Can The Dakotas Successfully Attract MN Workers?

Our neighbors to the west continue to market their low tax rates and “pro-business” environment to encourage Minnesotans to relocate.

For months now, North and South Dakota have been pulling out all the stops in an effort to reel in Minnesota businesses and workers, but is it working?
 
The Dakotas’ latest push to lure Minnesotans came after Minnesota lawmakers increased cigarette taxes, hiked taxes for higher earners, and closed what Governor Mark Dayton described as “corporate tax loopholes.”
 
The Dakotas saw the tax increases as an opportunity to convince some disgruntled workers or businesses into moving across the border to a land of lighter taxation.
 
A new report from the Star Tribune points out that it’s difficult to measure how successful the Dakotas have been. But, citing the most recent census data, the newspaper reported that South Dakota has had little success luring Minnesotans, while North Dakota's efforts have proven more fruitful.
 
The North Dakota Legislature in May approved $1.1 billion in tax relief. And South Dakota has the second-lowest per-capita taxation in the country, according to the Star Tribune. It has no corporate income tax, no personal income tax, and a lower cost of living due in part to cheaper energy and health care costs.
 
Two months ago, the Greater North Dakota Chamber said it’s “making a strong case for business to come across the border” and put up a billboard along Interstate 94 in Moorhead that declared, “North Dakota, Open for Business.”
 
Chamber CEO Andy Peterson told the Associated Press that part of what the campaign aimed to do was help Minnesota improve its business climate, pointing out that a competitive states index ranks North Dakota 15th for favorable business climate while Minnesota is 40th.
 
News of the North Dakota campaign came shortly after South Dakota Governor Dennis Daugaard visited the Mall of America in May to personally discuss career opportunities with Minnesotans, encouraging them to consider relocating to South Dakota.
 
That state’s efforts are nothing new: South Dakota even created a website in 2006 called Dakota Roots that makes it easy for citizens and business leaders to find jobs in South Dakota, and a quarter of the site is dedicated specifically to advice on relocating to South Dakota.
 
While it’s hard to judge how successful these most recent attempts have been, according to the Star Tribune, the net migration in 2011 from Minnesota to South Dakota was only 37 people.
 
North Dakota, however, fared a little better, mainly due to it becoming the country’s second-biggest oil-producing state. As a result of the oil boom in the state’s Bakken region, North Dakota’s economy is now growing four times as fast as Minnesota’s, according to the Star Tribune. Job’s have grown 30 percent over the past 10 years, compared with 3.2 percent in Minnesota. This translated, according to the newspaper, to Minnesota losing 4,740 people to North Dakota in 2011.
 
Art Rolnick, former economist at the Federal Reserve Bank of Minneapolis, told the Star Tribune that Minnesota’s economic strength, however, lies in the quality of its work force, which is what our neighbors covet so much.
 
And although the speed at which Minnesota’s economy is growing cannot match North Dakota, it’s still the fifth-fastest in the nation. Minnesota’s per capita income also remains in the top 10, and its unemployment rate is two percentage points below the national average.