigorous data privacy rules . However, there are some important areas in which Minnesota finds itself an outlier with respect to its health care regulatory framework. For example, Minnesota is currently one of only 7 states that mandates parity in payment for telehealth services with those provided in-person, regardless of the differences in costs or outcomes associated with the respective care settings. This requirement was passed in 2015 to ensure the growth and development of a robust menu of telehealth services in Minnesota, part of nation-leading legislation at the time that put Minnesota at the forefront of telehealth law and regulation. But the explosion of telehealth during the COVID-19 pandemic has fundamentally changed its role in our health care system and may warrant a fresh look at Minnesota’s laws. Thoughtful, flexible, and forward-looking policies will balance the expectations of providers, payers, and patients while leveraging the many benefits of telehealth to increase access to care, address health care disparities and inequity, improve quality and outcomes, and lower costs. The absence of such policies could act as a barrier to expansion of telehealth in the state, potentially inhibiting both the economic benefits and access to services that a more robust deployment of virtual care would enable. Additionally, Minnesota’s past innovations in data privacy has cut both ways. On the one hand, Minnesota has developed rigorous rules to protect patient confidentiality through state level regulations. Minnesota’s Health Records Act -- which was created prior to national HIPAA laws – now leaves the state with overlapping and redundant rules that actually work against efforts to better coordinate patient care, improve outcomes, and lower costs. Similarly, Minnesota places unnecessary restrictions on the use of its All Payer Claims Database, significantly limiting its usefulness as a tool to leverage de-identified heath insurance claims data to lower health care costs and improving the quality of care. As a result, a state report card from the University of California Hastings College of Law that assesses each state’s progress on price transparency efforts gave Minnesota an unimpressive grade of a C in 2020, improving from an F in 2017. While a full analysis of these issues is beyond the scope of this report, Minnesota should address such barriers to innovation by modernizing its rules in these and other critical areas. o Workforce training: As new technologies accelerate in health care, the skillsets of Minnesota’s medical workforce will be required to evolve as well. This includes equipping doctors, nurses and other practitioners with skills to leverage these technologies effectively. But it also includes meeting the rising demand for tech talent (software developers, data scientists and analysts, systems analysts, and so forth) across delivery, insurance, and medical goods and services industries. The recent announcement of Google’s first Minnesota facility in Rochester is emblematic of this growing fusion between technology and medicine. Minnesota’s ability to foster continued investment from health care leaders will be dependent in no small part on its ability to cultivate the tech talent needed expand such activities in the coming years. o High-speed broadband: Minnesota will also require broad and reliable digital connectivity across the state to advance access to care and support health care activities. Broad access to high speed internet is not just an economic imperative but also a public health imperative, especially for rural areas with fewer care providers in their communities. Minnesota should take steps to fast track its goals to provide border-to-border connectivity.

• Acknowledge the economic importance of Minnesota’s health care cluster to reinforce and advance Minnesota as a center of global health care innovation. Minnesota's health care cluster is tremendously important to the state’s economy. But often even Minnesotans don’t recognize Minnesota’s health care sector as the global innovation leader and economic growth engine it really is. Acknowledging the economic importance of Minnesota’s health care cluster is important to reinforcing and stewarding it economically. Not only is Minnesota home to leading health care companies such as UnitedHealth Group, Mayo Clinic, and Medtronic – alongside many others in the core delivery, insurance, device, supplies, and bio/pharma industries – but the state also has notable assets in emerging areas such as retail health, wearables and wellness. Not to mention the complementing wellness components of the food sector which have overlapping talent and infrastructure needs. Fostering collaboration and cross-industry partnerships could help Minnesota better compete against Silicon Valley and other high-tech hubs around the world in growing our health care sector in the years to come. Several initiatives are already underway to promote Minnesota as a global hub of health care innovation, including Medical Alley Association’s national branding campaign to attract talent, investment and profile and its Healthcare Transformation Initiative, the newly created Global Wellness Consortium, the Health Village development in Maple Grove, and of course Rochester’s Destination Medical Center which will invest $5.6 billion over 20 years. All are foundational elements intended to build on the success of Minnesota’s health care cluster that also have the potential to bring in additional communities and stakeholders along the way. Part of Minnesota’s efforts to reinforce and steward its health care cluster should aim to help Greater Minnesota communities diversify their medical portfolios, including supporting startup and expansion activities for healthcare-related companies outside of the delivery sector.

