demographic change and the “new normal”
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Demographic Change And The “New Normal”. Tom Gillaspy, State Demographer Mn Dept of Administration September 2010. Minnesota Has Been Very Successful (Especially For A Cold Weather State at the End of the Road). Our economic growth rate has exceeded the national average - PowerPoint PPT PresentationTRANSCRIPT
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Demographic Change And The “New Normal”
Tom Gillaspy, State DemographerMn Dept of Administration
September 2010
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Minnesota Has Been Very Successful(Especially For A Cold Weather State at the End of the
Road)
• Our economic growth rate has exceeded the national average
• Our population growth rate leads the frost belt• We rank with the leaders on many social and
economic indicators• Education has been a key contributor to the
state’s success
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Minnesota Has Outperformed the Nation Since 1950
Index to US of Disposable Per Capita Income
US BEA
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Minnesota Ranks Highly in Many Social/Economic Indicators
• 4th percent of 16-64 employed (78.5%) Statistically tied with 3 states for first
• 2nd cost of living adjusted per capita income (OK DOC)
• 8th lowest poverty rate • 1st percent with health insurance
2004-06 ave• 10th median family income 13%
above the nation• 2nd Kids Count 2008• 4th most livable state (Morgan
Quinto Press)
• 3rd lowest rate of disability among people age 21-64
• 2nd with at least high school degree (91.6%) statistically tied with Wyoming & Alaska
• 11th with at least a bachelor’s degree• 1st home ownership (75.2%)• 4th United Health Foundation ranking
of state healthiness 2008
Updated September 2009
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U.S. Employment Not Expected to Return to Pre-Recession High Until Spring 2013
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Minnesota’s Unemployment Rate Is Well Below the U.S. Average
July 2010—Mn 6.8%; US 9.5% Seasonally Adjusted
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National Mobility Has Fallen To Its Lowest Point Ever Recorded
Census Bureau, 2009 CPS and historical
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The Great Recession Has Raised the Level of The Great Recession Has Raised the Level of Social AngstSocial Angst
But What Is Really HappeningBut What Is Really Happening
Is That We Have Entered A Is That We Have Entered A
““NNeeww NNormal”ormal”
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Minnesota Saw a 30 Percent Jump in Workers Turning Age 62 in 2008
0
10,000
20,000
30,000
40,000
50,000
60,000
7/05 to7/06
7/06 to7/07
7/07 to7/08
7/08 to7/09
7/09 to7/10
7/10 to7/11
7/11 to7/12
Year Turning Age 62
Wor
ked
With
in P
ast 5
yea
rs
2005 ACS
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Social Security Retirement New AwardsMonthly Average
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Competition For Future College Students Will Increase
6.8%
4.5%
-1.6% -2.2%
13.0%
-1.2%
-3.5% -3.0%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
2000-05 2005-10 2010-15 2015-20
Perc
ent C
hang
e 18
-24 US
Mn
Census Bureau US Proj, Mn State Demographer revised 2007. The 18 year oldpopulation, both Minnesota & nationally are projected to decline starting 2009.
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Minnesota’s Labor Force Is AgingIn 1990, the peak was 30; in 2007 it was 46
1990, 2007 ACS, smoothed 3 year averages
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Labor Force Growth Is About To Slow Sharply
1.52%
1.12%
0.75%
0.43%
0.10% 0.13%0.27%
0.0%0.2%0.4%0.6%0.8%1.0%1.2%1.4%1.6%
1990-2000
2005-10 2010-15 2015-20 2020-25 2025-30 2030-35
Ave
Ann
ual C
hang
e
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For Many Occupations, Replacements Will Outnumber New Job Growth
Projected Openings In Minnesota Occupations 2009-19
DEED projections. Percent of 2009 level
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World Labor Force Growth SlowingProjected Change In Working Age Population (15-64)
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
Ann
ual %
Cha
nge
Continent
2000-102010-20
U.S. Census Bureau
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Labor Force Growth Is Slowing In Much Of The World
ILO forecast
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One Response to Labor Demand Has Been Immigration
Minnesota’s Foreign Born Labor Force Has Increased, Especially in Younger Ages
1990 Census, 2007 ACS, smoothed
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In 2006, Minnesota’s Foreign Born Workforce Was 240,000 or 8% Of The Total Workforce
0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000
Less Than HighSchool
High School
Some College
Bach+
2006 ACS
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The Economic/Demographic Environment Has Changed for as Far as We Can
Forecast
Short run economic cycle has merged with long run demographic cycleWe have entered the Age of Entitlement—economic growth in the next 25 years will be slower than what it was in the past 25.This is a national/global issue
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The “New Normal” Probably Means• Higher interest rates• Slower economic growth• Increasing numbers of retirees• Less consumption; more saving• More staycations/other personal spending cuts• More renters/fewer owners• Disappearance of some occupations/creation of new
ones• A more diverse population
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The “New Normal” Probably Means--2
• More uncertainty about the future
• A shift in the balance between private and public sectors
• Chronic government deficits & cuts in service
• Worries about how to pay for past promises
• Creative destruction/disruptive innovation will change the way we deliver services
• A whole new way of looking for opportunities
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Grieving For The “Old Normal”• Denial – “This is not happening.” “Just wait, things will return to
normal.”• Anger -- “Who is to blame?” Rage and gridlock rule and anyone
who symbolizes life, energy, progress, success, happiness, etc. is treated with resentment and mistrust.
• Bargaining – “I’ll change if this just goes away.” Somehow, we can get back to the old normal if we just return to good, ole fashioned (conservative/liberal) values.
• Depression (emotional, not economic) – “What’s the point in trying?” “We are all doomed anyway.” The certainty/finality of events is finally recognized.
• Acceptance – “It’s going to be okay.” Looking for opportunities begins.
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But Why Fear The New Normal?It Plays To Our Strengths!
Future economic growth will depend increasingly on increasing productivity and less on labor force size
Education has been the key to Minnesota’s productivity and prosperity
Future productivity increases will depend on decisions and the investments we make now
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Future economic growth will depend increasingly on increasing
productivity and less on labor force size
Productivity Is Not Just Producing at a Lower Cost
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Increasing Productivity Also Means
Making things better
(improved quality)
Making better things
(innovation, new products)
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Increasing Productivity Also Means A Better Educated Workforce
• 70% of Minnesota job openings will require at least some college--63% nationally
• In 1973, 28% of job openings required some college
• Minnesota is the 3rd most education intensive job market in the nation
• Nationally, college degrees conferred will need to increase by 10% a year by 2018 to meet the demand for skilled workers and avoid slower economic growth
Georgetown Univ Center for Education and The Workforce
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The Fiscal Catch-22
If we don’t make the necessary public investments in human capital, research and infrastructure, then we won’t have the productivity gains needed to provide the resources to make those investments.
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“If something can't go on forever, it will stop.”
Herbert Stein, Chair President Nixon’sCouncil of Economic Advisors
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“I skate to where the puck will be, not to where it has been.”Wayne GretzkyFamous Canadian Philosopher