2024 Business Benchmarks report
Scaling economic peaks: A summit of growth and challenges
Minnesota is an exceptional state. A highly educated workforce and abundant natural resources power a diverse and robust economy. But it’s important to understand the factors that define our economic competitiveness with other states. National rankings get a lot of attention but can mislead and oversimplify our economic position. When policymakers and others rely on these flawed economic analyses, it masks our actual economic position.
Each year, our Business Benchmarks report assembles data points into categories that make sense for business – taxes, costs, infrastructure, innovation, employment and growth. Measurements within each of these categories illustrate a clearer picture of their impact on businesses and how business leaders make decisions with ramifications on our state as a whole.
This year’s report highlights and detangles some apparent contradictions in our rankings:
- Minnesota is the 5th best state to live in the U.S., yet we rank 42nd in net domestic migration, with more people leaving the state than moving here.
- Minnesota is among the most innovative states in the nation, producing the 6th most patents per capita. But we rank 45th in net tech job growth and are forecasted to be among the slowest-growing tech sectors over the next decade.
- Minnesota has among the highest labor force participation rates in the country. However, our workforce is smaller today than it was heading into the decade.
- Minnesota has a highly skilled and educated workforce, but third and eighth-grade reading and math test scores have fallen sharply in recent years.
It can be hard to make sense of these seemingly contradictory points at a detailed level. But take a step back, and the theme becomes clear: Minnesota’s economy is rich with high-quality strengths, yet those strengths are not translating into meaningful economic growth.
An aging population means more workers are leaving the workforce than entering it. Growth in the labor force is expected to be essentially flat in the coming decades. To grow our economy and raise the standard of living for all Minnesotans, we must fuel productivity growth through innovations, business investments and by boosting human capital (i.e., skills and training) across all segments of our workforce. We must also find ways to beat labor force projections. Sustained efforts to retain and attract talent domestically and leverage our immigration advantage to attract talent across the globe could greatly improve Minnesota’s demographic challenges.
Minnesota had the 17th largest economy in 2015. But by 2022, the state slid to 20th largest and was surpassed by faster-growing states like Tennessee, Arizona and Indiana. In 2004, Minnesota’s per capita income was 109% of U.S. per capita levels. By 2022, Minnesota’s income advantage declined to just 105% of U.S. levels.
Failing to address these imperatives will not likely erode Minnesota’s high-quality economy overnight. Indeed, the state still has above-average per capita incomes, productivity levels and a diverse base of leading companies. But the cost of slow growth over time should not be ignored.
We encourage you to read this report and understand what it could mean for your company. We encourage lawmakers to read this report and talk with businesses in your district. We hope this provides a greater understanding of the real elements of our business climate that impact business decisions and
quality of life in Minnesota.
Doug Loon
President and CEO
Minnesota Chamber of Commerce
Questions about the 2024 Business Benchmarks report?
We'd love to hear from you! If you have questions on this year's Business Benchmarks or would like to get involved on the topics listed above, please contact us or reach out to one of our expert staff.