• Retain investments from existing medical companies. The economic powerhouses within Minnesota’s health care cluster continue to grow and expand. But too often that growth is not happening in Minnesota. There are several reasons. In some instances, that employment growth in Minnesota may be limited by access to talent. The state’s tax and regulatory climate may play a role. Or individual companies may be consciously diversifying geographically for strategic reasons of their own. Whatever the reason, Minnesota is demonstrably losing a portion of that potential employment growth to other states and nations. Despite Minnesota’s many strengths, the state needs to improve its ability to retain a greater portion of that growth and investment by the state’s existing healthcare industry leaders. The state’s challenges in this area are not limited to healthcare. A shortage of available workers in key areas of need, such as software development – as well as business climate concerns - contribute to companies in many industries and sectors adding headcount and capital investment in places like Texas and Colorado, rather than Minnesota. Remote work arrangements could heighten the challenge if top talent chooses to live in warmer, lower-cost states while working for a Minnesota employer. This is particularly important as Minnesota has traditionally benefitted from spin-off ventures emerging out existing companies, such as Optum or Bright Health. Minnesota should consider how it can better retain top talent and increase the likelihood that healthcare spin-offs and job creation is happening here, not elsewhere.

• Foster and Support high-growth medical startups. One of Minnesota’s greatest success stories is the history of its many startup companies that have created entire industries. Medtronic was once a startup. United Healthcare was once a startup. 3M was once a startup. Mayo Clinic was once a startup. Startup creation has been one of the great threads of Minnesota’s economic history. Some of that success was the result of geography. But much of it was the result of individual ingenuity, hard work and good fortune. Despite Minnesota’s many strengths, the state does not have strong mechanisms to support and foster potential new high-growth medical startups, and needs to improve its ability to spur new startup growth and retain investments made by the state’s existing industry leaders. A number of recent programs have been developed to better attract and support high-growth potential startups, including startups in the medical sector such as gBETA Medtech. While these early efforts are promising, businesses and public leadership should seek to build on these efforts, devoting particular attention to medical-related startups.

• Address workforce availability through local/regional partnerships, regulatory reform, and talent attraction/retention strategies. Minnesota will need more workers across health care and med-tech fields this decade. This includes workers in health care delivery – nurses, physicians, support staff, etc. – as well as individuals with health care knowledge working in related fields. For example, software developers with basic knowledge of the health care industry will be valuable in Minnesota’s insurance and medical technologies industries. Other industries -- such as long-term care and home health care – have already faced significant challenges finding and retaining workers, with this challenge poised to only intensify over the next decade. While no one solution can solve this challenge, targeted industry programs can help. Health care providers are already investing in workforce initiatives to help build a pipeline of skilled and diverse talent for the industry. For example, Mayo Clinic is investing in attracting young and diverse talent into gateway healthcare careers. This program not only seeks to attract and train talent for existing jobs such as nursing assistant and medical assistant, but also to foster career paths through which graduates gain valuable work experience that can help them decide to further their training and education to advance to higher-level positions and certifications. This is one example of many already operating across the state, but more attention will be needed to attract and train the health care workers necessary to grow Minnesota’s health care cluster through 2030.

• Understand the trends in technology jobs and industries with recommendations for the education and workforce development sectors. Minnesota has strengths and weaknesses in its tech sector. But the negative forecasts for future growth from IHS and CompTIA must be addressed. The positive DEED projection for job growth is the other lever. The conundrum is clear. Technology skills are and will continue to be in high demand, but projections suggest that Minnesota’s future growth will be constrained by an inadequate supply of highly skilled tech talent. This would limit Minnesota’s future economic growth. Further research should be conducted to make clear: a.) where Minnesota actually stands relative to tech and tech talent, and b.) what we need to do to improve and grow the supply of high-skilled tech talent to drive Minnesota’s future growth. Minnesota has strengths in multiple sectors across a range of tech activities. The key is to ensure Minnesota remains positioned to capture growth in the areas fusing new technologies into traditional industries, while better growing the tech subsectors in which Minnesota ranks low – before Minnesota falls even further toward the bottom of the pack. Leading employers have shared that they already struggle to find enough tech talent in the state, often looking and hiring elsewhere to meet these growing demands. Our paradox of strengths and weaknesses warrants further investigation and a detailed plan outlining how Minnesota will remove the barriers that seem to stand in the way of achieving our full high-tech future.

