PHILADELPHIA, PA – AUGUST 6: Democratic Vice Presidential candidate Minnesota Governor Tim… [+] Walz speaks during a campaign rally with Democratic presidential candidate and U.S. Vice President-elect Kamala Harris at Temple University’s Liacoras Center in Philadelphia, Pennsylvania, on August 6, 2024. Harris selected the 60-year-old Midwestern governor over other candidates, ending weeks of speculation about who her running mate would be. (Photo by Andrew Harnick/Getty Images)
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In his media appearances and speeches since being selected as the Democratic vice presidential nominee, Governor Tim Walz has frequently referred to Minnesota as a great state for business and touted his worker-friendly economic policies.
As the US election heats up and Donald Trump and his running mate J.D. Vance attack Waltz’s record, he will be heavily questioned about whether he has had a positive impact on business.
Since taking office in January 2019, Walz has sought to combine progressive policies that promote equity and sustainability with a focus on economic growth and workforce development. While the state has enjoyed an increase in business expansion projects during his tenure, his tax and regulatory policies have drawn criticism from some in the business community who are concerned about competitiveness and the overall investment climate.
Walz has emphasized workforce development through education and training programs such as the One Minnesota Plan, which aims to prepare people for high-skilled jobs in health care, technology and renewable energy. He has also pushed for heavy investment in Minnesota’s infrastructure, particularly transportation, as a way to make the state more attractive for investment.
Another focus of the Walz Administration is sustainability and Minnesota’s transition to a green economy. In 2023, he signed the Clean Energy First Act, which sets ambitious goals for renewable energy and aims to make Minnesota’s power sector carbon-free by 2040. In June 2024, he signed a bill that creates an expedited review process for small wind and solar projects.
As a result, Minnesota has seen a growth in its renewable energy sector under Walz’s leadership, with the U.S. Department of Energy projecting an estimated $8.5 billion in large-scale clean generation and storage investments in the state between now and 2030.
The Importance of Minnesota as a Business Center
As Walz frequently highlights, Minnesota was ranked No. 5 on CNBC’s annual “Best States in America for Business” rankings for 2023, but dropped to No. 6 in the 2024 rankings released in mid-July.
Although Minnesota has a small population of less than six million people, it is a vital business hub: the state is home to the headquarters of 17 Fortune 500 companies, including Best Buy, 3M, General Mills, Target and UnitedHealth Group, as well as Cargill, the nation’s largest private company.
Meanwhile, according to the Minnesota Department of Employment and Economic Development, more than 900 foreign-affiliated companies from about 40 countries are based in the state, employing more than 170,000 people. According to data from the Department of International Trade, the proportion of jobs in Minnesota from foreign-affiliated companies is rising from about 5.7% (160,700 people) in 2018 to about 6.4% (169,300 people) in 2021.
Following the 2020 COVID-19 recession, Minnesota saw a surge in business investment and expansion projects over the next two years, according to data from the Conway Project Database analyzed in the Minnesota Chamber of Commerce report. The database records projects with a minimum investment of $1 million, the creation of more than 20 new jobs or more than 20,000 square feet of new construction. Minnesota announced 184 such projects in 2022, the highest level in 11 years.
“Over the past few years, we’ve seen dramatic expansion in Minnesota from internationally based companies such as SICK, Cirrus, Yanmar, Daikin, Nidec, Polar Semiconductor, Bosch and Uponall,” said Lawrence Rezetal, director of international business strategy for the Minnesota Trade Office, part of the Department of Employment and Economic Development. “These companies represent a wide range of industries, and Minnesota is an attractive state with an economy that supports and interacts with a variety of different industries.”
But in 2022, the state lost three notable expansions due to regulatory hurdles, totaling 350 potential new jobs and $1.2 billion in capital investment. In those cases, the companies involved (Hoover Engineered Woods, Epitome Energy and Talon Metals) took their projects to other states, raising concerns that Minnesota’s permitting and regulatory system is overly burdensome.
Waltz and Big Business’ Tax War
Taxes have been a major point of contention between Walz and much of Minnesota’s business community. The state ranks 44th in the Tax Foundation’s 2024 State Business Tax Climate Index, with the highest corporate tax rate in the country at 9.8%. Walz proposed tax increases on high-income earners and corporations to fund social welfare programs and education, which drew pushback from business groups but ultimately became law. On the other hand, he has supported tax cuts for small businesses, especially during the pandemic.
Grow Minnesota!, a partnership between the Minnesota Chamber of Commerce and local chambers of commerce and economic development organizations, surveyed more than 170 Minnesota businesses, economic developers and site selectors across the state. Survey respondents rated Minnesota’s tax rate as the top barrier for businesses considering expanding into the state.
“Governor Walz has a long track record of serving Minnesotans through difficult times, whether in the National Guard, the Legislature or as Governor, but he has missed opportunities during his time in office to make Minnesota’s economy more competitive,” Doug Rune, president and CEO of the Minnesota Chamber of Commerce, told Forbes.
“Many progressive policies passed by the Legislature and signed by the Governor have limited the private sector from realizing its economic potential. This has catapulted Minnesota onto the national stage, but there is still much work to be done here to improve the business climate,” he added.
On the positive side, businesses and site choosers cite Minnesota’s strong workforce and developed industry clusters in areas like life sciences, skilled manufacturing and natural resource-based industries as competitive advantages for the state, and 41 percent of businesses surveyed said they plan to expand within the state.