By Tom Scheck

MPR News, 90.1FM

Minnesota Republicans suffered steep losses in 2012 after challenging Democrats over gay marriage. Most voters didn’t see it the GOP’s way.

This year Republicans are talking economy, not social issues. But the GOP contenders seeking a shot this fall at Gov. Mark Dayton face a similar dilemma — how to convince voters Dayton and the Democrats have bungled the state’s economy when most indicators show Minnesota is recovering pretty well.

Dayton’s touted the recent job growth in public appearances, a signal he thinks the latest economic news will help him get re-elected.

“Our work isn’t done, but my goodness we have 154,000 more jobs in Minnesota than when I took office,” Dayton said. “We’re doing a lot of things right.”

Dayton’s Republican challengers argue Minnesotans aren’t feeling it.

“There are a lot of people out there working part-time jobs who are struggling,” former state Rep. Marty Seifert said. “You can throw around statistics all you want, but as I travel the state and meet with real people there’s a lot of struggle out there.”

The statistics, though, are compelling. The state’s unemployment rate is the lowest it’s been in seven years. The Twin Cities has the lowest unemployment rate of any major metropolitan area in the country and in many respects the state’s economy is doing better than the nation.

Dayton has benefited from timing, taking office in 2011 when the state and nation started to gain steam after the Great Recession, University of Minnesota economist Tom Stinson said.

Still, Dayton deserves some credit for the “strong” economy, said Stinson, who spent 26 years as Minnesota’s chief state economist before retiring last year.

“Governors get blamed for a bad economy when it’s not their fault,” he said. “We have to give them a little bit of latitude for taking credit for an economy that’s doing reasonably well.”

Seifert and other GOP gubernatorial hopefuls heading for an Aug. 12 primary say the state’s economy should be doing better.

Hennepin County Commissioner Jeff Johnson noted Minnesota’s lost several Fortune 500 headquarters during Dayton’s term, pointing to Medtronic, Nash Finch, PepsiAmericas and Alliant Techsystems.

But there are other factors at play. Nash Finch was acquired last year as fierce competition continued to take a toll on traditional grocers.

Medtronic will be domiciled in Ireland for tax purposes, but the company says it will add jobs in Minnesota. PepsiAmericas was acquired by Pepsi for strategic reasons before Dayton took office.

Defense contractor Alliant TechSystems moved to the Washington, D.C., area to be closer to its customer base.

Minnesota has lost six Fortune 500 headquarters over the past 10 years — three under Dayton, including Medtronic, and three under Republican Gov. Tim Pawlenty. Other firms have joined Minnesota’s list of Fortune 500 companies through growth or other factors, and the state’s tally is down by two compared to 2004.

Losing a company’s headquarters isn’t a major concern as long as jobs stay in Minnesota, Stinson said.

Johnson disagrees. If Minnesota’s corporate giants start looking elsewhere to do business and create jobs, he said, “we may not notice that next month but we are going to notice that in five or 10 years and we’re going to notice it really dramatically.”

Losing Fortune 500 firms could provide an important signal, said Louis Johnston, economics professor at the College of St. Benedict and St. John’s University.

“It could be telling us about innovation, about Minnesota, if we don’t have a new company like UnitedHealth Care or Best Buy on the horizon that’s growing really rapidly and generating a lot of job growth,” he said. “That could be the canary in the coal mine.”

Seifert, Johnson, state Rep. Kurt Zellers of Maple Grove and Orono-based businessman Scott Honour also say Dayton’s tax policies will chase businesses from the state and make others reluctant to start up here.

Minnesota, however, has consistently outperformed the nation even though it’s been a high-tax state for decades, Dayton countered, adding that he’s concerned about underemployment, too, and thinks education and job training will help.

As for the criticism by his Republican opponents, Dayton dismissed it, saying, “They’re desperately reaching for whatever they can in the midst of a growing economy.”