• Leverage existing industry strengths to lead in areas like Internet-of-Things (IoT), fin-tech, digital health, ed-tech, automation, cybersecurity and data analytics. Minnesota possesses key strengths in advanced fields such as: corporate headquarters, financial services, health care and medical technology, machinery manufacturing, just to name a few. Each of these industries are undergoing transformations in what they produce and how they operate. Whether through digital transformation, data analytics, artificial intelligence, machine learning, internet-of-things, 3D printing, cybersecurity, blockchain or automation – firms in these industries will be on the forefront of technology changes over the next decade. This means that Minnesota does not have to try building a new industry – its existing industry clusters and innovative businesses will be the ones that can drive tech growth in the coming years. Further, Minnesota’s deep knowledge in specialized industries make Minnesota a prime location for startups and existing firms creating technology solutions for these industries. As exhibit 1 shows, Minnesota already has traction in areas like ed-tech, fin-tech, digital health, cybersecurity and more. Venture capital and startup resources are on the rise, and these digital transformations are largely to credit.

• Adapt and transform technology education and workforce training to better prepare Minnesotans for a technology-driven future. As explored further in the Workforce and Productivity section, Minnesota needs to rethink how it gives people the skills to succeed in a changing economy. New technologies are creating disruptions across our economy and changing the type of tasks performed in the workplace. The implications of this are broad and will require the state think creatively about what types of actors are best-suited to deliver certain kinds of training and education. This includes aligning K-12 and higher ed offerings to evolving demand in the economy. But it also includes the wide array of actors that are involved in delivering targeted training to job seekers or existing workers, whether through earn-and-learn programs, certificate “boot camp” training programs, and other on-the-job training programs.

• Build on recent programs to accelerate high tech startups. As noted above, Minnesota has experienced recent traction in new startup activities and funding in recent years. This includes new initiatives and programs such as Forge North, Hill Capital, Great North Labs, Techstars Farm to Fork, Lunar Startups, gener8tor, OnRamp Insurance Accelerator, gBETA Medtech, alongside many others. Startup support services have also branched out widely, including efforts to foster high tech startup activity in Greater Minnesota regions, such as the state’s Launch Minnesota program, the gBETA St Cloud accelerator, the Center for Innovation and Entrepreneurship in Mankato, and the Mayo Clinic Business Accelerator Program in Rochester. A full list of programs, funds, and initiatives is too long to list here, but many of these have been created in just the past five to ten years and are gaining momentum. This gives Minnesota a buildable base of support services needed to foster the high tech businesses of the next decade. Maintaining this momentum amidst the challenges brought by COVID-19 and the resulting economic downturn will be imperative, particularly given the uptick in new business filings seen since the middle of 2020. A next step would be to evaluate what resources are needed to help successful startups scale and expand in Minnesota, once they make it past their initial stages. Adapt and transform technology education and workforce training to better prepare Minnesotans for the technology-driven future economy.

• Improve net domestic migration. As noted earlier, Minnesota’s 15-year domestic migration slump is the result of a combination of factors: 1.) accelerated losses to the sunbelt 2.) slower in-migration from Midwestern neighbors, due especially to net losses along Minnesota’s border 3.) out-migration of young people in the 18-24 age bracket. At the same time, Minnesota possesses strengths relative to domestic migration that could potentially be leveraged. First, Minnesota has gained more people than it has lost in the age cohort of 25-34. This suggests that the state has advantages for people looking to start or grow their career here. . These advantages seem to benefit rural communities throughout Greater Minnesota as well, pointing to a “brain gain” rather than “brain drain” phenomenon for adults in their 30’s and 40’s. Second, while Minnesota has had overall net losses in domestic migration, the state does considerably better when narrowing the sample to high-skilled individuals. Third, after 15 consecutive years of negative net domestic migration, Minnesota experienced back-to-back net domestic migration gains in 2018 and 2019. It is not clear whether this is the start of a new trend or a blip in the radar, but it does point to an emerging opportunity for the 2020’s to be a potential decade of attracting and retaining more people to Minnesota. Of course, it is too early to tell how COVID-19 will impact state-to-state migration patterns, but it is an important factor to track going forward. A positive net migration strategy should thus include further investigation into the underlying causes of both Minnesota’s strengths and weaknesses relative to domestic migration, and development of an action plan to address these causal factors.

