Rural Minnesota is falling behind and losing clout

  • Article by: ROD HAMILTON and MATT SCHMIT
  • Updated: December 3, 2013 - 6:26 PM

Rural Minnesota is falling behind the metro, losing clout, and being ignored

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Although it’s refreshing to read success stories about Greater Minnesota (“State’s small towns buck dire forecasts,” Nov. 24), we worry that this piece misses the broader point. Much of Greater Minnesota is failing to keep pace with the state’s growing economic recovery. Inadequate public policy, declining political representation, and aging infrastructure threaten to widen this gap.

After a decade dominated by attention to Minnesota’s perceived shortcomings, we’re encouraged to see the state touting its strengths and achievements. The stream of positive news from objective observers ranging from Moody’s Investor Service (on Minnesota’s restored fiscal responsibility) to Forbes Magazine (on our state’s business climate) certainly helps.

Dive deeper into the stories, though, and one sees more nuance. The Twin Cities metropolitan area is driving state economic growth; our regional centers are accelerating. But, despite many efforts, much of rural Minnesota is stuck in neutral.

In an October 2013 report, Moody’s Analytics counted the “increasing divergence” between the economies of the Twin Cities and Greater Minnesota as a top-three economic weakness for the state. The analysis added: “The Twin Cities have long been the state’s economic epicenter, but the gap between Minneapolis-St. Paul and the rest of [Minnesota] is widening. The metro area accounted for the entirety of statewide employment gains in 2013…The rest of the state, meanwhile, has struggled with unsteadiness in manufacturing and agriculture. Absent strong secondary drivers, rural areas face the risk of returning to recession as jobs and residents flock to the Twin Cities.”

Now take the much-discussed Forbes review of “best states for business.” Minnesota placed 8th (up 12 spots since 2012). A similar, albeit somewhat dated review by the Corporation for Enterprise Development ranked our state 42nd nationally in the disparity between rural and urban economic competitiveness in its Development Report Card for the States (2007). This gap has been a persistent problem for Minnesota, limiting the state’s overall economic performance for years.

In much of Greater Minnesota, stagnant economic growth is coupled with flat or declining population. This, in turn, has led to diminished rural clout at the Legislature. A 2013 report for the St. Peter-based Center for Rural Policy and Development highlighted the challenge, noting that “statewide organizations are following the flow of money and members to the Twin Cities and regional centers — placing much more emphasis on nonrural agendas.”

Otherwise effective tools in our state economic development toolbox, such as the Angel Investor Tax Credit, disproportionately benefit the metro — with 95 percent of funds staying in the Twin Cities area. Where opportunity exists, our policy continues to lag: for instance, the Department of Employment and Economic Development reports that 12,000 additional workers will be needed to fill manufacturing jobs in Greater Minnesota by 2020. If we can’t fill these openings with qualified workers, the jobs will go elsewhere or simply fail to materialize. That’s lost opportunity for the state.

Greater Minnesota’s infrastructure shortcomings vary from roads to sewers, but significant disparities in broadband Internet connectivity are keeping much of Greater Minnesota from truly “connecting.” While basic connectivity for e-mail and online shopping has extended its reach, service with the speeds and reliability needed for important new applications in e-commerce, tele-medicine, education, and agriculture is sorely lacking.

According to Connect Minnesota, 92 percent of metro residents have access to speeds of 25 Mb download / 6 Mb upload; only 32 percent of rural Minnesotans enjoy this access. Nearly one-third of Greater Minnesota lacks access to speeds of 10 Mb download / 6 Mb upload — an inadequate threshold for today’s applications.

Although market forces explain much of this disparity — and, to be sure, our local providers and rural cooperatives are doing an admirable job with scarce resources — broadband connectivity for 21st century applications will have to catch up for Greater Minnesota to remain a great place to live and to work. Unfortunately, what could serve as a great equalizer in economic opportunity is now a limiting factor.

Amid this troubling news, though, there is hope. We know our weaknesses. We can target policy fixes to address them. And despite its shortcomings, Minnesota’s economy is picking up steam. Now imagine the strength of a diversified statewide economy operating on all cylinders — one that fully integrates the creativity, entrepreneurship, and productivity of all it citizens.

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