Minnesota Matters 10-16-26

Yeah, the report that we just released did show kind of a mixed bag of outcomes as it relates to business expansion activity and economic development in the state.

So the good news is that, like what we've seen over the past few years, there's been a steady stream of companies that are announcing their plans and intention to expand here.

And when we talk about expansions, we're usually talking about some combination of capital expenditures, so companies that are doing a plant expansion or building a new facility, Adding more equipment into their operations, combining that with some kind of job creation.

And this is important because it tells us not only what's already happened, but it's a little bit of a forward looking way to think about where our economy might be headed.

Right? We're kind of seeing this is where companies are investing in their future growth.

And so that can be helpful for us to understand what might.

occur in the coming you know months or years here so some of the positive news is again that companies are still expanding here each year we've had you know somewhere between 100 to 120 companies that are announcing these kinds of expansion projects and the ones that are expanding are you know really fantastic businesses doing innovative things so some of these investments are in r d in emerging fields they're in high-tech manufacturing in clean tech all these areas that are you know really kind of advanced fields in our economy so that's the positive news the challenge that we've seen is that though we do have these isolated examples of companies expanding or at least intending to expand when we look at the overall landscape of Minnesota compared to other states and how we're creating jobs and kind of high wage sectors of the economy we're facing some more headwinds So we rank kind of toward the bottom of states within the Midwest, 10th out of 12 Midwest states in projects per capita.

So though companies are expanding, it appears just not quite to the same extent that they're expanding elsewhere.

So that's a concern for us of thinking, how do we really compete for those investments that companies are making so that more of them happen here? And then a second challenge is that when we look at the jobs data in high wage and advanced sectors of the economy, we've actually had net job losses over the course of the decade in sectors with above average wages.

And we can talk a little bit more about what might that mean for us going forward.

But that's a concern from an economic development lens, because it tells us not just how much we're growing, but where we're growing.

And that has implications for our future wage growth and tax base and all these things that we associate with economic development here.

And that's what I was going to ask you, kind of the driving factors behind it.

So I'm kind of hearing two different things that, you know, perhaps higher taxes compared to other states.

And then when it comes to those competitive wages, is that fair to say?

Uh, so a couple of the challenges that we've heard when we survey companies about their ability to grow and expand here.

As some, some consistent themes around our tax climate here, it doesn't drive every location decision, but it is 1 of the things that, um, that that do matter from a state perspective that we have some control over and Minnesota.

has a much harder tax climate than surrounding states and other parts of the country that are seeing more investment.

So when we look at where is the investment in job growth taking place in the US, a lot of it's in the Southeast region of the United States, it's in places like Texas, it's in the Mountain West states.

All of these are areas with much lower cost of doing business and tax burdens than Minnesota.

So that can be a challenge for us to compete with those areas.

Our regulatory climate is part of that as well.

So some of this has to do with some of the new labor mandates that were put in place a couple of years ago that really can make it more complex for companies to operate here than elsewhere.

We've done a lot of work around permitting.

It can take companies a longer time to go through a permitting process to build and expand here than elsewhere.

Yeah, the report that we just released did show kind of a mixed bag of outcomes as it relates to business expansion activity and economic development in the state.

So the good news is that, like what we've seen over the past few years, there's been a steady stream of companies that are announcing their plans and intention to expand here.

And when we talk about expansions, we're usually talking about some combination of capital expenditures, so companies that are doing a plant expansion or building a new facility, Adding more equipment into their operations, combining that with some kind of job creation.

And this is important because it tells us not only what's already happened, but it's a little bit of a forward looking way to think about where our economy might be headed.

Right? We're kind of seeing this is where companies are investing in their future growth.

And so that can be helpful for us to understand what might.

occur in the coming you know months or years here so some of the positive news is again that companies are still expanding here each year we've had you know somewhere between 100 to 120 companies that are announcing these kinds of expansion projects and the ones that are expanding are you know really fantastic businesses doing innovative things so some of these investments are in r d in emerging fields they're in high-tech manufacturing in clean tech all these areas that are you know really kind of advanced fields in our economy so that's the positive news the challenge that we've seen is that though we do have these isolated examples of companies expanding or at least intending to expand when we look at the overall landscape of Minnesota compared to other states and how we're creating jobs and kind of high wage sectors of the economy we're facing some more headwinds So we rank kind of toward the bottom of states within the Midwest, 10th out of 12 Midwest states in projects per capita.

So though companies are expanding, it appears just not quite to the same extent that they're expanding elsewhere.

So that's a concern for us of thinking, how do we really compete for those investments that companies are making so that more of them happen here? And then a second challenge is that when we look at the jobs data in high wage and advanced sectors of the economy, we've actually had net job losses over the course of the decade in sectors with above average wages.

And we can talk a little bit more about what might that mean for us going forward.

But that's a concern from an economic development lens, because it tells us not just how much we're growing, but where we're growing.

And that has implications for our future wage growth and tax base and all these things that we associate with economic development here.

And that's what I was going to ask you, kind of the driving factors behind it.

So I'm kind of hearing two different things that, you know, perhaps higher taxes compared to other states.

And then when it comes to those competitive wages, is that fair to say?

Uh, so a couple of the challenges that we've heard when we survey companies about their ability to grow and expand here.

As some, some consistent themes around our tax climate here, it doesn't drive every location decision, but it is 1 of the things that, um, that that do matter from a state perspective that we have some control over and Minnesota.

has a much harder tax climate than surrounding states and other parts of the country that are seeing more investment.

So when we look at where is the investment in job growth taking place in the US, a lot of it's in the Southeast region of the United States, it's in places like Texas, it's in the Mountain West states.

All of these are areas with much lower cost of doing business and tax burdens than Minnesota.

So that can be a challenge for us to compete with those areas.

Our regulatory climate is part of that as well.

So some of this has to do with some of the new labor mandates that were put in place a couple of years ago that really can make it more complex for companies to operate here than elsewhere.

We've done a lot of work around permitting.

It can take companies a longer time to go through a permitting process to build and expand here than elsewhere.