Last year, there was much excitement among Minnesota’s political leaders and journalists when our state ranked fifth on CNBC’s annual ranking of “America’s Top States for Business.” Some headlines were:
Governor Walz was so pleased with the fact that Minnesota had ranked ahead of Texas, that not only did he tweet about it when the rankings came out, but he has regularly cited this “fact” subsequently:
Minnesota is down one place overall
Alas for the Governor and our state, he failed to keep to his New Year’s resolution. CNBC have released their 2024 rankings of “America’s Top States for Business” and one headline reads:
Indeed, while Texas rose from 6th to 3rd, Minnesota dropped one place overall to 6th in 2024, as Table 1 shows.
Table 1: Minnesota’s CNBC “Top States for Business” rankings
Source: CNBC
The good…
Minnesota scored decent bumps on “Business Friendliness” and “Access to Capital.” According to CNBC’s methodology, these measure:
Business Friendliness (250 points – 10%)
Companies follow the path of least resistance. That includes a legal and regulatory framework that does not overburden business. We measure each state’s lawsuit and liability climates, regulatory regimes covering areas such as trade and labor, as well as overall bureaucracy. We also consider how hospitable states are toward emerging industries. New in 2024, we look at which states are leading the way in providing a regulatory framework to guide but not stifle the artificial intelligence industry. Also new in 2024, with infrastructure being so crucial, we look at state land use regulations.
…
Access to Capital (75 points – 3%)
As business costs and interest rates remain stubbornly high, companies large and small need ready access to financing. We look at venture capital investments in each state, as well as traditional bank lending by state in relative and absolute terms. We also look at state-backed capital assistance and loan guarantee programs. New in 2024, we measure foreign direct investment in each state.
…the bad…
But while our rankings have improved in three of ten categories, they have fallen in five. The biggest slump was in “Technology & Innovation.” CNBC tells us:
Technology & Innovation (250 points – 10%)
Truly competitive states prize innovation, nurture new ideas, and have the resources to support them. We measure the states based on results, including the number of patents issued per capita, as well as health, science and agriculture research grants. With domestic semiconductor research, development and manufacturing taking center stage, we look at each state’s place in this crucial technological ecosystem. New in 2024, we measure each state’s role in the artificial intelligence revolution in terms of where new AI models are being developed and where the AI jobs are. Also new in 2024, we look at how states fared in the Tech Hubs program authorized through the federal CHIPS and Science Act.
…and the ugly
You will notice also, however, that we fell four places on “Education.” Indeed, this only continues the decline of Minnesota’s ranking in this category. As Table 2 shows, our state has now fallen from a ranking of 5th in Education in 2018, the year before Governor Walz took office, to 17th in 2024. Considering how often he touts his experience as a former educator, Minnesotans aren’t seeing any benefit from it.
Table 2: Minnesota’s CNBC “Top States for Business” rankings
Source: CNBC
How seriously should we take all this? I’ll look at that tomorrow.