Minnesota Economy: Healthcare, Retail, and Cold-Climate Innovation

Minnesota is a mid-sized state economy, usually ranked in the upper third of U.S. states by GDP per person — the dollar value of everything a place makes and sells in a year, divided by population. The Minnesota economy is unusually diverse for a Midwestern state: healthcare, retail, finance, food, and manufacturing all play big roles.

This is a plain-English tour. For the national picture, see The State of the U.S. Economy and the Economy hub.

How big is the Minnesota economy?

For example, recent state GDP for Minnesota has run around $475 billion, according to the Bureau of Economic Analysis. Population is roughly 5.8 million, per the U.S. Census Bureau. The Twin Cities (Minneapolis-St. Paul) metro holds about 60% of the state's population and an even larger share of its economic output.

The biggest industries

Minnesota has one of the most diversified industry mixes in the country. The main pillars are:

• Healthcare — anchored by the Mayo Clinic in Rochester, plus large systems like Allina, Fairview, and HealthPartners in the Twin Cities; medical devices is a related cluster.
• Retail — Target and Best Buy are headquartered in the Twin Cities, and the Mall of America is the largest mall in the United States.
• Finance and insurance — U.S. Bancorp and several large insurance companies are headquartered in Minneapolis.
• Food and agribusiness — Cargill, General Mills, and Hormel are all Minnesota-based; the state is a top producer of corn, soybeans, sugar beets, and turkeys.
• Manufacturing — 3M, Polaris, and Donaldson are major Minnesota manufacturers.
• Mining — northern Minnesota's Iron Range supplies most of the iron ore mined in the United States.

Jobs and wages

Minnesota labor data is published by the Minnesota Department of Employment and Economic Development, with national-level numbers from the Bureau of Labor Statistics. For example, the Minnesota unemployment rate has typically run well below the national average — Minnesota is consistently one of the tightest labor markets in the country.

The Minnesota minimum wage is set by the state and is above the federal $7.25 floor; it is adjusted each year for inflation. Minneapolis and St. Paul have their own higher local minimum wages.

Taxes in Minnesota

Minnesota has a graduated state income tax with some of the higher top rates in the country. The state collects income tax aggressively but also funds well-regarded public services.

The state sales tax rate is 6.875%, with local add-ons in some cities. Clothing is not taxed, which is unusual. State tax forms and rules live at the Minnesota Department of Revenue. You can read more about how sales tax works in our glossary.

Cost of living

Cost of living in Minnesota is roughly average overall, with the Twin Cities a bit above and rural areas well below. Winters are cold but housing in most of the state is more affordable than coastal metros of similar size. The federal government tracks region-specific Consumer Price Index data through the BLS Midwest region, and HUD publishes Fair Market Rents for every county at HUD User.

The Mayo Clinic effect

The Mayo Clinic in Rochester is one of the most influential single employers in any U.S. state. It draws patients from around the world, supports a deep cluster of medical research and biotech firms, and indirectly shapes how Minnesota allocates training, transportation, and housing investment. Rochester is small but consistently one of the highest-income metros in the Midwest because so much of its workforce sits in advanced healthcare roles.

The Iron Range

Northern Minnesota's Iron Range supplies most of the iron ore mined in the United States, the bulk of which is used to make steel. The Range has been through long boom-and-bust cycles, and federal trade policy on steel imports has direct effects on local employment. Even though mining is a small share of statewide GDP, it is dominant in the counties where it operates and shapes those communities' politics and tax bases.

Twin Cities corporate density

The Minneapolis-St. Paul metro has more Fortune 500 headquarters than its size would suggest. Target, Best Buy, U.S. Bancorp, Ameriprise, 3M, Ecolab, General Mills, UnitedHealth Group, and Xcel Energy are all headquartered in the area. That concentration creates a distinctive professional services economy: large law firms, accounting firms, and management consultancies have deep Twin Cities offices to serve those headquarters, which in turn keeps a steady supply of well-paid white-collar jobs in the region.

How does the Minnesota economy fit into the national picture?

Minnesota has more Fortune 500 headquarters per capita than almost any other state. The combination of a deep talent pipeline, established corporate base, and healthcare research strength keeps the state competitive despite high taxes and a cold climate.

A note on the numbers

Numbers in this article change every quarter — always check the latest from BEA, BLS, and the Minnesota Department of Revenue for the most current data.