Minnesota ranks 5th among nation's most "recession-proof" states
MINNEAPOLIS -- Minnesotans know a thing or two about resilience. A great example of that is how we weather the weather. And as a potential recession storm still looms, Minnesota is one of the states most capable of withstanding a financial crisis.
"You've got really strong state reserves for your budget. You also have a really strong GDP per person as well as a really affordable set of housing," said Brian Chevalier-Jordan, director of special projects at National Business Capital.
National Business Capital, an online business marketplace, ranks Minnesota fifth in the country on a list of most recession-proof states for 2023.
"I'm surprised it's not higher quite, frankly. During the great recession, my own research that focused on the Twin Cities economy, we had the lowest unemployment rate of all the major metros in the country," said Myles Shaver, University of Minnesota professor of strategic management and entrepreneurship.
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"The percentage of people who are covered by your state unemployment insurance is really, really strong. It's number two in the nation," said Chevalier-Jordan.
The one poor-performing spot in Minnesota is effective tax rates; the state ranks 39th in that department.
"Now it's arguable though that you've got such strong fiscal responsibility that you've got the ability to cover people if there is a recession, in terms of the unemployment insurance. Maybe that effective tax rate is actually a good thing, because you can afford to cover people with unemployment insurance," said Chevalier-Jordan.
"We do pay high taxes in Minnesota. The issue is do we get commensurate benefits with it," said Shaver.
Shaver says there's another undeniable factor in Minnesota's ability to weather economic storms: talent.
"Our region is one that we have a big talent base and, in some ways, the companies would like it to be even bigger. If somebody's out of a job, generally there's another job around here for them," said Shaver.
Dave Vang, finance professor at the University of St. Thomas Opus College of Business, agrees that it's about more than raw numbers. Fortune 100 companies learned about the importance of quality of life when they'd bring in talent from outside Minnesota.
"If they transferred someone in, they had to transfer them away within 5 years, otherwise people would want to stay here. And they'd be willing to quit their job just to continue to live here," explained Vang.
North Dakota topped the list of most recession-proof states, and Wisconsin tied Minnesota for the fifth spot.