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Minnesota employers worried about keeping competitive edge

Minnesota employers are more optimistic about the economy than they have been in recent years. At the same time, as business optimism returns to pre-recession levels in Minnesota, employers are concerned that the costs of doing business in Minnesota may slow continued economic growth.

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These findings highlight the 10th annual Minnesota Business Barometer Survey, co-sponsored by the Minnesota Chamber of Commerce and Himle Rapp and Company.

Forty percent said the economy is getting better, compared with 31 percent a year ago. Thirty percent of the respondents reported higher profits than a year ago, and 48 percent said earnings were about the same.

Despite this positive report, just 37 percent of owners and managers stated that Minnesota’s business climate is better than most other states, the smallest number in the 10-year history of the Business Barometer and a drop from 59 percent at the height of the recession in 2010.

“Business owners and managers have become more concerned that Minnesota is losing ground with other states,” said Minnesota Chamber president David Olson.

Olson underscored the business community’s lack of confidence in the state’s policy-makers. Ninety-three percent of respondents believe the governor and Minnesota Legislature play an important role in determining Minnesota’s business climate, but only 21 percent of those say the role has been positive over the last year.

Among other findings was the impact of the new tier in the personal income tax enacted by the 2013 Legislature, making Minnesota’s top rate among the highest in the nation.

Seventy-two percent of respondents said the tax increase will have a somewhat or very significant impact on business operations, and 55 percent said it will reduce their ability to add jobs.

The survey identified four key barriers to improving the state’s business environment:

• High taxes drew the greatest attention.

• Government regulations stand in the way of economic growth.

• Costs continue to increase for employers who provide health insurance.

• Employers still struggle to find qualified workers.

The concern over tax burdens reinforces the Minnesota Chamber’s top agenda item for the 2014 Legislature: To eliminate the sales tax expansion on business-to-business services, Olson noted.