Thursday, December 18, 2008

Unemployment Forecasts for 2009

Today's local newspapers in Minnesota reported the following unemployment forecasts for 2009:

Upper Peninsula of Michigan -- 11.4%
Minnesota -- 7%
Wisconsin - 5.6%
Montana - 4.3%
North Dakota - 4.1%
South Dakota - 3.4%

Source: Federal Reserve Bank of Minneapolis

The 11.4% rate in the UP of Michigan doesn't surprise me for two reasons: 1.) Michigan's state government has taxed and regulated the state economy into a near-depression, and 2.) There is just not much "employment infrastructure" in the UP to start with especially when tourism spending is probably down due to the poor national economy.

But coming in at second place is my beloved Land of 10,000 Taxes - Minnesota at 7%. I really hope I am wrong but I fear our 2009 legislature will propose yet again the nation's highest personal income tax rate to "create jobs in Minnesota.........."

Instead of looking to St. Paul for answers Minnesotans should look west to our neighbor - South Dakota - who is at 3.4% unemployment which in economic terms is considered "full employment" since you always have some shifting in the labor market.

Perhaps one key difference between Minnesota and South Dakota is the fact that South Dakota has ZERO personal income tax which helps keep entrepreneurs in the start creating more jobs.

If there are other factors that readers want to note for me to study please let me know. We have tried the "tax and create jobs" model for too many years in Minnesota so let's use 2009 to implement the "South Dakota Model" by phasing out our personal income taxes.

Todd (please see my other commentaries at -- )

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