• Embrace and maintain robust immigration levels. The second component to improving overall net migration and labor force growth involves embracing immigration and maintaining Minnesota’s advantages in attracting workers and families from around the world. Through the first two decades of the 21st century, Minnesota relied entirely on international migrants to keep from falling in the red for overall net migration. While Minnesota has little influence on the “push” factors that drive international migration, the state can strengthen the “pull” factors that help international movers choose Minnesota as their new home to raise a family, get an education, find meaningful work, or start a business. The state has long benefited from a network of resettlement agencies, philanthropic entities, educational institutions, business organizations that have supported immigrants as they start their new lives in Minnesota.

• Increase labor force participation among older adults and underrepresented groups. For years, Minnesota compensated for its low population and labor force growth with exceptionally high labor force participation rates. Minnesota routinely ranks among the top five states for the share of its population 16 and over working or actively looking for work. In 2019, Minnesota’s labor force participation rate was 70.1%, ranking 2nd highest in the U.S. However, our high labor force participation rates are projected to decline over the next decade. This is driven primarily by Minnesota’s aging demographics, leaving a smaller share of adults in prime working age years. The state’s significant racial and ethnic disparities also tend to produce lower labor force participation and higher unemployment rates among people of color. Additionally, Minnesota’s regional economies – particularly in more rural areas -- face barriers to growing workforce participation due to insufficient housing, broadband, childcare, and transportation. On top of all this, the COVID-19 pandemic itself produced substantial drops in the state’s labor force participation rate, with Minnesota’s rate falling to 67.9 percent in November 2020. It is not entirely clear why Minnesota dropped as much as it did or whether this drop will endure post-pandemic. But it represents a significant threat. If Minnesota’s labor force participation rate were to permanently shift lower, the other factors slowing labor force growth in Minnesota would only be exacerbated – with significant impact on Minnesota’s economy.

• Target training to under-equipped populations. First, Minnesota must meet the economic imperative this decade of ensuring that all Minnesotans receive the basic education and training needed to sustain meaningful employment. While the state ranks high in the share of adults with at least a 2-year degree, too many individuals continue to fall through the cracks and are left unprepared for the workplace. This includes not just those without a high school diploma, but potentially the roughly one-fifth of Minnesotans over 25 with some college but no degree. Adequately targeting resources and career-specific training to these individuals is critical to reaching Minnesota’s fullest economic potential and simultaneously improving economic outcomes for all Minnesotans, ensuring businesses have the talent they need to thrive.

• Invest in skills, not just degrees, through upskilling and alignment strategies Minnesota need to think broadly about how individuals are trained for meaningful careers and who provides such training. Employers increasingly prioritize high-demand skillsets over educational credentials alone. Many well-paying jobs require only a 2-year degree or less, and many heavily utilize on-the-job training programs and other earn-and-learn programs. Even certain high wage jobs such as software and web developers offer opportunities to those who develop skillsets outside of traditional avenues. The Minnesota Chamber Foundation’s Center for Workforce Solutions recognizes this need to better prepare young people and working adults for the skillsets and jobs in greatest demand in their communities. The Foundation’s Business Education Networks foster collaboration between key community stakeholders (e.g. schools, students, parents, local businesses, local chambers, etc.) to ensure that curricula and training is aligned with the jobs being created in their communities. This is only one of many programs and initiatives to respond this challenge. However, the state’s ability to execute well on such strategies will be critical to positioning the state for long term growth.

• Prepare for an increasingly high-tech workforce: Minnesota must also rise to the challenge of equipping Minnesota’s existing and future workers to adapt to rapid technological changes. This includes assessing the capacity of higher education and workforce development institutions to train a greater number of core technical workers, as well as training individuals across all fields in key areas such as STEM, basic digital skills, advanced mechanical skills, etc. Technologies like AI, robotics, predictive analytics, and others will become more embedded in the day-to-day tasks of workers. This brings opportunity but also risks to Minnesota’s economy. Automation will displace workers in certain occupations all across the occupational and skill spectrum. Other states or countries could gain competitive advantage by building workforce systems that are more responsive to the demands of a digital economy. The disruptions of COVID-19 only increase the urgency of developing a statewide response to these imperatives.

