What’s behind greater Minnesota’s economic recovery?
Published 8:13 am Friday, July 14, 2017
By Jeff Hargarten
Star Tribune (Minneapolis)
In the world of economics, things aren’t always cut-and-dried.
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Take income and jobs, for example. Most people might assume that the Twin Cities metro area would’ve been the first to recover from the job and income losses caused by the Great Recession.
But actually, some regions of the state outside of the metro area — particularly along the western edge — have seen much faster growth in average personal income and other economic metrics.
The Twin Cities metro area remains the state’s prime economic engine, providing most of the state’s tax revenue, a symptom of an urban-rural divide that played a pronounced role in the 2016 election.
Despite challenges faced in greater Minnesota, data suggests that part of the state is better off economically than it was eight years ago. And some areas have recovered even faster than the metro area.
A Star Tribune analysis shows per capita personal income increased an average of 16 percent in outstate Minnesota since the Great Recession’s end in 2009, higher than the metro’s rate of 12 percent.
When mapping this out by county, we can see places like Swift County with a 30 percent jump in per capita personal income, while Kittson, Stevens and Red Lake saw growth of 20 percent or more.
In the metro, per capita income in Ramsey County grew more slowly, with an 8 percent increase over the time period, while Hennepin rested at about the state average.
“The impact of the recession was different in different parts of the state,” said Allison Liuzzi, project director of Minnesota Compass, which measures social trends using data. She added that tough times have necessitated economic changes in some places.
Checking median household income over time reveals similar trends, with 47 outstate counties showing growth at or above the statewide rate since 2009 of 3 percent.
Pushing the analysis outward from counties to regions shows an even clearer picture, with the Twin Cities resting just below the state average and nearly every outstate region either matching or surpassing it, with the exception of southern Minnesota.
Income growth was particularly strong in western Minnesota since 2009, likely connected to what’s going on in North Dakota. Fargo in particular has seen population and economic growth in recent years, Liuzzi said, which may have partially affected some Minnesota counties.
And since income is a metric closely tied to other economic indicators, it’s not surprising that unemployment rates often dropped significantly from 2009 to 2015 in some outstate counties, while available jobs increased.
These kinds of trends in outstate economic growth haven’t gone unnoticed. A 2015 report from the National Association of Counties (NACo) showed that of the eight Minnesota counties that had recovered from the recession, all of them were in the western part of the state.
Since then, the most recent iteration of that report shows nearly 25 percent of county economies nationwide closed their unemployment gaps in 2016, mostly in counties with fewer than 50,000 residents. And the only Minnesota counties to grow jobs faster in 2016 than the year before were in the western edge of the state.
The NACo report also sheds additional light on some political realities related to the last election as a majority of counties that swung from Democrat in 2012 to Donald Trump in 2016 had weak job recoveries. But in Minnesota, that was only the case for about half the 19 counties Trump swayed into the red column, according to the report, and many saw income growth above the state average as well.
Though every region has its own story to tell, possible explanations from experts for greater Minnesota’s recovery include:
— Wider age ranges in the workforce in rural counties, as people often start working at younger ages and continue well after retirement age.
— Some profitable years for the energy, agricultural and manufacturing industries in various regions.
— Demographics that could affect per capita metrics like personal income, as younger people make less money and counties in greater Minnesota are often older on average. Aging populations could also be retiring in the metro.
— Migrations of lower income families into the Twin Cities area might be slowing personal and household income growth rates in those counties.
A notable economic chasm still exists between the Twin Cities and regions beyond. But when taking a closer look, it seems some regions of greater Minnesota effectively weathered the storms of recession.
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