MINNESOTA

2018
Business
Benchmarks
Sizing up Minnesotas
business and economic climate

M I NNE S OTA M I NNE S OTA MI N N E S OTA

C HAM BE R of C HAM BE R of CH A M B E R of
COMMERCE COMMERCE M
CO I NMNM E SOTA
ERCE
G R O W M I N N E S O TA ! PRO JOBS MAJORITY CH
H I RA
I N GMM BE RO Eof
N HER S

COMMERCE

M I NNE S OTA M I NNE S OTA MI N N E S OTA

C HAM BE R of C HAM BE R of CH A M B E R of
COMMERCE COMMERCE COMMERCE
WASTE WISE FOUNDATION L E A D E R S H I P F U N D PA C F E D E R AT I O N

M I NNE S OTA M I NNE S OTA MI N N E S OTA

17101226.indd 1 C HAM BE R of C HAM BE R of CH A M B E R of 10/27/17 4:04 PM

COMMERCE COMMERCE COMMERCE

 November 16, 2017

Executive Summary
For generations, Minnesotas economy has been fueled by innovation, a highly educated
workforce and forward-thinking leadership. Extending this legacy requires preventive
maintenance borne from awareness and informed conversation.
Its tough to evaluate Minnesotas economy by following the states disparate performance in
national business rankings. How can we be CNBCs third best state for business, yet 47th in the
Small Business Policy Index?
This makes the clarity of the Minnesota Chamber of Commerces third annual Minnesota
Business Benchmarks report especially timely and valuable. By aggregating objective data
measuring Minnesotas economic health and competitiveness against other states, we can
build on our many strengths and mitigate notable threats.
Minnesota has the tools in place (e.g. talented workers, infrastructure) to lead the nation in
economic growth. Yet we lag in many indicators, partly because of self-imposed headwinds
(e.g. taxes, overall cost of business). Some key findings are:
Minnesota continues to shine in innovation. This success should be used as a springboard
to close the gap with other states on entrepreneurship and start-up activity.
Our workforce continues to be one of Minnesotas greatest assets. Working to close
the achievement gap and keeping an open door to incoming talent will continue to fuel
economic growth.
Minnesotas tax environment threatens our other competitive advantages. Working to lower
rates and simplify the tax structure will make other elements of our business climate even
more inviting to grow jobs and our economy for the long term.
Minnesotas affordable cost of living helps recruit and retain talent. Reining in other everyday
business costs will help employers maintain a healthy bottom line and compete into the future.
The Business Benchmarks report is a tool to spark meaningful conversations among
elected officials, the business community and especially 2018 gubernatorial candidates on
recalibrating Minnesotas economy policy to propel our economy forward and sustain our
cherished quality of life.
Being on the front lines of Minnesota businesses with our membership makes me exceedingly
confident that we will reach this goal. If we lead from ahead, we will remain there. It is up to us.

Doug Loon
President, Minnesota Chamber of Commerce

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 Table of Contents

Economic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Innovation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Workforce/Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Business Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Cost of Doing Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Federation Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Contacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

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 Economic

Job growth in Minnesota is currently above the national average, ranking 20th in the nation. This is
encouraging, but several economic trends must change to ensure long-term economic prosperity.

For the second straight year, the state lagged the national average in GDP growth, partly due to declining
exports, which have been negative for the past two years. And although job growth has increased,
Minnesota lags the national average in personal income growth.

Minnesota has the tools in place (e.g. talented workers, infrastructure) to lead the nation in economic
growth. Yet we lag in many important indicators partly due to self-imposed headwinds (e.g. taxes, overall
cost of business). Minnesota can best position for a prosperous future by improving our business climate
to encourage private-sector growth, investment and innovation by building on our strengths and reducing
uncompetitive costs.

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 The Minnesota Chamber is focused on Minnesotas future by providing
all companies the tools to realize their plans. Helping companies

adapt and grow in a changing economy is key to making Minnesota
ready for the future.

Doug Loon
Minnesota Chamber President

MINNESOTA RANKING: 1ST IS BEST

2016 BETTER
GROWTH IN
STATE GDP
Ranked 24th
1.3% growth
National Average: 1.5%
9
SPOTS
FROM 2015

2016
Ranked 29th SAME
ANNUAL EXPORTS -4.1% RANKING
National Average: -3.3% FROM 2015

2017
BETTER
ANNUAL
JOB GROWTH
Ranked 20th
1.7%
National Average: 1.45%
10SPOTS
FROM 2016

2016
WORSE
PERSONAL
INCOME GROWTH
Ranked 32nd
3.0% growth
National Average: 3.6%
3
SPOTS
FROM 2015

2016
WORSE
OUTPUT PER
WORKING ADULT
Ranked 13th
$83,672
National Average: $78,304
2
SPOTS
FROM 2015

2017 WORSE
UNEMPLOYMENT
RATE
Ranked 15th
3.8%
U.S. Unemployment Rate: 4.4%
2
SPOTS
FROM 2016

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 Innovation

Innovation remains a strength in Minnesota. The state continues to make strides with patents per capita
and increases in venture capital.

