ST. PAUL — Despite observable signs of economic growth, the Minnesota Chamber of Commerce this week warned that the state's high taxes and rising healthcare premiums could stunt its ability to compete with the rest of the country.
"We're not as competitive as we could be in the tax space, and that's an artificial headwind for businesses who are competing nationally and globally," said chamber president Doug Loon on Thursday, Nov. 21.
Citing the findings of the Federation of Tax Administrators and other groups, the chamber this week reported that Minnesota's corporate income and sales tax rates rank fourth and 18th in the nation at 9.8% and 7.43%, respectively. Employer-sponsored health insurance, meanwhile, continues to be among the highest costs of doing business in the state.
Based off of Kaiser Family Foundation data, the chamber reported that health insurance premiums in Minnesota cost an average of $6,781 compared to the national average of $6,715, making them the 21st most expensive in the state. Employee contributions make up nearly $1,600 of the state figure, according to the foundation.
Despite those findings, the chamber reported signs that Minnesota's economy is growing. Speaking at a chamber gathering at the Mall of America on Thursday, Loon and other Minnesota business leaders hailed the state's growth in the measures of gross domestic product and annual exports as a win.
According to the U.S. Bureau of Economic Analysis, Minnesota's GDP growth ranked 22nd in the nation in 2018 at a rate of 2.2%. The state Department of Employment and Economic Development reported that exports grew by 9.6% that year compared to the national average of 7.6%.
At a time when some economists are warning of a looming recession, Federal Reserve Bank of Minneapolis president Neel Kashkari said Thursday that one doesn't appear to be imminent. He pointed to decreasing unemployment rates and slow wage growth as indicators of a relatively healthy economy.
"We’re not forecasting a recession, but there are risks on the horizon," Kashkari told the crowd.
Slowing economic growth in Europe and Asia are a cause for concern, he said, as is the ongoing trade war between the United States and China. Domestic growth could also be hindered by falling birthrates, he said.
Speakers at Thursday's event cautioned that comparatively poor public school graduation rates, among other measures of achievement, could exacerbate projected workforce shortages. The state Department of Education reports that total on-time graduation rates rose between 2012 and 2017 to a rate of 83%, or 36th in the nation.
By 2017, however, only 65% of black students and 66% of Hispanic students graduated from high school on time.
Kashkari didn't mince words when speaking about the achievement gap, saying that it predominantly affects lower-income Minnesotans of color and can eventually translate to an overall poorer quality of life.
"We are leaving Minnesotans behind," he said. "And they are your workers of tomorrow, and they are your consumers of tomorrow."