Minnesota’s Economic Prosperity as a
Headquarters Economy
Myles Shaver
Professor and Pond Family Chair
Fesler-Lampert Chair in Urban and Regional Affairs
4/30/2016
Myles Shaver presentation to MMA
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Median household income 2011-2013
• Minnesota
– $61,162
• United States
– $51,847
(That is 18% greater than the national average)
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Median household income 2011-2013
1)
2)
3)
4)
5)
6)
7)
8)
9)
Maryland
New Hampshire
Connecticut
Virginia
New Jersey
Massachusetts
Alaska
Minnesota
Colorado
4/30/2016
Adjusted for cost of living
1) New Hampshire
2) Virginia
3) Maryland
4) Minnesota
5) Connecticut
6) Utah
7) North Dakota
8) Nebraska
9) Massachusetts
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Median household income among
25 largest metro areas in the U.S.
1)
2)
3)
4)
5)
Washington DC
San Francisco
Boston
Baltimore
Minneapolis-St. Paul
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Adjusted for cost of living
1) Washington DC
2) Minneapolis-St. Paul
3) Boston
4) San Francisco
5) Seattle
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2015 Minnesota Data
• Gross State Product (size of our economy)
– $331 Billion
• Ranks 16th among states
– Would rank 31st in the world
– Equivalent to the economy of Egypt
• Population
– 5.5 Million
• Ranks 21st
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Regional economic growth
Gross State Product 1965
Gross State Product 2015
1.2
1.2
1
1
0.8
0.8
0.6
0.6
0.4
0.4
0.2
0.2
0
0
MN
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WI
IA
ND
SD
MN
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WI
IA
ND
SD
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Regional population growth
Population 1960
Population 2010
1.2
1.2
1
1
0.8
0.8
0.6
0.6
0.4
0.4
0.2
0.2
0
0
MN
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WI
IA
ND
SD
MN
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WI
IA
ND
SD
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20 Fortune 500’s in 2011
UnitedHealth Group Target Best Buy Supervalu 3M CHS U.S. Bancorp Medtronic General Mills Land O'Lakes 4/30/2016
Xcel Energy Ameriprise Financial C.H. Robinson Worldwide Thrivent Financial for Lutherans Hormel Foods Mosaic Ecolab Nash‐Finch Alliant Techsystems St. Jude Medical Myles Shaver presentation to MMA
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MN compared to other states
Rank
1
2
3
4
5
6
7
8
8
8
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State
New York California Texas Illinois Ohio Pennsylvania Michigan Minnesota New Jersey Virginia Myles Shaver presentation to MMA
Number of HQs
57
54
50
31
26
23
22
20
20
20
9
Compared to other states – scaled by
population
Rank
1
2
3
4
5
6
7
8
9
10
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State
Minnesota Connecticut New York Nebraska Virginia Illinois New Jersey Ohio Delaware Michigan Myles Shaver presentation to MMA
HQs
HQs/Million
20
12
57
5
20
31
20
26
2
22
3.77
3.36
2.94
2.74
2.50
2.42
2.27
2.25
2.23
2.23
10
Compared to other states – scaled by gross
state product
Rank
1
2
3
4
5
6
7
8
9
10
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State
Minnesota Michigan Nebraska Ohio Connecticut New York Illinois Virginia Texas New Jersey Myles Shaver presentation to MMA
HQs
HQs/$Trillion
20
22
5
26
12
57
31
20
50
20
74.06
57.27
55.69
54.43
50.58
49.16
47.58
47.19
41.41
41.04
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MN 1955 Fortune 500
Pillsbury Mills
Minneapolis‐Honeywell Reg.
Archer‐Daniels‐Midland
Seeger Refrigerator
Minneapolis‐Moline Co.
Minnesota & Ontario Paper
Gould‐National Batteries
Marshall‐Wells
3M General Mills Hormel Foods 4/30/2016
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Evolution of the MN Fortune 500
• In 1955 there were 11
• Movement from 11 to 20
– Adding 40
– Losing 31
• Only ONE addition was a HQ move
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What does it look like regionally?
25
20
15
1955
2011
10
5
0
Minnesota
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Wisconsin
Iowa
North Dakota
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South Dakota
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Large private company HQs
• 2011 Forbes private company rankings
(out of 212 companies with sales over $2B)
1.