The Milken Institutes State Technology and Science Index places Minnesota seventh in the nation in its
overall ranking, largely on the strength of a deep and highly-skilled workforce. Our technology and science
workforce fares particularly well at fourth in the nation.

This success drives innovation across all sectors of Minnesotas diverse economy and should serve as a
springboard to close the gap on other states that have greater success in entrepreneurship and start-up activity.

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 Minnesota is a homegrown economy built on innovation. We are home to
17 Fortune 500 companies and the largest privately held company in the

U.S. Thats a big deal. We need public policies that encourage continued
development and growth of businesses of all sizes.

Todd Paulson
Minnesota Chamber Board Chair
Vice President & CFO, RTP Company, Winona

MINNESOTA RANKING: 1ST IS BEST

TECHNOLOGY 2016
AND SCIENCE Ranked 4th NEW RANKING
WORKFORCE INDEX 88.00

2016 BETTER
VENTURE CAPITAL
PER CAPITA
Ranked 12th
$61.49
National Average: $181.32
3
SPOTS
FROM 2015

BUSINESS
2011-2016
WORSE
FORMATION
AND SURVIVAL
Ranked 10th
52.2%
National Average: 51%
2
SPOTS
FROM 2010-2015

BETTER
5
2017
ENTREPRENEURSHIP
START-UP ACTIVITY Ranked 16th
Out of 25 largest states SPOTS
FROM 2016

2015 BETTER
PATENTS PER CAPITA Ranked 4th
88.39
1
SPOT
FROM 2014

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 Workforce/Education

Our talented workforce continues to be among Minnesotas greatest assets, its growth fueled by international
immigration. From 2010 to 2016, Minnesota ranked sixth in the nation for percentage growth of our immigrant
population. It is noteworthy that, since 2001, among all states, more people have left Minnesota than have
moved here. We must keep an open door to incoming talent both domestic and international that supports
the full range of the states economy while building bridges to the world economy.

And even though our workforce ranks among the top in the nation with high levels of education and labor
participation, on-time high school graduation rates rank 32nd in the nation. For minority populations, this
number is even lower: 53 percent of American Indian students, 65 percent of black students and 65 percent
of Hispanic students graduate on time. This achievement gap remains one of the states biggest challenges.
Much greater urgency must be brought to bear on solutions to help these students achieve academic
success and eventually succeed in work.

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 Hardworking and skilled employees have always been part and parcel to our
Minnesota companys success. Historically, an abundant talent pool was a
given, and thats just not the case anymore. The current labor shortage makes

it harder and harder to find the employees we need to compete with our peers
across the country and around the globe.

Eric Gibson
President, UMC, Inc., Monticello

MINNESOTA RANKING: 1ST IS BEST

2015
TWO-YEAR DEGREE Ranked 2nd
OR HIGHER 50% SAME
RANKING
(AGE 25-64) National Average: 41% FROM 2014

2015 BETTER
8TH-GRADE
READING SCORES
Ranked 6th
270.2 average
National Average: 264
4
SPOTS
FROM 2013

ON-TIME 2015 BETTER

HIGH SCHOOL
GRADUATION RATE
Ranked 32nd
82%
National Average: 83%
1
SPOT
FROM 2014

LABOR
2017 BETTER
PARTICIPATION
RATE
Ranked 3rd
70.1%
National Average: 62.9%
3
SPOTS
FROM 2016

BETTER
3
2010-2016
NET DOMESTIC Ranked 34th
MIGRATION 38,178 net loss SPOTS
FROM 2005-2009

GROWTH IN 2010-2016
INTERNATIONAL Ranked 6th NEW RANKING
IMMIGRATION 20.8%

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 Business Taxes

Minnesota ranks among the top five in far too many tax categories. Our tax environment threatens our
other competitive advantages and remains the greatest hurdle to long-term economic growth.

Businesses bear a particularly heavy tax burden, whether owners pay corporate tax or report business
income on their personal income tax returns. High state and local taxes $1,000 per capita more than
the national average create an environment less conducive to investment and growth in Minnesota.

Working to lower rates and simplify the tax structure in our state will make other elements of our business
climate even more inviting to grow jobs and our economy for the long term.

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 Minnesotas high tax rates gain even more attention as other
states lower their taxes to be competitive in the marketplace. As

cost pressures build, businesses have all the more incentive to
look elsewhere to expand.

