Study finds Minnesota’s economy ‘average’ – with a dim future

While Minnesotans like to believe we’re above average, a new study shows the state’s economy has been average, at best, over the last 15 years, and leading indicators are pointing downward for the future.

Those are among the findings in a comprehensive report released Monday by the Center of the American Experiment, a Minneapolis-based conservative think tank. The study was conducted by Joe Kennedy, a St. Paul native and former chief economist for the U.S. Commerce Department.

Minnesota has many economic strengths, including a highly educated workforce, good health, intact families, a strong work ethic and low crime rate, Kennedy said at a Capitol news conference.

But while the state’s economic growth historically has been slightly faster than the national rate, it has been “just average” since 2000 while productivity per worker is below average, he said.

Although Minnesotans’ per capita income is higher than the national average, most other states have done better than Minnesota in both income growth and job growth in recent years, the study found.

The Twin Cities rank average or below average among the 15 largest U.S. urban areas in economic growth and job creation, the report said.

Kennedy cited several danger signs that he said pointed to a weaker future unless state leaders change policies. They include:

• Minnesota’s job growth has centered on less productive jobs. In some high-income occupations, such as mining, information technology and utilities, the number of jobs has stagnated or fallen. The fastest-growing occupations in health care and education services have a relatively low impact on economic growth.
• The state’s high-technology employment is declining.
• Entrepreneurial activity in Minnesota also is dropping.
• Thousands of high-income families are leaving the state, while few wealthy residents of other states are choosing Minnesota.

Kennedy noted that agencies in DFL Gov. Mark Dayton’s administration also predict below-average economic performance.
Minnesota Management and Budget projects growth in personal income and jobs to be lower than the national average for the next four years, and the state Department of Employment and Economic Development forecast that from 2014 to 2024 Minnesota will under-perform the nation in job creation in 19 of 22 major job categories.

The report asserted Minnesota’s “blue-state policies,” including high taxes and regulatory burdens on businesses, are “suspects” in the state’s mediocre economic performance.

In response, the liberal  North Star Policy Institute  issued a statement noting that conservative and Republican governors and their “red-state policies” have dominated state government for most of the past 15 years.

“It’s simply unbelievable to blame ‘blue-state policies’ for red-state outcomes,” said North Star Executive Director Stephanie Fenner.

Center of the American Experiment President John Hinderaker said the think tank commissioned the study to spur a public policy debate about how Minnesota’s economy is doing.

“Are we doing as well in Minnesota as we think we should?” he asked. “I think the answer to that question is pretty obviously, ‘No, we are not.’”

The next question, he said, is “What are we going to do about it?” He hopes Minnesotans will propose policy changes.