Wisconsin Isn’t The Only State Eyeing Minnesota Jobs

I’m not quite sure why neighboring states keep trying to poach businesses away from the Gopher State, but they do. Last month’s kerfuffle with Wisconsin was just one example. South Dakota is mounting a renewed push to lure Minnesota businesses following Governor Dayton's tax plan. Two years ago, the state embarked on an ad blitz, including radio spots, targeting businesses from Minnesota, California and Illinois with its "Tired of taxes? Call me" campaign. If you’ve heard the ads, you'd cringe. Minnesota is killing your profits and South Dakota won’t, the story goes, because of its low tax structure and lax regulatory climate. This kind of job-poaching is silly.

First off, as Benjamin Bartenstein told us last month job poaching is a zero-sum game: one state gains at the expense of another. Worse yet the ‘winning’ state usually uses tax breaks as bait, keeping revenue out of projects to improve the state.

But worse in my mind is what it says about these states’ economic plans. They don’t seem to be much more than ‘don’t tax and they will come – and if they don’t, we’ll shout louder!’ Instead of building a state that offers the resources for companies need to be successful and communities that employees want to move to, efforts are being focused on stealing companies away from Minnesota using shiny tax breaks. South Dakota is even paying for employers to bring new workers to the state.

Maybe it’s easier to focus on luring companies away from Minnesota because the anti-government crusaders in South Dakota and Wisconsin know that it takes public dollars to create a vibrant business community. A few hundred thousand dollars spent on radio ads must look better than building 21st century infrastructure, school systems, and social safety net.

After all, San Francisco and New York City are the poster children for what Tea Partiers hate. Taxes are relatively high and there are lots of government programs, but businesses want to be there. There are large markets to tap into and robust public services to accommodate all the people living and working in the cities.

Minnesota has taken a path of public investment to retain, grow and attract companies and workers, with good results. Minnesota has the 2nd most Fortune 500 companies per capita of any state, with 19 headquartered here. The Twin Cities are a national hub for the medical device, retail, air travel, and advertising industries. The schools are above average, and the workforce is very well educated. In fact, 50% of the labor force has a college degree in Minnesota, versus 45% in Iowa, 41% in Wisconsin, 42% in South Dakota. That gap will only grow in the coming years, when up to 74% of Minnesota’s workforce could have degrees – 10% and 14% higher than South Dakota and Wisconsin, respectively.

There’s more to the decision of where to locate a business than the lure of tax rates. It’s more about the overall cost of doing business – and that includes the infrastructure and workforce. On top of that, what employer is going to pry his or her workers from their homes to a new state – especially when Minnesota is the 3rd happiest state in the country

Posted in Economic Development | Related Topics: Job Growth  Midwestern States 

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