The transcontinental bake-off now underway for a new Amazon.com headquarters has highlighted how aggressive our neighbors in Wisconsin and Iowa have been about economic development and adopting more business-friendly policies.
Anybody here advocating for an economic policy course that more closely matches our neighbors, though, first has to contend with all of those inconvenient facts out there showing how well-off Minnesota’s people are.
Compared with our neighbors to the south and east, in Minnesota we enjoy higher household incomes and are more likely to have a job, have college degrees and be covered by health insurance. We are less likely to live in poverty or be disabled.
This is as a state, of course. There are rich towns in Wisconsin and poor ones here, rich families in Iowa and those just getting by here. But if anyone wants to argue about the right course for the state’s economy, they really should start with the simple observation that it’s better here.
Like siblings looking over each other’s Christmas gifts, states just can’t seem to stop comparing themselves to each other. We have noticed that Iowa and Wisconsin have been aggressively courting economic development projects of late.
So maybe another way to understand the story being told by the numbers is that in places like Iowa and Wisconsin, state officials have concluded that they have no real choice but to play the economic development game as hard as they can. That’s how shoveling $3 billion in taxpayer subsidies into something like a Taiwanese-owned TV factory in southeast Wisconsin can come to look like a good idea.
Plenty of smart people in both states aren’t happy about trading lots of taxpayer money for jobs. The news that more than $200 million of Iowa taxpayer money would wind up in an Apple data center with just 50 permanent jobs drew this response from Des Moines Register columnist Daniel Finney: “Apple Inc. played Iowans for suckers, and we paid them to do it.”
Neither state, of course, is facing an economic crisis. The demographic profiles from the U.S. Census Bureau reflect states where the people are doing a lot better than the nation by many measures, such as the great rate at which kids graduate from high school.
Minnesota’s high school graduation rate happens to be a bit higher, but at least in this category the margin is small.
Higher education is a good example of where the gap isn’t close. A highly educated workforce has really become a must-have, and here in Minnesota almost 34 percent of the people 25 or older have at least a bachelor’s degree, according to census data. Both Iowa and Wisconsin are miles behind Minnesota when measured by this yardstick, with fewer than 27 percent of Iowans older than 25 holding a degree.
The unemployment rate is one of those bits of information that’s a lot closer, but even here there’s an interesting story. All three states have an unemployment rate that’s well below the national rate, and Minnesota’s is actually the highest.
One glance at the labor force participation rate fills in the rest of the picture. The labor participation rate measures who is working and at least looking for a job, and the rate of people doing that here in Minnesota is more than 70 percent.
That’s one of the highest labor participation rates in the nation. Both Iowa and Wisconsin have a high labor participation rate, too, but they both lag Minnesota.
It’s difficult to know for sure just why somebody of working age isn’t employed or even looking for a job. They could be caring for family members. A big employer in town closing down could explain it, too, as it might be impractical for some laid-off workers to relocate and there might not be enough jobs nearby to put everyone to work.
But in one telling detail about these three states, Minnesota’s rate of people on disability is lower than Iowa’s or Wisconsin’s.
There may be no better measure of economic well-being than median household income. By now you may have already guessed that Minnesota’s is way ahead of Iowa’s and Wisconsin’s and much higher than the nation’s as a whole.
Before anyone in Gov. Mark Dayton’s administration takes a bow for presiding over an economic success story, however, understand that Minnesota has led in median household income since well before Dayton was sworn in as governor.
You would have to go back into the 1990s to find a time when Wisconsin actually was ahead.
There isn’t a simple explanation for why that’s no longer the case, although a good place to start might be sweeping changes in manufacturing. In Iowa, Wisconsin and everywhere else, manufacturing jobs have disappeared — lost to automation and to facilities in lower labor-cost countries. And manufacturing jobs were simply more economically important in states like Wisconsin than they have been in Minnesota.
From the peak employment reached just before the dot-com recession of the early 2000s, Wisconsin has lost about 125,000 manufacturing jobs. That’s nearly 50,000 more manufacturing jobs than Minnesota lost during this period, according to the U.S. Bureau of Labor Statistics.
What Minnesota continues to have in relative abundance is corporate headquarters, with six times the number of big companies on the last Fortune 500 ranking as Iowa had.
Please don’t conclude that I’m making a pitch for complacency. Policymakers looking for signs of trouble can easily find them, including in the movement of people out of the state. But advocates for a much lighter state tax burden and other policy changes should still consider tweaking their main talking points.
Not sure how convincing it would be, but they will have to explain how, in a regional economic horse race, Minnesota seems to stay in the lead even when carrying an overweight jockey.