Has Tim Walz Been Good For Business In Minnesota?

In making the media rounds and delivering stump speeches since being selected as Democratic candidate for vice president, Governor Tim Walz frequently references Minnesota as a top state for business while also touting his worker-friendly economic policies.

Whether Walz has been good for business will be under scrutiny as the U.S. elections heat up and as Donald Trump and his running mate J.D. Vance attack his record.

Since assuming office in January 2019, Walz has placed a heavy focus on economic growth and workforce development mixed with progressive policies that promote equity and sustainability. During his tenure the state has enjoyed an uptick in business expansion projects, but his tax and regulatory policies have drawn criticism from parts of the business community 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 is geared towards preparing the workforce for highly skilled jobs in healthcare, technology and renewable energy. He has also pushed for substantial investments in Minnesota’s infrastructure, particularly transportation, as a means of improving the state’s attractiveness for investment.

Another focus area for Walz’s administration has been on sustainability and transitioning Minnesota towards a green economy. In 2023 he signed the Clean Energy First bill which set ambitious goals for renewable energy, aiming to make Minnesota’s electricity sector carbon-free by 2040. In June 2024, he signed a bill to create an expedited review process for small wind and solar projects.

As a result, Minnesota has seen growth in the renewable energy sector under Walz’s leadership. The U.S. Department of Energy forecasts an estimated $8.5 billion of investment in large-scale clean power generation and storage in Minnesota between now and 2030.

Minnesota’s Importance as a Business Hub

As highlighted frequently by Walz, Minnesota was ranked fifth in CNBC’s annual America’s Top States for Business ranking for 2023, although it was knocked down to sixth place in the 2024 ranking which was released in mid-July.

Despite its small population of less than 6 million people, Minnesota has an outsized importance as a business location. The state hosts the headquarters of 17 Fortune 500 companies, including Best Buy, 3M, General Mills, Target and United Health Group. The largest private company in the country, Cargill, is also based in Minnesota.

Meanwhile, more than 900 foreign-owned companies from around 40 countries are located in the state, employing more than 170,000 people, according to the Minnesota Department of Employment and Economic Development. Data from the International Trade Administration shows the percentage of Minnesota’s employment by foreign-owned enterprises has risen from around 5.7% in 2018 (160,700) to around 6.4% in 2021 (169,300).

After a Covid-led downturn in 2020, business investment and expansion projects surged in Minnesota in the following two years, according to figures from the Conway Projects Database which were analyzed in a report by the Minnesota Chamber of Commerce. The database records projects with a minimum investment of $1 million, creation of 20 or more new jobs or 20,000 square feet or more of new construction. Minnesota posted 184 such projects in 2022, marking an 11-year high.

“We have seen dramatic expansion in Minnesota from several internationally-based employers over the past few years, including at SICK, Cirrus, Yanmar, Daikin, Nidec, Polar Semiconductor, Bosch and Uponor,” says Laurence Reszetar, international business strategy director with the Minnesota Trade Office, which is part of the Department of Employment and Economic Development. “These companies represent a broad cross-section of industries, which also makes Minnesota attractive since we have an economy where our diverse industries interact and support each other.”

However, in 2022 the state lost three notable expansions due to regulatory barriers, totaling a combined loss of 350 potential new jobs and $1.2 billion in capital investment. In these cases the companies involved — Huber Engineered Woods, Epitome Energy and Talon Metals — took the projects to other states instead, adding to worries that Minnesota’s permitting and regulatory system is overly onerous.

Battle Over Taxes Between Walz And Big Business

Tax has been a key point of contention between Walz and many parts of the business community in Minnesota. The state ranks 44th in the Tax Foundation’s 2024 State Business Tax Climate Index and has the highest corporate tax rate in the country, at 9.8%. Walz proposed raising taxes on higher-income earners and corporations to fund social programs and education, which faced pushback from business groups but were eventually signed into law. On the other end of the spectrum, he has supported tax relief for small businesses, particularly during the pandemic.

Grow Minnesota! — a partnership between the Minnesota Chamber of Commerce and local chambers and economic development organizations — conducted a survey of more than 170 Minnesota businesses across the state as well as economic developers and site selectors. Survey respondents ranked Minnesota’s tax rates as the top barrier for businesses considering expanding in Minnesota.

“Governor Walz has had a long record of serving Minnesotans in the national guard, Congress and as governor during challenging times, but there have been missed opportunities during his tenure to make Minnesota’s economy more competitive,” Doug Loon, president and CEO of the Minnesota Chamber of Commerce tells Forbes.

“Many progressive policies passed by the legislature and signed by the governor have limited the private sector from reaching its economic potential. This propels Minnesota to the national stage but there is much more to be done here to improve our business climate,” he adds.

On the plus side, businesses and site selectors cited Minnesota’s strong workforce and well developed industry clusters in areas like life sciences, skilled manufacturing and natural resource-based industries as competitive advantages for Minnesota. And 41% of business polled said they have plans to expand in the state.