By Will McDermott
What the locals say
The Gopher State is forging a new path to prosperity.
Minnesota was named “Top State for Business” by CNBC in 2015, the first time
the business-news network named a “high-tax, high-wage, union-friendly
state” to the top spot. More recently, Forbes ranked the Gopher State at No. 15
in its “Best States for Business” rankings.
Both rankings cite quality of life and an educated workforce as major reasons
for the state’s business strength. According to Forbes, Minnesota’s 92. 8 percent
high-school graduation rate is the second highest in the nation. The state ranks
10th in college degrees, with 34. 7 percent of residents earning a degree.
Minnesota also led the nation in average composite ACT scores for nine consecutive years as of 2015. Minnesota Governor Mark Dayton pushed an additional $500 million in education spending through the state Legislature that
year, which should help the state maintain its educational competitive edge.
Employment data from the Minnesota Management and Budget office shows
the state is slightly lagging behind the national average in terms of job growth,
but that average wages in the state are almost double the national average.
Minnesota added more than 37,000 jobs in 2016 for a 1.3 percent employment
growth rate, which was slightly lower than the national average of 1.4 percent.
Average wages for private sector employees in the state, however, increased
5. 7 percent year over year, compared to a 2.9 percent increase nationwide.
Many of these jobs are coming outside of agriculture and mining. The two
strongest sectors in Minnesota today are manufacturing and professional and
business services, according to a 2015 report by the University of Minnesota Extension office. Manufacturing is the No. 1 source of economic output in seven
of the 12 state regions outside of the Twin Cities.
Professional and business services is in the top three in terms of employment
in 11 of the 12 regions and in the top three in all 12 in terms of output. In fact,
professional and business services jobs increased by 27,000 from 2003 to 2013,
a 17 percent increase, according to the report.
This diverse economy has helped Minnesota recover from the Great Recession.
Its 2015 gross domestic product of $328 billion ranked No. 17 in the nation, and
its $63,488 median household income was No. 11 among states, and almost
$10,000 higher than the national average.
These positive economic factors — increasing jobs and rising wages — along
with Minnesota Governor Dayton’s progressive tax policies, have resulted in
a projected $1.65 billion surplus in the state government’s operating budget
over the next two years. This after the governor inherited a $6.2 billion budget
gap when he took office in 2011. Although Dayton’s policies have their critics, it appears his pro-education, high-tax and union-friendly strategy has the
Gopher State’s economy burrowing forward at a good pace. n
Home sales and prices
The Twin Cities of Minneapolis and St. Paul dominate the Minnesota
housing market. More than 60,000 of the 87,000 homes sold in the state
in 2016 were in the Twin Cities, according to a report published by the
Shenehon Center for Real Estate at the University of St. Thomas. According to the report, the median sales price for a home in the Twin Cities
increased 4.1 percent in 2016 and will increase another 5 percent in 2017
as low inventory and strong demand continue driving up prices.
This trend can be seen across the state as well, as closed housing sales
skyrocketed from 72,000 units in 2014 to almost 87,000 in 2016, according to the Minnesota Association of Realtors. Minnesota median sales
prices have risen since 2011, topping prerecession prices in 2015 and
increasing another 7 percent in 2016, to $208,500.
Minnesota Home Sales
Source: Minnesota Association of Realtors
Closed sales Median sales price
President, Minnesota Association of Realtors
“We are truly challenged with an inventory shortage. That is
our biggest issue we have right now. With our market being
so hot, we just don’t have enough properties on the market,
so buyers are receiving multiple offers, properties are selling
first day on the market, and they’re selling above list price.
The unfortunate thing is that it’s not making it a market that
first-time homebuyers can get into.”