• Child care. Minnesota’s childcare crises has been growing in intensity over the last decade. In a recent survey, 62 percent of employers ranked affordable child care as a barrier to finding workers. Early care and education program accessibility and affordability are dual education and workforce issues. Working parents need a safe, reliable place of learning and care for their children, enabling one or both parents to participate in the current workforce. The children, who will eventually become our workforce, need quality early-learning opportunities, especially pre-K. The ability of Minnesota employers to attract workers is clearly being hindered by the growing statewide shortage of early childcare and education opportunities. This shortage is already impeding economic growth in many communities across the state, and it will only continue to if this issue not addressed. Both supply and demand solutions are necessary – short-term and long-term. Short-term solutions could include additional funding and support of childcare providers, higher reimbursement rates, and greater investment in early learning scholarships. Incentives for employers may be another way to support quick and innovative ways for employers to help address childcare issues within their company or their community. The traditional childcare model seems broken, and it’s not clear band-aid solutions are going to hold it together. Longer-term analysis is therefore also required to address seeming deficiencies in the private-sector child care business model, as well as the intersection of public programs and childcare funding. Developing innovative solutions to the crisis of childcare affordability and accessibility would provide Minnesota an incredible advantage in attracting and retaining workers across the state.

• Housing. One of Minnesota’s key assets is affordability, especially compared to the east and west coasts. Housing cost is a critical piece of affordability – and numerous reports, including the 2018 Minnesota Governor’s Task Force on Housing demonstrate that Minnesota’s housing market is not producing enough affordable housing for entry-level homeowners. According to the Task Force, Minnesota needs to enable the private sector to build 300,000 new homes over the next decade to stabilize prices in the market and keep up with demand. A 2019 report by the Housing Affordability Institute, Priced Out: The True Cost of Minnesota’s Broken Housing Market, also found troubling results: New homes in Minnesota now cost more than comparable homes in all other Midwest markets. For example, a comparable home in Hudson, Wisconsin, now costs $47,000 less than the same home in the eastern Twin Cities. The Twin Cities has one of the highest gaps between new and existing home prices in the nation. The disparity in homeownership rates between white and non-white Minnesotans is the highest in the nation. Up to one-third of a new home’s price in the Twin Cities is due to regulations and policies imposed at the local, regional and state level. New strategies and new partnerships are needed in addressing Minnesota’s housing market. Fortunately, work has already been started with multiple examples around the state of policymakers, non-profits, local communities, employers and builders coming together to spur new housing in their communities and help preserve the housing stock. Much more needs to be done, however, to reduce the cost of building and to spur construction of more affordable housing. It is not just one factor pushing up the high cost of new housing. It is a multitude of factors. Policymakers at the state, regional and local level should undertake a rigorous cost/benefit analysis to assess and streamline the many regulations impacting housing costs, including permitting, zoning, and construction codes. In addition, policies to encourage and facilitate innovation in the housing market, enabling less expensive construction in building build and creating additional consumer choice - while still ensuring safety – should be pursued.

• Connectivity. High-speed internet connectivity - like all other technologies - is developing quickly in ways that may prove to be more cost effective to deliver to underserved or rural areas. As access increases further into previously unserved and underserved areas, however, the “last mile” cost per connection will likely increase. Minnesota could take the lead on innovative solutions. To accomplish this, greater exploration of wireless solutions and satellite technologies should help determine whether these methods of connectivity can meet reliability and speed needs. Fixed wireless projects are also underway with a mix of local and federal funding. Further incentives by local governments, business partners and nonprofits may be necessary to test deployment in different conditions around the state. Rapid analysis of the total cost, broadband speeds, service reliability, and subscription rates should also follow within 12 months of deployment. If shown to be as effective and reliable as traditional wired broadband at the same or lower cost per connection, the state grant program should be modified to allow for embracing these wireless solutions. The need for digital connectivity is only growing. It will be even more important to our healthy growing economy in the coming decade.

• Private sector investments to make inclusion a strength. Fortunately, there are successful models in effect, with companies already making significant investments in new efforts. At the time of this report, dozens of companies and organizations have already launched significant initiatives to accelerate change and invest in Minnesota’s diverse talent pool. Minnesota should treat these various initiatives as laboratories of social and economic innovation – testing, replicating, and scaling successful programs wherever they may occur. Minnesota can promote what is working as recruiting tools for diverse talent from around the globe.