84.
101.
106.
158.
176.
206.
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Cargill
Carlson
Schwan’s
Holiday
Rosen’s Diversified
Mortenson
Andersen
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“Hidden” HQs
• Divisional/unit HQs of companies HQ’d
elsewhere: (MSP employment estimate)
– Wells Fargo
20,000
– Thomson Reuters
7,700
– Boston Scientific
4,500
– Honeywell
3,500
– Cummins Power Generation 2,000
Minneapolis – St. Paul Business Journal (2014)
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A concentration of large public HQ’s
2011 Fortune 500
Metropolitan Statistical Area
Minneapolis, MN
Omaha, NE
Charlotte, NC
San Francisco + San Jose
Richmond
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Number of Fortune 500 HQ’s
HQ’s per Million people
19
5
9
5.79
5.78
5.12
31
5.02
6
4.77
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Explanations
Industry Clusters
• 2011Fortune 500
– MSP:
19 Firms
15 Industries
– San Jose:
– Detroit:
12 Firms
14 Firms
6 Industries
7 Industries
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Explanations
• Moment of population to the South and
West
– Dispersion of Fortune 500 HQ’s over time
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“Business-focused” public policy
• Taxes
– Tax Foundation 2015 State Business Climate
• 47th Minnesota
• Per capita business incentive spending
– New York Times, December 2012
• 46th Minnesota
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Explanations
• Geography-Specific Benefits
– For example: Energy Companies in Texas
However:
• Diverse range of industries
– Many with no natural geographic base
• Not to say there are not relationships or reasons
• A lot of turnover in Fortune 500’s
– Many companies originally on the list are not
around
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Local ‘theories’
• Cold weather
• Scandinavian heritage
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The need for a new explanation
• Managers
– Professional managerial and administrative
workforce
• Mobility
– This workforces moves:
• between companies and across industries
• into smaller/start-up companies
• Migration
– Mobility is pronounced because regionally
retention is high
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Domestic migration data: MSP
American Community Survey (ACS) 2007-2011
•
Did this person live in this house or apartment 1 year ago?
Sample
Net Migration
Inflow
Outflow
All
(rank out of 22)
‐0.32%
(15)
2.78%
(16)
3.10%
(6th lowest)
23+,college,employ,
household inc 100K+
0.22%
(9)
1.78%
(19)
1.56%
(1 ‐ lowest)
Above & child in household between 5 and 19
0.33%
(9)
1.15%
(15)
0.82%
(1 ‐ lowest)
4/30/2016
Myles Shaver presentation to MMA
IPUMS
micro data, U of MN Minnesota Population Center
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Domestic migration data:
MSP historical
4+ years college, 23+, employed, household inc 100K+ (2011 dollars)
Year
Rank Net migration
Rank Inflow
Rank Outflow
2011
9
19
1
(lowest outflow)
2000*
12
15
2
1990*
15
16
7
1980*
10
15
3
* Decennial Census Data: IPUMS micro data, U of MN Minnesota Population Center
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Myles Shaver presentation to MMA
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Domestic migration data:
MSP historical
4+ years college, 23+, employed, household inc 100K+ (2011
dollars), child in household between 5 and 19
Year
Rank Net migration
Rank Inflow
Rank Outflow
2011
9
19
1
(lowest outflow)
2000*
14
16
2
1990*
14
17
5
1980*
10
16
1
* Decennial Census Data: IPUMS micro data, U of MN Minnesota Population Center
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Minnesota’s Economic Prosperity
• Gives rise to a lot of the quality of life
factors we enjoy
• Reflection of a unique type of economy
– Headquarters economy
• My work is trying to highlight the drivers of
this economy
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Two concluding thoughts
• The engine of our economic growth and
the associated spillover benefits is the
concentration of Headquarters activities in
the state
– This is not to imply that this is the only
economic activity in the state
– This is not to imply that it should be the only
economic activity in the state
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Two concluding thoughts
• Minnesota’s sustained prosperity will
reflect our economic competitiveness in
the global economy
– That means understanding and building upon
our economic strengths
– Our state will suffer if we are myopic and do
not understand this broad base of competition
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