Report: Shrinking Workforce, High Taxes Among Chief Concerns For MN Businesses
Workforce shortages, taxes and the cost of doing business were among the top concerns in the state’s business community, according to key economic indicators gathered by the Minnesota Chamber of Commerce in its second annual Minnesota Business Benchmarks report.
When ranked against other states, findings indicate Minnesota fell shortest in areas of economic growth and workforce development in 2015. Although the state experienced a 1.4 percent increase in annual job growth and 3.8 percent rise in personal income, both figures ranked 30th and 29th in the nation, respectively.
“We cannot ignore these areas where Minnesota lags behind other states,” said Doug Loon, president of the Minnesota Chamber of Commerce. “We cannot rest on past successes.”
One of Minnesota’s key strengths continued to be its well-educated workforce. Half of the state’s workers hold a two-year degree or higher (ranked second in the nation); however, graduation rates, particularly among groups of color, have been slipping. Recent findings show 81 percent of Minnesota high schoolers graduate on time (ranked 33rd). Minority groups in particular struggled, with only 68 percent graduating on time.
“As a manufacturer, we increasingly are challenged to find workers,” Traci Tapani, co-president of Stacy-based Wyoming Machine Inc., said in prepared remarks. “Minnesota’s workforce has always been one of our strengths, but we now are losing our homegrown talent. More must be done so all Minnesota students graduate from high school on time, ready to succeed with skills needed for jobs in our diverse and dynamic economy.”
Moreover, the report showed Minnesota’s skilled workforce is shrinking as net domestic migration figures indicated a nearly 37,000 loss between 2010 and 2015 (ranked 35th).
When it comes to costs to do business in Minnesota, the Chamber of Commerce found the state is home to the second highest unemployment taxes in the nation. Minnesota’s pass-through and individual income tax and corporate income tax rates all ranked as the country’s third highest. Meanwhile, as some businesses are concerned about the cost of labor (12th highest), others have expressed worry over electricity costs (20th highest).
“Minnesota used to be much more competitive on energy costs, but we are losing that advantage,” Keith Matzdorf, superintendent of Cloquet-based paper products manufacturer Sappi Cloquet LLC, said in prepared remarks. “Minnesota is best served by a broad portfolio of energy sources, but we must remember that some policies, though well intentioned, can have negative consequences on the ability to attract and retain businesses.”
According to the Chamber of Commerce, the price of individual health insurance premiums was a bright spot in the state’s costs of doing business rankings. Minnesota boasted one of the nation’s cheapest lowest annual costs of $5,691, which beat out the national average of $5,963 a year. Where Minnesota continued to struggle, however, was with its percentage of businesses that offer insurance to employees—44.3 percent in Minnesota compared to 45.7 percent nationally.
“Minnesota has much to be proud of with a vibrant business community, talented workforce and a high quality of life complimented with beautiful natural resources,” said Chamber president Doug Loon. Yet, he added, “Minnesota must continue to adapt to changing competitive pressures.”
To view the full Minnesota Business Benchmarks report, click here.