The Minnesota Chamber of Commerce has raised concerns about the state’s weakening economic position relative to the rest of the U.S., urging coordinated action between public officials and private industry to reverse the trend. On November 19, the organization released its 2026 Business Benchmark Report, which highlights a consistent decline in key economic indicators over the past five years.
Between 2019 and 2024, Minnesota ranked 38th in GDP per capita growth, 40th in workforce expansion, and 41st in domestic migration. During this period, the state experienced a net population loss of nearly 48,000 residents. Its annual GDP per capita growth averaged 1.0%, significantly below the national rate of 1.8%. Doug Loon, president and CEO of the chamber, described the moment as a pivotal point for the state’s economic future.
Loon emphasized that while Minnesota once led in economic performance, recent data shows a prolonged downturn affecting both public confidence and business development. He identified excessive regulatory burdens and an uncompetitive tax structure as primary obstacles to attracting talent and investment. A 2024 study by the chamber found that industrial permit processing in Minnesota took over 650 days on average—far longer than neighboring states like Iowa, Wisconsin, and Illinois, where approvals typically take between 109 and 121 days.
University of Minnesota political scientist Larry Jacobs acknowledged that regulatory complexity and tax policy play a role but argued that demographic shifts are equally critical. Minnesota’s workforce is older than the national average, which he says contributes to slower job creation and reduced innovation. However, he cautioned against viewing high taxation alone as the root cause, pointing to states like Massachusetts, which maintain high public investment and strong growth.
“It’s not just the level of government spending,” Jacobs noted, “but how effectively those resources are used.” He stressed the importance of evaluating whether public funds yield tangible economic returns, particularly in education and infrastructure.
Educational outcomes have also come under scrutiny. The report revealed sharp declines in reading and math proficiency, with Minnesota ranking 49th in high schools offering computer science and 44th in college graduates earning STEM degrees. These shortcomings could undermine long-term competitiveness, Jacobs warned, especially as future industries demand advanced technical skills.
In response, the chamber launched the Economic Imperative for Growth initiative earlier in the year, aiming to foster bipartisan dialogue among business leaders and policymakers. The effort focuses on reducing bureaucratic hurdles, improving cost competitiveness, and reforming tax policies to encourage reinvestment in the state.
Loon stressed that solutions require both policy adjustments and a shift in mindset. “We need to ask how we can create conditions that attract strong investments and sustain economic momentum for the next decade,” he said.
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Minnesota Economy at a Crossroads, Says Chamber of Commerce
The Minnesota Chamber of Commerce has concluded the state is lagging behind the rest of the country economically, and public and private leaders should join forces to accelerate growth.
On Nov. 19, the chamber published its 2026 Business Benchmark Report, which found the state economy has fallen behind the rest of the nation’s pace of growth. An initiative launched earlier this year by the chamber called the Economic Imperative for Growth aims to bring policymakers and the private sector together to address these concerns.
The report called upon several metrics to reach this conclusion, including GDP per capita, workforce growth, and domestic migration trends. In these categories, Minnesota ranked 38th, 40th, and 41st, respectively, between 2019 to 2024. The state lost nearly 48,000 residents in that time frame. In the decade leading up to 2024, Minnesota’s GDP per capita grew at 1.0% annually, compared to 1.8% nationally, according to the report.
“In many ways, our economy is at a crossroads,” Doug Loon, president and CEO of the chamber, tells TCB. Loon notes that the chamber has been releasing this report, which provides key measures of Minnesota’s economic performance compared to other states, for 11 years.
While Minnesota has historically been an economic leader, “we believe, based upon the data, we have been in a decline for a while,” says Loon. “We’re seeing it now hitting a stage where it’s becoming a challenge for Minnesota’s growth and our private sector.”
Although Loon says Minnesota’s economy and private sector are far from defeated, they’re not headed in the right direction. Loon cites high regulation and an uncompetitive tax code as two of the chief causes behind this slowed growth and inadequate draw of new workers.
“This is one of the tradeoffs,” says Larry Jacobs, a political scientist who teaches at the University of Minnesota. “You introduce more regulations, and it creates delays, complexity, and businesses may decide to invest in states where timelines are more predictable.”
Referring to recent business mandates, Loon says “a lot of things that have been done in the past couple of years, going back to 2023 in particular—it has not helped.” In other cases, there has been inaction; in the wake of the Covid-19 pandemic, for example, many states worked toward a more competitive tax code, but not Minnesota.
A 2024 study by the chamber collected anecdotal evidence that Minnesota also has been slower providing industrial permits than other states. “We didn’t know how bad it was until we did this objective study,” Loon says. In contrast to an average of 109-121 days to review and process the permits in Iowa, Wisconsin, and Illinois, it took more than 650 days on average in Minnesota.
Jacobs says that although it is true that Minnesota is lagging economically compared to the rest of the country and that higher taxes and complicated regulations notably contribute to businesses investing in other states, there’s more to it.
“Aging is a more significant influence than taxes and regulations,” Jacobs says. “The age of the workforce of Minnesota is higher than it is throughout the country.” That older workforce has lowered the rate of job creation, he says.
According to Jacobs, higher taxes can be a propellor for a strong economy, if approached correctly and efficiently. He notes there are other states with high taxes and high public investment, like Massachusetts, that have grown much faster economically. “That suggests that it’s not just too much government producing slower growth,” says Jacobs. “The issue is not just taxes and spending, it’s ‘What are you doing with those funds?’”
Still, Jacobs says the objections the chamber is raising about higher taxes and regulations—and whether the returns are worth it—are crucial. “We used to be leaders in terms of economic growth and innovation,” he says. “We used to do better in terms of attracting folks to move here, domestically and internationally. In all those areas, Minnesota is struggling compared to other states.”
He notes Gov. Tim Walz’s administration seeks to invest in education with the goal that it will at some point positively affect the downward trend in the state economy.
The fact that Minnesota’s current school-going generation is struggling with test scores, as well as with high absentee rates, is a major worry, Jacobs says. As the business benchmark report also points out, “reading and math scores have dropped sharply, and the state ranks 49th in high schools offering computer science and 44th in college graduates earning STEM degrees.”
“We need to be looking carefully at what’s happening with the effectiveness of our education system,” Jacobs says.
The Economic Imperative for Growth initiative by the chamber seeks to address many of these concerns, starting with a “non-partisan conversation” about these issues with Minnesota’s business community and policymakers, Loon says. The push will be for less regulation, more affordability, and a more competitive tax code.
“There’s a lot of things we can work on,” Loon says. “Some of it is policy; some of it is frame of mind.
“Some of it is, ‘How do we have this conversation to make sure that we’re in a position going into the future with strong investments coming back to Minnesota that can propel our economy into the next decade?’”