This year’s Conexus Manufacturing and Logistics report graded each state on how successful its manufacturing and logistics industries are based on economic measures, like industry health, human capital, worker benefit costs, tax climate, and several others. With the manufacturing industry making up 9.9 percent of the state economy, Minnesota fared decently well. Minnesota scored high in human capital and worker benefit costs, but its shortcoming was in the state’s tax climate.
Because labor is the largest cost of business operations and linked to productivity and innovation, Minnesota’s human capital grade of an “A” has a ripple effect across multiple economic measures. It also indicates that the state’s schooling and technical programs are well suited to meet the industry’s hiring demands. Minnesota also received an “A” in worker benefit costs, which means that local and state public policies are making it easier for businesses to manage non-wage labor costs.
Unfortunately, Minnesota’s tax rates are severely impairing the ability for manufacturing firms to operate successfully within the state. The study gave Minnesota an “F” in tax climate, the same grade as last year. In order for Minnesota to improve manufacturing business’ capabilities, rates for business taxes, individual income taxes, sales, unemployment, insurance and/or property taxes must be cut.
Compared to 2016, the one area where Minnesota improved this year was in manufacturing industry health, which received a “B-” as opposed to last year’s “C+.” Minnesota’s improved industry health will be noticeable in the greater U.S. economy. To see how Minnesota compared to other states, access the national report card here.