… But, What About Tomorrow?
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… But, What About Tomorrow? Tom Stinson, State Economist Tom Gillaspy, State Demographer January 2007 2008
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… But, What About Tomorrow?. Tom Stinson, State Economist Tom Gillaspy, State Demographer January 2007 2008. Last Year, We Said. Minnesota is prosperous Wise decisions made 50+ years ago made that prosperity possible Investment in education and human capital Investment in infrastructure - PowerPoint PPT Presentation
Transcript of … But, What About Tomorrow?
… But, What About Tomorrow?
Tom Stinson, State EconomistTom Gillaspy, State Demographer
January 2007 2008
Last Year, We Said• Minnesota is prosperous• Wise decisions made 50+ years ago made
that prosperity possible– Investment in education and human capital– Investment in infrastructure– Investment in research and innovation
• But, … we are aging • Productivity is even more important • Wise decisions once again are needed
Last Year’s Issues Have Not Gone Away
From 2005 to 2015, Largest Growth in Minnesota Will Be in Ages 55 to 69
16,2003,9006,700
44,50098,000
119,400107,200
55,500-43,400
-64,100-700
67,20051,800
-9,600-29,200
7,40049,100
37,600
85+80-8475-7970-7465-6960-6455-5950-5445-4940-4435-3930-3425-2920-2415-1910-14
5-90-4
Source: Minnesota State Demographic CenterNumbers are rounded
The Number of Workers Turning Age 62 Will Jump 30 Percent 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
New Entrants to Minnesota’s Work Force Plateau as Baby Boomers Retire
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1950 1960 1970 1980 1990 2000 2010 2020 2030
18-2465+
Census counts & State Demographer projection, revised 2007
New Concerns Have Emerged
Minnesota’s Economy Has Struggled in 2007
Payroll Employment in Minnesota Has Fallen
98.5
99.0
99.5
100.0
100.5
101.0
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov
Index
US MN
Minnesota’s Unemployment Rate Has Been at or Above U.S. Average
3.50
3.75
4.00
4.25
4.50
4.75
5.00
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov
Percent
US MN
Has Something Changed?
… But, What About Tomorrow?
There Is Not Much the State Can Do About Short Term Economic Fluctuations
Short Term State Stimulus Seldom Makes a Difference
• Economic downturns typically are short
• They can be over before a stimulus program is enacted
• A recovery is likely to be underway before any additional spending occurs
• Only a small amount of capital spending occurs in the first year
… But, What About Tomorrow?
Minnesota May Be Losing Ground
• Per capita income growth has fallen below the U.S. average
• Payroll employment has grown more slowly here than elsewhere
• Our unemployment rate has been above the U.S. average
• Labor force participation rates have fallen• We show signs of slipping in education
Minnesota Employment Growth 2001-07
-3
-2
-1
0
1
2
3
4
5
Jan01
Jul01
Jan02
Jul 02
Jan03
Jul 03
Jan04
Jul 04
Jan05
Jul 05
Jan06
Jul06
Jan07
Jul07
US MN
Pecent Change Since February 2001
Per Capita Personal Income Growth In Minnesota Is Slowing
11
8 89
109
87 7
11
13
0
3
6
9
12
15
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Rank% of US Avg
Minnesota Ranks 36th In Job Growth Since 2001
-10
-5
0
5
10
15
20
25
30
NV AZ
WY
UT ID MT FL HI
NM AK
ND TX WA
SD VA MD
OR SC OK AL
NE
GA
US
NC AR
DE
CO RI
CA
WV TN IA NH NJ
KS
MS
MN
MO WI
KY
PA VT IN ME CT
NY LA IL MA
OH MI
Perc
ent C
hang
e
Past PerformanceDoes Not EnsureFuture Results
How Do We Encourage Long Term Growth?
Economic Fact of Life #1
Standard of Living depends on output per resident
Output = Output per Hour * Hours Worked
Economic Fact of Life #3
• Productivity depends on – The stock of physical capital– The stock of human capital
• Education• Health status
– The stock of infrastructure– Advancements in technology
Education Is The Key To Productivity
Minnesota High School Graduation Ratio
57%
85%
60% 62%
89% 85%
0%10%20%30%40%50%60%70%80%90%
100%
AmericanIndian
Asian Hispanic Black White Total
2 Yr
Ave
Rat
e
2004-05 through 2005-06 graduates. Based on 10th grade enrollment three years earlier.
Academic Research Is a Key Factor in State Economic Growth
• “the lags between R&D and economic outcomes are quite long (at least years, and more likely decades)
• “The state … may do well for a while by drawing upon its existing stock of knowledge capital
• “How the state of Minnesota will fare in the future … will crucially depend on its recent and future investment in R&D
*Long Gone Lake Wobegone, Pardey, Dehmer and Beddow, 2007
R&D Spending Slowed in the Early 90sWe Are No Longer Above Average
Rank 1972 Rank 2004
Total Academic R&D 19 26
Academic R&D per capita
20 40
Academic R&D per dollar of GSP
20 43
Budget Pressures Will Change More 65+ Than School Age by 2020
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1950 1960 1970 1980 1990 2000 2010 2020 2030
18-2465+5-17
Census counts & State Demographer projection, revised 2007
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 has led the frost belt
• We have ranked with the leaders on many social and economic indicators
• Wise decisions are needed for future prosperity
How will Minnesotans 50 years from now view our generation’s stewardship?
