Why has Minnesota’s per capita income growth lagged that of the United States since 2014?

By John Phelan. Excerpts:

"Back in November, I noted that since 2014, Gross Domestic Product (GDP) per capita growth in Minnesota has ranked 38th out of 50 states." 

"Minnesota’s rate of real per capita GDP growth has lagged that of the United States generally (highlighted in black) in every year but one since 2014. Only Wisconsin has lagged the nation for more years."

"As a result of this persistently below average growth, the economic “premium” Minnesotans used to enjoy for living in the state in terms of a level of per capita GDP significantly above the national level, has almost disappeared." 

"In 2004 this premium stood at $4,973 per Minnesotan and was still $4,658 in 2014. Since then, however, it has fallen dramatically to just $239 per Minnesotan in 2024."

"Using a technique known as “growth accounting,” we broke down the growth rate of per capita GDP into its components; the per capita growth rate in human capital, physical capital, and Total Factor Productivity (TFP)."

"across each of the sources of real per capita GDP growth, Minnesota performed worse than the United States generally. Our state saw no growth in its per capita stock of human capital over this period while, for the country at large, it grew at an average annual rate of 0.2% annually. Minnesota’s per capita stock of physical capital grew at an average annual rate of 0.4%, but this was below that of the United States generally of 0.7%. And, again, while TFP in Minnesota increased at an average rate of 0.7% annually, across the United States it increased by 1.0%.

Of course, this only begs further questions: Why was the per capita growth rate of human capital, physical capital, and TFP slower than that of the United States generally? To investigate these questions, over the coming weeks we will delve deeper into the data behind these figures."