We paused at reading this item in the Brainerd Dispatch article, Honour wants to bring his business perspective to governor's post:
He said taxpayers and companies are leaving the state, which he said ranks 50th in the number of start-up businesses.
“I am absolutely alarmed with the direction we’re heading,” he said. “We have one of the worst business climates in the country.”
For a guy who just got here a couple of years ago, that's some insight. Yes, Scott Honour, who moved to Minnesota in 2010, is wandering around greater Minnesota telling editors about how taxpayers and companies are leaving.
Unfortunately for the readers of the Brainerd Dispatch, associate editor Mike O'Rourke doesn't bother to fact-check any of Honour's stalking points--or tell readers how recently Scott Honour arrived on our doorstep.
Let's unpack his "start-up businesses" claim, then turn to the old taxpayer and business tax refugee urban legend.
Critical thinking skills and Brand Minnesota: April's fool Kauffman index report
Honour's Debbie-downer, brand-damaging claim about the state coming in 50th in business start-ups is a slender thread to hang his hopes on, although with the crack staff at the Dispatch reprinting his claims, maybe there's hope.
Adam Belz at the Star Tribune reported in Minnesotans lag in new business starts, Kauffman index finds:
Minnesotans started fewer new businesses in 2012 than people in any other state, a troubling trend for a state with an economy built on homegrown business.
Roughly 150 out of every 100,000 Minnesotans started a new company in 2012, according to the Kauffman Foundation’s annual index of entrepreneurial activity, published this week. That compared with a U.S. average of 300 per 100,000.
Minnesota’s showing was the lowest in the nation and the state’s worst since Kauffman started tracking the index in 1996.
. . .Kauffman’s researchers used census data to estimate the percent of people between 20 and 64 who started a business in 2012. Entrepreneurial activity declined across the country, the foundation said. The number of businesses created per month fell by about 29,000 compared with 2011.
Across the Midwest, states earned weak marks in the index, the exception being Indiana. Nebraska, Michigan, Wisconsin and Ohio rounded out the bottom five.
The claim itself has received fairly thorough scrutiny. Belz reported:
“It’s likely not a coincidence that the number of new businesses created dropped when the economy improved last year,” said Dane Stangler, director of research at the Kauffman Foundation, which is based in Kansas City, Mo., and focuses its research on entrepreneurship and education. “While a stronger economy is good for business growth, it also means the unemployed find jobs instead of starting firms.”
If job creation slows entrepreneurship, then Minnesota would do poorly in Kauffman’s index, said Tom Stinson, the state economist. Minnesota’s job growth has outpaced the nation, while the unemployment rate in the state is more than 2 percentage points lower than the national figure.
Yes, that's one heck of a stat to drop in there, Scott, since the 2012 estimate reflects the state's job growth.
But there's more! Veteran business reporter Lee Egerstrom, now an Economic Development Fellow at MN2020 noted in Promoting Minnesota and Its Business Climate:
The methodology involved in forming the recent entrepreneurial assertions became the determining factor, [Secretary of State Mark] Ritchie said. At issue is a report using extrapolations from Census Bureau household data, and then estimating entrepreneurial activity. It did not use actual startup data collected by Secretaries of State in the various states. . . .
Ritchie said Minnesota’s national leadership in hosting Fortune 500 companies, providing employment for thousands of entrepreneurial and creative people, also holds back startup activity. But that still doesn’t explain the absence of benchmark data that his office collects every month for every year, and how Minnesota’s business startups keep growing.
Looking at other Midwest states with diverse economies, Ritchie said Minnesota had more startup business filings registered in 2012 than neighboring Wisconsin. Minnesota startups (60,829 filings) looked favorable when compared with Ohio (88,068 filings), despite Ohio having more than twice Minnesota’s population (11.54 million to 5.38 million).
With every passing month, and nearly every week, more conflicting news about Minnesota’s business climate and entrepreneurship keeps rolling out. For instance, business media reported on June 12 that Minneapolis was ranked the nation’s fourth best city for female entrepreneurs. The article also noted that Forbes magazine recently saluted Minneapolis as 12th on its list of “Best Cities for Female Founders.” That same day, the 24/7 Wall St. blog ranked Minnesota as fifth among the “States with the Fastest Growing Economies.” North Dakota, with its booming energy development and small population, was rated No. 1.
Not only that, but another survey that the Kaufmann Foundation itself was involved with about the time the Index was released ranked Minnesota fairly high on the list of state that are friendly to small business.
Minnpost columnist and former Public Affairs director for the Pawlenty-era Met Council Steven Dornfeld reported in Is Minnesota friendly to small businesses?:
. . . A recent survey of nearly 8,000 small businesses across the nation found that taxes were not the prime concern of small businesses when rating the business climate of their state or city, with licensing and regulatory issues ranking much higher.
“Licensing and permitting regulations were … a more powerful predictor of a state’s small business-friendliness than were taxes, even controlling for the businesses’ different industries,” the survey found.
Overall, the survey ranked Minnesota 11th among all states in business-friendliness, and the Twin Cities 17th among 57 metro areas. The survey was conducted by Thumbtack, an online business marketplace based in San Francisco, and the Ewing Marion Kauffman Foundation of Kansas City. . . .
Moreover, Republican delegates might want to think hard about picking a guy who selects the most negative metric for assessing Minnesota's business climate from 2012--since Republicans running for the state legislature want to claim that their 2011-2012 stint of controlling the legislature made things better for business.
Negative Nell Scott Honour also repeated the old saw about tax refugees. We looked at that one on June 1, 2013 in Fables of the reconstruction: New Ulm Journal fact-checks Republican tax flight talking point.
In addition to sharing the New Ulm Journal's analysis, we noted:
The assertion is nothing new--nor are the studies that dispute it. During the 2011-2012 session, when the pachyderm party controlled both chambers of the state legislature, Bluestem factchecked specific claims in May 2011's Glenn gone wild: Gruenhagen's baseless talking point about tax refugees fleeing OR & MD, June 2011's Whatever the game may be, Parry borrows tax refugee fear talk from Glencoe Glenn Gruenhagen, and October 2011's Tales of Hoffman: senator reads actual article about Maryland tax refugees, makes things up.
Perhaps Honour will come up with some specifics as he haunts editorial offices with his gloom parade.
Photos: California vulture capitalist Scott Honour can haz a sad (above; Bluestem is so not telling where we ripped that one off); Grumpy cat, grumpy facts (below).
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