‘Frost Belt’ Minnesota Stays Hotter Than Neighbors With Diverse Economy

Minnesota’s snow and cold aren’t deterring residents drawn to its thriving medical technology industry, performing arts and service jobs that attract immigrants from as far as sub-Saharan Africa.

The state’s population grew 7.8 percent between 2000 and 2010, more than anywhere else in the Midwest except South Dakota, to reach 5,303,925 people. More than 80 percent of the increase came from minorities, U.S. Census Bureau data released yesterday show.

Non-Hispanic whites remain because of a diverse economy marked by technology companies such as Medtronic Inc. (MDT), the world’s largest maker of heart devices, and a cultural scene known for Garrison Keillor’s “A Prairie Home Companion” radio show. Immigrants are pulled by service-sector jobs and affordable housing.

“For a frost-belt place, we do really well,” said Tom Gillaspy, the state’s demographer. “We weren’t so much into heavy industry, like the folks to the east of us.”

The economic diversity has helped Minnesota weather economic downturns that have hurt other cold-weather states.

Companies with headquarters in Minnesota include Target Corp. (TGT), 3M Co. (MMM), Best Buy Co., General Mills Inc. (GIS) and Piper Jaffray Cos. (PJC) It’s also home to former Governor Tim Pawlenty, a potential 2012 Republican presidential candidate.

Twin Cities

Minneapolis and St. Paul, the state’s two largest cities, both saw slight population declines, as suburban counties that circle them grew, census data show. Minneapolis saw its population drop by 40 people to 382,578, while St. Paul lost 2,083 people to finish the decade at 285,068, a 0.7 percent decline.

Rochester, home to the Mayo Clinic in southeastern Minnesota, is the state’s third-largest city. Its population grew 24.4 percent to 106,769, the census found.

During the worst recession since the Great Depression, Minnesota’s unemployment never was as high as the national average. It peaked at 8.4 percent in May and June 2009 and has been on the decline since. By January, the most recent month available, it was down to 6.7 percent, below the U.S. average of 8.9 percent in February.

The Bloomberg Star Tribune 100 Index, a price-weighted measure of Minnesota companies, is up 11.4 percent in the past year. Compared with the 8.4 percent recorded by the Standard & Poor’s 500 index, those Minnesota-based stocks are above average, not unlike the children in the fictional town of Lake Wobegon that plays a central role in Keillor’s weekly radio program, which started in St. Paul in 1974.

Political Capital

Minnesota’s population grew less than the national average of 9.7 percent during the decade, though it was enough for the state to maintain its eight seats in the U.S. House.

Non-Hispanic whites account for 83.1 percent of the state’s population, down from 88.2 percent in 2000. The Hispanic population grew by 74.5 percent during the decade and represents 4.7 percent of the population. The number of black residents soared 59.4 percent while Asians increased 51 percent. Blacks now represent 5.1 percent of the population, while Asians are 4 percent.

Though Minnesota offers “radically different” weather than their native lands, immigrants from Somalia, Kenya and Liberia are some of the state’s most recent arrivals, Gillaspy said. Yesterday’s census release doesn’t include data detailed enough to identify the growth of those groups.

African Migration

Somalians started coming to Minnesota in the mid-1990s, after first arriving in eastern U.S. states, Gillaspy said, as the state was experiencing a labor shortage. There are about 20,000 people in Minnesota born in Somalia and the full community, including children, is about 30,000 people, he said.

Minnesota’s secret to success is a long tradition of economic diversity, said Bill Blazar, a senior vice president for the Minnesota Chamber of Commerce.

“We are a good 400 miles off of the major east-west trade route,” he said. “We’re very much a part of the world economy now, but 100 years ago we were pretty isolated.”

The state’s economy includes a farm sector benefiting from corn and soybean prices that, before a falloff this month, were at levels not seen in more than two years.

While Minnesota’s unemployment rate is below the national average, Blazar said companies tied to housing, such as Andersen Corp., a Bayport, Minnesota-based manufacturer of windows and doors, have been hurt by the recession.

‘Still Edgy’

“People are still very edgy about where the economy is headed,” he said. “It’s not like we are invulnerable, but the fact that we are diverse helps.”

The state was a leader in mainframe computers in the 1970s and saw a decline with the emergence of the personal computer, Gillaspy said.

“It really caught us in the early 1980s, but the transition started then increasingly to high-tech medical products,” he said.

St. Jude Medical Inc., the world’s second-biggest maker of heart-rhythm devices, after Medtronic, is also based in Minnesota, as are medical technology companies Vital Images Inc. (VTAL) and Vascular Solutions Inc. (VASC)

Most of the state’s population growth took place around the Minneapolis-St. Paul metropolitan area, as well as a corridor from St. Cloud in central Minnesota to Rochester.

St. Cloud, the state’s eighth-largest city, grew 11.4 percent during the decade. Duluth, the fourth-largest city, saw its population drop 0.8 percent.

Ice Queen

Minnesota’s reputation for frigid weather started in 1819 when soldiers at the frontier post of Fort Snelling wrote letters to relatives on the East Coast about the cold, according to the Minnesota Department of Natural Resources.

International Falls, in the northern part of the state, is the coldest major National Weather Service station outside of Alaska, with an average annual temperature of 37.5 degrees Fahrenheit (3 degrees Celsius), and Minneapolis-St. Paul is the coldest major U.S. population center, the state agency said.

The weather leads to jokes about the cold and snow, even as Minnesota keeps growing. The state’s companies exported a record $4.6 billion in products in the fourth quarter of 2010, the Minnesota Department of Employment and Economic Development said in a March 15 news release.

“It’s not always real exciting, but it is pretty regular,” Gillaspy said of Minnesota’s population and business growth. “That has served the state well.”

To contact the reporter on this story: John McCormick in Chicago at jmccormick16@bloomberg.net.

To contact the editor responsible for this story: Flynn McRoberts at fmcroberts1@bloomberg.net.

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