How Good is the Metro’s Business Climate?

It’s hard to know, and for the Minneapolis Regional Chamber, creating uncertainty is the point.

We’re number one as a bike-friendly region, but for businesses climate, not so much.

That’s some of what the Minneapolis Regional Chamber of Commerce concludes after aggregating dozens of rankings and statistics in a report released June 16. The 2010 “MSP Business Vitality Index,” the chamber’s second annual project of this kind, compares the Twin Cities to seven similar metro areas across the country. It shows that the metro is “excellent” in quality-of-life measures, such as live music performances, fitness, and safety, but when it comes to work force development (“good”) and business climate (“average”), the report says the Twin Cities lag their peers.

“The complacency in this community is slowly strangling us,” says Chamber President Todd Klingel. He calls the index a conversation starter and a wake-up call for anyone who thinks that being a good place to live is enough.

It’s true that examining the index will more easily start conversations than conclude them. Of the 15 business-climate indicators that it takes into account, for instance, six relate to job growth (see chart). One of those is a prediction from business management e-zine BNET that the Twin Cities will be the nation’s sixth-“hottest” job market of the next decade. Another indicator from Forbes, however, ranks Minneapolis–St. Paul only 57th among 200 “Best Places for Business and Careers.” Two months after publishing it, Forbes called the Twin Cities the third-best place in the country for young professionals to start careers.

“It does show how arbitrary these lists really become,” says Steve Hine, the state’s labor market research director. Methodologies vary and how the source organizations decide to weight their variables can dramatically skew the results, he says. “I’d rather be higher on any of these lists than lower, but I don’t think we can rest on our laurels or throw our hands up in despair if we’re at the top or bottom.”

To Klingel, the disparities are instructive, a way to identify and shore up areas where the region is slipping in economic competitiveness: “If we wanted to just put pompoms up, we could just grab the [rankings] that say we’re fantastic,” he says. “What we’re trying to do instead is . . . assemble a variety of them to [show] the continuum that we’re spread across.”

An Annotated View

Methodologies vary, but all get equal weight in the “MSP Business Vitality Index.”


A: Compared with seven other metros: Atlanta; Austin, Texas; Boston; Denver; St. Louis; San Diego; Seattle. But the competitive set is a subjective choice. Last year’s included three more metros.


B: Klingel says the chamber reviewed hundreds of possible indicators for the index. Many used last year were used again, but others were arbitrarily replaced, including concentration of banks and number of patents filed.


C: USA Today attributes its charts and data to Moody’s, which made comparisons of payroll data, and number and type of employees.


D: BNET used Bureau of Labor Statistics numbers, interviews with economists, and projections of how demographic trends might intersect with quality-of-life factors: whether a metro area has amenities attractive to the growing categories of retiring Baby Boomers and 20-somethings starting their careers.


E: Forbes used 12 metrics to analyze and rank cities, including cost of living and cost of doing business, education levels, and past and projected job growth, but also crime levels and cultural and recreational opportunities.


F: New Geography based its rankings on monthly employment data from the Bureau of Labor Statistics from November 1998 through January 2009.