The Center of the American Experiment (CAE) released a new report today, bemoaning Minnesota’s “mediocre” economic performance since 2000. Some of the trends noted in the report are legitimate, while others are not. However, the insinuation that “Minnesota’s blue-state policies” are “responsible for its economic underperformance” is bogus and unsupported by information in the report or anywhere else.
The attempt to attribute Minnesota’s lackluster economic performance during the 21st century has already been rebutted in a recent North Star series of articles.
The CAE report notes that recent Minnesota job growth has been centered on “less productive jobs” and that high-technology employment is declining. To some extent, these trends could be the result of conservative policies that cut education funding. A recent North Star report found that real per pupil state operating aid to Minnesota school districts fell by 17 percent from 2003 to 2013, while another North Star report revealed that real per student state instructional support of higher education declined by 33 percent over the same period. To be intellectually honest, conservatives must be willing to entertain the fact that some of the trends they decry may be the result of their own chickens coming home to roost.
Other trends cited in the CAE report are either exaggerated or completely off base. For example, the claim of projected below average per capita income growth in Minnesota relative to the national average is overstated. Based on an analysis of personal income data from the U.S. BEA and projections from Minnesota Management & Budget, personal income in Minnesota will increase by $6,500 per capita from 2016 to 2019–$300 per capita greater than the projected national average ($6,200).
In addition, CAE once again trots out the largely discredited claim of massive income migration. These claims are based on IRS Statistics of Income (SOI); conservative economist Lyman Stone notes that:
It is common for migration commentators to treat the AGI [adjusted gross income] of IRS SOI migrants as “migration of money.” This is an egregiously wrong use of the data. The IRS SOI user guide makes clear that this is not a viable interpretation of the data, and thus those who read the data this way have either failed to perform the most basic due diligence by looking at the manual, or else actively mislead their readers.
Furthermore, the CAE conveniently ignores new Minnesota Department of Revenue data which demonstrates a significant increase in the number of very high-income taxpayers and the income taxes paid by them in the year following enactment of a new “top tier” income tax rate targeted at high-income households, as well as other critiques of the “income migration” claim based on IRS SOI data. Perhaps most importantly, CAE income migration claims ignore the fact that most of Minnesota’s alleged income migration occurred while conservative policies dominated the state’s fiscal agenda.
Data from other sources paint a far more optimistic picture of Minnesota’s economic performance. For example, Minnesota:
Absent from the CAE report is any hard data linking Minnesota’s “mediocre” economic performance to “blue state policies,” but this is the least of its problems. Apart from exaggerating claims of Minnesota’s economic demise, the report is oblivious to the fact that conservatives dominated Minnesota fiscal policy for the vast majority of the 21st century and thus—to the extent they insist on attributing economic outcomes to state fiscal policy—they must logically be largely responsible for the trends they decry.