Single link this week, short post, but it this article hits on several interesting and relevant themes for our economic developer clients.
The success of Minneapolis isn’t necessarily related to business relocations:
Minneapolis–St. Paul is the headquarters for 19 Fortune 500 companies—more than any other metro its size—spanning retail (Target), health care (UnitedHealth), and food (General Mills). In the past 60 years, 40 Minneapolis-based businesses have made it onto Fortune’s list. “We’re not like Atlanta, where half of its Fortune 500s moved there,” Myles Shaver, a professor at the Carlson School of Management at the University of Minnesota, told me. “There is something about Minneapolis that makes us unusually good at building and keeping large companies.”
Additionally, Shaver points to the ability to retain a talented and capable workforce as key factor.
Shaver’s theory, which he’s developing into a book, is that Minneapolis is so successful at turning medium-size companies into giants because its most important resource never leaves the city: educated managers of every level, who can work at just about any company. Shaver looked at the outward migration of employed, college-educated people who earn at least twice the national average income—his proxy for the manager demographic—and found that of the 25 largest American cities, only one had a lower rate of outflow than Minneapolis (although he couldn’t compute data for three others). Among all college-educated workers, Minneapolis also had the second-lowest outflow. “It bears out the old adage: ‘It’s really hard to get people to move to Minneapolis, and it’s impossible to get them to leave.’ ”
Minnesota set up the rules to share the wealth to avoid inequality.
In the 1960s, local districts and towns in the Twin Cities region offered competing tax breaks to lure in new businesses, diminishing their revenues and depleting their social services in an effort to steal jobs from elsewhere within the area. In 1971, the region came up with an ingenious plan that would help halt this race to the bottom, and also address widening inequality. The Minnesota state legislature passed a law requiring all of the region’s local governments—in Minneapolis and St. Paul and throughout their ring of suburbs—to contribute almost half of the growth in their commercial tax revenues to a regional pool, from which the money would be distributed to tax-poor areas. Today, business taxes are used to enrich some of the region’s poorest communities.