Lisa Paxton
President, Ultra Paws LLC, Baxter

MINNESOTA RANKING:
1ST IS HIGHEST COST

SMALL BUSINESS AND BETTER

ENTREPRENEURSHIP
TAX INDEX
2017
Ranked 4th 1
SPOT
FROM 2016

PASS-THROUGH AND 2017

INDIVIDUAL INCOME Ranked 3rd SAME
TAX RATES 9.85% RANKING
FROM 2016

2017
STATE AND LOCAL Ranked 17th
SALES TAX RATES SAME
7.30% RANKING
FROM 2016

2017
CORPORATE Ranked 3rd
INCOME TAX RATE SAME
9.8% RANKING
FROM 2016

2014
OVERALL STATE Ranked 10th
AND LOCAL TAXES $5,645 SAME
PER CAPITA National Average: $4,680
RANKING
FROM 2013

2017 BETTER
GAS TAX Ranked 27th
28.6 / gallon
National Average: 31.58/gallon
2
SPOTS
FROM 2016

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 Cost of Doing Business

Cost of living is a new indicator in our report an important measure for recruiting and retaining talent.
Minnesota ranks 23rd in the nation, which means it is cheaper to live here than in many other states,
especially those on either coast. This is an advantage.

And Minnesota has modestly improved its cost of doing business in some key ways, including making
progress on workers compensation premiums (improved five spots from 2012).

But many business costs are on the rise. The price of electricity has steadily climbed over the last 20 years;
today we rank 17th highest in the nation. Rising health care costs pose challenges to both large and small
employers and their employees. According to federal data, 54 percent of small private-sector employers in
Minnesota provide health benefits for full-time employees. Thats down 10 percent since 2012.

Finding solutions to these rising costs will help companies bottom lines and improve Minnesotas overall
quality of life.

12

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 Many factors, in addition to taxes, affect my companys success. Employers
are being forced to make changes in our health insurance offerings

an increasingly important benefit to attracting and retaining talent, and
ensuring healthy and productive employees.

Molly Jungbauer
CEO, Hollstadt Consulting, Mendota Heights

MINNESOTA RANKING:
1ST IS HIGHEST COST

2017 WORSE
4
ELECTRICITY Ranked 17th
(AVERAGE PRICE FOR 8.11/kWh
INDUSTRIAL CUSTOMERS) National Average: 7.33/kWh SPOTS
FROM 2016

INDIVIDUAL HEALTH
2016 WORSE
INSURANCE PREMIUM
(EMPLOYER SPONSORED)
Ranked 31st
$6,030
National Average: $6,101
12
SPOTS
FROM 2015

WORKERS 2016 BETTER

COMPENSATION
PREMIUMS
Ranked 22nd
1.91 index rate
Above National Average by 4%
2
SPOTS
FROM 2014

UNEMPLOYMENT 2017
SAME
TAX RANKING Ranked 2nd RANKING
FROM 2016

2015
Ranked 23rd
COST OF LIVING 97.4 NEW RANKING
National Average: 100

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 Infrastructure

Minnesotas diverse and dynamic infrastructure has solidified its position as an accessible hub. The ease
with which goods and services can be transferred within the state and to anywhere else in the country and
world gives businesses a logistical advantage. Bipartisan legislation in 2017 spurred continued investment
in our roads and bridges without adding to the overall cost of doing business.

Although Minnesota has improved high-speed Internet access thanks to greater public- and private-sector
investments, we remain squarely in the middle of the pack compared to other states.

Continued commitment to improving transportation and broadband infrastructure will ensure that our
businesses have the connectivity to compete and succeed.

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 Minnesota has a diverse and dynamic transportation network. We

have great access to worldwide commerce. We must keep pace
with investments being made by other states.

