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The 5 biggest economic stories in Minnesota from 2018

From HQ2 to Janus, a look at the year in economic development. 

Amazon Seattle HQ
What was inside the Twin Cities’ bid that didn’t attract Amazon? Nobody is quite sure, since the state is fighting a lawsuit to avoid telling the public.
MinnPost photo by Peter Callaghan

It was a year with highs and lows for Minnesota’s economy, marked by turnover in the state’s technical college system, trade war uncertainty, rosy economic numbers and an escalating shortage of workers. Here, a look at the year in Minnesota’s economic development:

1. A new leader for Minnesota State

After two failed nationwide searches for a new chancellor, the board of trustees at the Minnesota State system of colleges and universities tapped someone close to home: interim Chancellor Devinder Malhotra. Over its nearly two-year long search process, the board rejected six finalists to replace the outgoing Steven Rosenstone. Malhotra, who was not formally part of the search, was previously a provost at St. Cloud St. University.

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Minnesota State is considered to be a critical part of the state’s economy. The system serves more than 375,000 students at its seven universities and 30 community and technical colleges.

And while Minnesota State is key to reducing the state’s shortage of trained workers, the system is facing tight budgets and declining enrollment, and the board is asking the Legislature for $246 million in new spending in the state’s two-year budget to address some of its problems.

2. Minnesota misses out on HQ2, Army headquarters

Apparently tired of Seattle and looking to expand, Amazon embarked on a quest in 2017 to find a new home for its second headquarters, dubbed HQ2. The Internet giant solicited bids from cities large and small, many of which salivated at the prospect of an Amazon-induced economic jolt.

In the end, the company picked New York City and a Washington D.C. suburb. Alas, no new big-money jobs (or extra jump in housing prices) for Minnesota. What was in the Twin Cities’ bid that didn’t attract Amazon? Nobody is quite sure, since the state is fighting a lawsuit that seeks to find out.

Despite a spirited lobbying effort, the Twin Cities also missed out on the Army’s new Futures Command center, which would have brought a 500-person team focused on ensuring the U.S. is at the forefront of military and combat technology. The Army instead picked Austin, Texas.

3. Unemployment swings low

O.K., so Minnesota didn’t win the sweepstakes for new Amazon or Army headquarters, but the state’s economy is hardly in shambles. In September, Minnesota’s unemployment rate fell to 2.8 percent, its lowest since May 1999. To compare, the national unemployment rate was 3.7 percent. For context, the state’s lowest ever unemployment rate is 2.5 percent. 

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That 2.8 percent rate comes with a few caveats, though. A broader measure of unemployment, which includes people who are working part time but who want and can’t find a full-time job, pegs Minnesota at a 5.4 percent rate. (The country’s rate in this measure, known as U-6, was 7.6 in November.) The state also has more than 142,000 open jobs and an increasingly tight labor market.

4. ‘Tariff Man’ Trump and his policies make waves in Minnesota

Donald Trump’s presidency has brought the hope of jobs to mining advocates in Northern Minnesota while simultaneously rankling the agriculture industry in the southern part of the state.

The president imposed strong tariffs on international steel and aluminum coming into the U.S., a move cheered by domestic companies and Minnesota’s long-shrinking iron mining industry. The Trump administration also ended a study on how copper-nickel mining in northern Minnesota might affect Superior National Forest and the nearby Boundary Waters Canoe Area. The decision removed a major barrier to potential copper-nickel mining in Northern Minnesota as the study could have resulted in a 20-year moratorium on such extraction.

At the same time, the ongoing trade war invited new tariffs on American corn, soybeans and pork from China and Mexico. Those industries are critical in southern Minnesota and left many farmers with anxiety over dropping prices and, in some cases, yields they can’t sell.

5. Janus decision changes unions

In June, the U.S. Supreme Court struck down so-called “fair share” fees that public-sector unions charge nonmembers to cover the cost of collective bargaining. Conservatives and anti-labor groups said the decision in Janus v. AFSCME was a win for free speech, but unions said it was a blow to their power and allowed people to get benefits from unions without actually paying for them.

Either way, it was a decision with long-term ramifications for organized labor. MinnPost found in July that only 5 percent of the state teachers union, Education Minnesota, were nonmembers who pay “fair share” fees. But some within the union leadership saw the Janus ruling as detrimental nonetheless.

“The decision is exactly what we expected,” Education Minnesota president Denise Specht said at the time. “We knew it was going to be an example of wealthy elites and corporations trying to rig the economy to make it harder for working people to get ahead.”