Brain Drain Is Lowering Minnesota’s Tech Workforce

Although a national leader in patents, innovation and STEM jobs, the state's well-educated population is also highly mobile — leading to a troubling net loss of workers.

by Frederick Melo, Pioneer Press / October 11, 2016
St. Paul, Minn. Flickr/Jonathan Miske

(TNS) — Minnesota remains a national leader when it comes to patents and innovation, as well as the state’s impressive concentration of science, technology, engineering and math, or “STEM” jobs.

The amount of venture capital spent per capita isn’t shabby, either, though not quite as commanding as it has been in recent years. But the state’s population, while relatively well-educated, also is highly mobile — leading to a troubling net loss of workforce.

Those are some of the findings of a new report from the Minnesota Chamber of Commerce. The chamber, based in St. Paul, on Monday issued a 20-page review — “2016 Minnesota Business Benchmarks: Sizing up Minnesota’s business and economic climate” — that offers both praise and warnings regarding the state of the state’s business environment.

“Our goal,” states the report, “is for Minnesota to be among the top 10 states for economic growth — ahead of the national average for GDP growth, job creation and personal income growth. A strong business climate is a critical ingredient in the recipe for achieving that goal.”

In 2015, Minnesota ranked second in the nation for population having a two-year degree or higher but 33rd for on-time high school graduation rate. The labor participation rate was well above the U.S. average (69.4 percent vs. 62.8 percent), but workers continue to leave the state, especially in their younger years, faster than they come in, leading to a net workforce migration of 36,723 people from 2010 to 2015.

Corporate income taxes, like state and local taxes per capita, scored high — as in burdensome.

The report finds that the state’s biggest area of improvement was in gross domestic product, or total value of produced goods and services. Nationally, the state’s ranking improved from 27th to 13th due to a strong first quarter in 2015. The last three quarters of 2015, however, were lackluster, and the state trailed the nation in both GDP growth and annual job and personal income growth. “Exports declined by 7 percent, and our export ranking slipped to 29th,” the report states.

The state was 30th in annual job growth (1.4 percent), 29th in personal income growth (3.8 percent), and 13th for unemployment (4 percent), which continues to beat the national unemployment average of 4.9 percent.

Innovation remains Minnesota’s strong point, according to the report. The state ranked fourth in the nation for patents per capita, an improvement of one spot from 2014, but 15th in the nation for venture capital per capita, which was three spots worse than in 2014. The state was 10th in the nation for STEM job concentration and eighth for business formation and survival (as measured by how many new companies survive five years).

Of the 25 largest-population states, Minnesota ranked 21st for entrepreneurship startup activity, an improvement of three spots from 2015, but still “a big concern as the number of new businesses ranks among the worst in the nation.”

John Stavig, director of the Holmes Center for Entrepreneurship at the Carlson School of Management, wasn’t familiar with the latest chamber report, but he noted that entrepreneurship can be measured in a number of ways. “It’s difficult to look at a measure like ‘number of legal entities formed per capita’ and draw many conclusions out of that,” he said.

“I think if you look more at investments in startups … over the last six to eight years there’s been a tremendous uptick in activity,” Stavig said. “Which I would like to think are lead indicators of more companies being formed, and more talent coming into the process, and more organizations or enablers. The eco-system is a lot more robust than it was 10 years ago. The funding amounts and the amount of startups is increasingly improving. Companies are more likely to succeed and doing it with fewer resources.”

©2016 the Pioneer Press (St. Paul, Minn.), Distributed by Tribune Content Agency, LLC.


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