Ryan Steen
Site Manager, International Paper, White Bear Lake

MINNESOTA RANKING: 1ST IS BEST

2016
ACCESS TO HIGH- Ranked 24th
SPEED INTERNET 80% SAME
RANKING
National Average: 80% FROM 2015

2017 BETTER
TOTAL SCHEDULED
FLIGHTS
Ranked 9th
177,797 flights 1
SPOT
FROM 2015

2016
TOTAL FREIGHT Ranked 8th
RAIL MILES 4,292 freight SAME
RANKING
rail miles FROM 2012

2015 WORSE
COMMUTE TIMES Ranked 18th
23.1 minutes
National Average: 25.9 minutes
1
SPOT
FROM 2013

BETTER
OVERALL HIGHWAY
PERFORMANCE
2013
Ranked 27th 1
SPOT
FROM 2012

15

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 16

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 2017 Minnesota Chamber Federation Partners
Albert Lea-Freeborn County International Falls Area Chamber of Commerce
Chamber of Commerce
Lakeville Area Chamber of Commerce & CVB
Apple Valley Chamber of Commerce
Litchfield Chamber of Commerce
Austin Area Chamber of Commerce
Marshall Area Chamber of Commerce
Bemidji Area Chamber of Commerce
MetroNorth Chamber of Commerce
Brainerd Lakes Chamber
New Ulm Area Chamber of Commerce
Burnsville Chamber of Commerce
North Hennepin Area Chamber of Commerce
Cloquet Area Chamber of Commerce
Northfield Area Chamber of Commerce
Dakota County Regional Chamber of Commerce
Owatonna Area Chamber of Commerce and Tourism
Duluth Area Chamber of Commerce
River Heights Chamber of Commerce
East Grand Forks/Grand Forks
Rochester Area Chamber of Commerce
Chamber of Commerce
St. Cloud Area Chamber of Commerce
Eden Prairie Chamber of Commerce
Shakopee Area Chamber
Elk River Area Chamber of Commerce
Twin Cities North Chamber of Commerce
Faribault Area Chamber of Commerce & Tourism
TwinWest Chamber of Commerce
Fergus Falls Chamber of Commerce
Waconia Chamber of Commerce
Grand Rapids Area Chamber
Waseca Area Chamber of Commerce
Greater Mankato Growth Inc.
White Bear Area Chamber of Commerce
Hastings Area Chamber of
Commerce & Tourism Bureau Willmar Lakes Area Chamber of Commerce
Hibbing Area Chamber of Commerce Winona Area Chamber of Commerce
I94 West Chamber of Commerce Worthington Area Chamber of Commerce

Each year, 40 or more local chambers join with the Minnesota Chamber of Commerce to unify around a
.
common advocacy agenda for Minnesota businesses statewide This collective voice, representing tens
.
of thousands of businesses across the state, amplifies our members priorities with state policy leaders

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 18

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 Sources for Economic Benchmarks
Sizing Up Minnesotas Business and Economic Climate

The most recent available data was used for this report. Some data is more current such as unemployment
rates while other data such as workers compensation rates is only updated every two years.
For links to the sources used in this report go to Minnesota Chamber of Commerce website at:
mnchamber.com/benchmarks2018

Contact us:
Chamber Main 651.292.4650

DOUG LOON BETH STRINDEN KADOUN KATHI SCHAFF

President Vice President, Tax Director, Grow Minnesota!
651.292.4650 & Fiscal Policy Partnerships & Business
dloon@mnchamber.com 651.292.4678 Development
@MCC_DLoon bkadoun@mnchamber.com 651.292.4667
@MCC_BKadoun kschaff@mnchamber.com
BILL BLAZAR
Senior Vice President, JENNY MUNYER ANNE MASON YODER
Public Affairs Vice President, Member Senior Director, Communications
& Business Development Development & Engagement 651.292.4688
651.292.4650 651.292.4690 ayoder@mnchamber.com
bblazar@mnchamber.com jmunyer@mnchamber.com @annemason

LAURA BORDELON VICKI STUTE JIM PUMARLO

Senior Vice President, Advocacy Vice President, Programs Director, Communications
651.292.4681 & Business Services 651.292.4664
lbordelon@mnchamber.com 651.292.3908 jpumarlo@mnchamber.com
@MCC_LBordelon vstute@mnchamber.com @MN_Chamber

JENNIFER BYERS JILL CURRAN

Vice President, Grassroots Executive Director, Minnesota
& Chamber Relations Waste Wise Foundation
651.292.4673 651.292.4653
jbyers@mnchamber.com jcurran@mnchamber.com

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NESOTA M I N N E S OTA MIN N E S OTA
MBE R of C H A M BE R of CHA MB E R of
MERCE COMMERCE COMMERCE
M I N N E S O TA ! PRO JOBS MAJORITY HIRING MN HEROES

NESOTA M I N N E S OTA
MINNESOTA MIN N E S OTA
MBE R of C H A M BE R of CHA MB E R of
MERCE
CHAMBER
COMMERCE
of COMMERCE
SE FOUNDATION
CL EO MMERCE
A D E R S H I P F U N D PA C F E D E R AT I O N

MINNESOTA CHAMBER OF COMMERCE

NESOTA 400 Robert
M I N NStreet North, Suite 1500,MIN
E S OTA St. Paul,
N EMN 55101
S OTA
MBE R of 651.292.4650
C H A M BE| www.mnchamber.com
R of CHA MB E R of
MERCE COMMERCE COMMERCE
GY SMART BUSINESS RESOURCES F O U N D AT I O N

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