Tag: economic system of Minneapolis

Has the number of business establishments in Minneapolis increased since 2006?

Analyzing data always provides interesting insights. For example, a simple analysis of establishment (business) data from the Minnesota Department of Employment and Economic Development (DEED) reveals some fascinating insights into the systems dynamics – a system changing over time – of the Minneapolis marketplace with respect to business firms.

As the data, Graph 1, reveals, the number of establishments, or businesses, in Minneapolis has been decreasing for at least the past 10 years. Why is this so? This blog will not venture into such speculation. This is because the system’s perspective is limited to only establishment data. A multivariate perspective (multiple perspectives) is needed to find such possible reasons.

 

Graph 1

As Graph 1 illustrates, the number of firms per quarter has been decreasing since at least 2006. And although this rate has been variable, which is to be expected because the marketplace is probabilistic, the overall trend has been negative.

Furthermore, this overall negative trend can be shown in a couple of different ways. First, it can be illustrated via linearization. As Graph 2 shows, the overall trend is negative. That is, the Minneapolis marketplace decreased in the total number of establishments between the 1st Quarter of 2006 and the 3rd Quarter of 2016.

Graph 2

It should be noted that the linearization seen here is not the same linearization as in dynamical systems. In dynamical systems, linearization is an approximation “to a function at a given point.” Obviously this is not the case here.

Again, the main idea to take away from linearization, in the way it is used here, is the overall trend of the graph – did the marketplace gain businesses over the period stated in Graph 2, did the marketplace lose businesses over the period stated in Graph 2, or did the marketplace remain about the same over the period stated in Graph 2?

And finally, the marketplace behavior of business establishments in Minneapolis can be illustrated through Vector Algebra. Yes! That’s right – Vector Algebra. In this case, there will be no math included, just an illustration of direction via Graph 3, so there is no reason to be alarmed.

Graph 3

As Graph 3 shows, the overall dynamics, or vector, of the marketplace is negative in regards to the number of establishments from the 1st Quarter of 2006 through the 3rd Quarter of 2016. And the vectors, those letter “a’s” with the hats over them, further illustrate a greater decrease in total establishment between the 1st Quarter of 2006 and the 3rd Quarter of 2010 than between the 3rd Quarter of 2010 and the 3rd Quarter of 2016.

Of course, these vectors could further be broken into smaller vectors. But the way the algebra works, each vector that is computed in this system should add up to the overall vector, which is negative. Thus, this decomposition of the system behavior provides a more conclusive way of viewing the dynamics of this particular system than how linearization is being used here. And the vector idea, along with the math, supports the initial observation. That is, the total number of establishments in the Minneapolis marketplace has decreased since at least the 1st Quarter of 2006.

So how does this market behavior compare to the county or state level? How does Minneapolis compare to the zip codes that reside within it?

And another interesting question to ask one’s self is, has employment increased, decreased, or stayed the same in Minneapolis? And what does this mean for the number of employees per establishment?

 

Matt Johnson is a writer for the Urban Dynamics blog; and is a mathematical scientist. He has also contributed to the Iowa State Daily and Our Black News.

You can connect with him directly in the comments section, and follow him on LinkedIn or Facebook

Photo credit: The Systems Scientist

 

 

 

 

 

Copyright ©2017 – The Systems Scientist

 

Challenging Forbes|Economic Elements of a City

Photo Courtesy of ids-center.com - Nicollet mall in the evening
Photo Courtesy of ids-center.com – Nicollet mall in the evening

According to the 2014 Forbes 1000 list, Minneapolis is home to nine Forbes 1000 companies: Target, U.S. Bancorp, General Mills, Medtronic, Ameriprise Financial, Donaldson Company, The Valspar Corporation, Xcel Energy, and Thrivent Finanacial for Lutherans. Forbes lists all nine companies with Minneapolis addresses. However, there is a discrepancy.

Indeed, six of the Forbes 1000 companies reside in Minneapolis proper, or within the Minneapolis political boundaries put forth by the Minneapolis charter. Matter of fact, all six companies are clustered together in the 3rd Ward of Minneapolis only a few blocks away from the birth place of Minneapolis itself – The Falls of St. Anthony. Three of these companies are located on the Nicollet Mall – Target, Excel Energy, and U.S. Bancorp. Their respective headquarters are within a hop, skip, and a jump from each other. The other three Forbes 1000 companies located in the economic hub of Minneapolis, Ameriprise, Valspar, and Thrivent, are located on 2nd Ave, South 3rd St., and 4th Ave, respectively. But there are three that reside outside of the Minneapolis political boundaries.

The Donaldson Company is located a good 10 to 15 miles outside of the most northern boundary of Minneapolis, near Blaine; General Mills is located a few miles west of Minneapolis right next to Golden Valley right off of the 169 and 394 interchange; and Medtronic, one of the most well-known medical device companies around, is located in Fridley, just a few miles North of Minneapolis. Why is this important?

First, Minneapolis has well established political boundaries. Within these boundaries, there are 13 Wards; and within these wards, there are dozens of neighborhoods. Second, there are cultural boundaries. In other words, each part of the city – Downtown, Campus (Southeast Minneapolis), South Minneapolis, Southwest Minneapolis, North Minneapolis, and Northeast Minneapolis – each have a personality. Together, these personalities make up the total personality of Minneapolis. In addition, these personalities interact with each other and interact with the politics of Minneapolis. These political boundaries provide a space for these respective cultural personalities to interact with the economic hub of Minneapolis. Similar to most other western cities, Minneapolis’ economic hub in centralized with respect to geography; and there is a dynamic behavior that resonates from this economic hub, thus interacting with the respective parts of the city. But there is also proximity.

Urban/Civic Sites
Urban/Civic Sites – Thrivent Financial, Downtown Minneapolis

Because of the respective locations of Donaldson, General Mills, and Medtronic, they do not experience the same interactive intensities as the companies in the economic hub of Minneapolis. This is because of their respective proximity to everything else. Think of it like gravity. The further away an object is away from a gravitational field, the less gravity the object will feel. This urban gravity could be the density of the population, the increased interactions of people due to the increased numbers of people, the rate of business traffic, the number of other businesses that exist near the corporation, and the increased number of potential opportunities due to proximity and exposure. There is also traffic: automobiles, buses, and light-rail.

Another way to think about this would be to consider a packed dance floor full of people. There is more activity and energy taking place at the core; whereas, there are less people with less energy on the outskirts of the dance floor. What part of the dance floor is better for business? What part of the dance floor is better for interacting with other people? What part of the dance floor increases potential and potential outcomes?

If the most basic definition of a system is its elements, the interaction between its elements, and the function of the system, then can Donaldson, General Mills, and Medtronic really be included in the general Minneapolis system itself? Can they really be considered to be interactive with the other economic elements of the city?

Should they be included in the economic system? Does the political system have the same boundaries as the economic system? The cultural boundaries are indeed not the same as the political boundaries. Perhaps there is an argument for including Donaldson, General Mills, and Medtronic into the economic system of Minneapolis? But then what about the smaller businesses that exist outside the city boundaries between Donaldson, General Mills, and Medtronic? Should they also be included?