A recent report shows the state’s small business growth suffers from an average economy.
You Might Not Want to Know Minnesota’s Ranking in New Business Formation
It’s not all sunshine and rainbows
in the North Star State.
Despite a recovery from the economic
downturn, a recent report from the Center of the American Experiment
shows that Minnesota’s economy has had only “average at best” growth over the
last 15 years. Former Department of Commerce Chief Economist Joseph Kennedy
released the report.
“Many Minnesotans believe that their
state’s economy performs well above the norm, and therefore vindicates the
‘blue state’ policies that, for the most part, have prevailed in Minnesota for
a number of years,” he wrote. “Unfortunately, a systematic review of
the facts does not bear this assumption out. On the contrary, the data show
that Minnesota’s economy has been average, at best, over the past 15 years.”
Minnesota has ranked 30 in income
growth and 28 in job creation since 2000, with the metro area ranking 9 out of
the 15 major urban areas in economic output growth and 8 in job creation. This
matches with Kennedy’s report that Minnesota’s job growth “has centered on less
productive jobs,” and fewer new jobs are being created due to a stagnating
investment scenario.
“Economists generally recognize that
most jobs are created by new businesses,” the report states. “Moreover, the
small new businesses of today are, in some cases, the large, established
businesses of tomorrow. Therefore, it is a dangerous warning signal if a state
falls behind in new business formation.”
According to the report, the Pacific
Research Institute ranks Minnesota’s regulation of small business 32, where 1
is the lightest regulatory burden and 50 the heaviest. The Thumbtack Small
Business Friendliness Survey gives Minnesota’s overall small business
friendliness a C grade and ranks the state 24 of the 35 states surveyed. On overall
regulations, the survey graded Minnesota a D+, ranking 29 of 35. Therefore,
Minnesota’s heavy regulatory burden on small business coincides with a
below-average rate of new business formation.
