Minnesota’s recent placement among the top five states for business by CNBC has ignited a fierce debate. While some celebrate this achievement, others question the ranking’s validity, pointing to economic indicators that tell a different story.
The America’s Top States for Business 2026 rankings placed Minnesota in an elite group alongside Ohio, North Carolina, Virginia, and Texas. However, critics argue that the ranking doesn’t align with the state’s economic realities, such as population loss and unemployment rates.
Quality of Life vs. Economic Reality
John Phelan an economist with the Minnesota-based Center of the American Experiment, calls the ranking completely bogus. He argues that the metrics used don’t correlate with actual business activities like startups or hiring.
Phelan highlights a stark contrast between the ranking’s quality of life category and population trends. The top-ranked states in this category lost a total of 57,641 residents, while the bottom-ranked states gained 211,511. This suggests that people are moving away from states with higher quality of life scores.
The quality of life category, which accounts for 12% of the Phelan contends that this equates progressive policies with a higher quality of life, which may not reflect economic realities.
Minnesota’s Economic Performance
Minnesota’s performance across various categories paints a mixed picture. The state ranked fourth in quality of life but struggled in other areas. Notably, it placed 31st in the cost of doing business category, indicating potential challenges for businesses operating in the state.
Other rankings include infrastructure (7th), economy (8th), education (10th), technology and innovation (14th), business friendliness (16th), access to capital (21st), cost of living (22nd), and workforce (27th). These varied rankings suggest that while Minnesota excels in some areas, it faces significant challenges in others.
Dustin Grage a Minnesota-based policy analyst, echoes Phelan’s concerns. He argues that Minnesota has lost more businesses under the current administration than any other in state history, questioning the ranking’s credibility.
The Ranking Methodology
CNBC’s study, now in its 20th year, evaluates states based on factors companies consider when making site selection decisions. The study takes into account 138 metrics across 10 categories, each weighted based on how frequently states use them as a selling point.
The categories include infrastructure, economy, workforce, cost of doing business, technology and innovation, business friendliness, access to capital, education, and cost of living. While the methodology is comprehensive, critics argue that it may not fully capture the economic realities businesses face.
As the debate continues, it’s clear that Minnesota’s top business ranking is not without controversy. While some see it as a testament to the state’s economic strengths, others view it as a misrepresentation of the challenges businesses face.
