Demographic Change And The “New Normal” - PowerPoint PPT Presentation

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Demographic Change And The “New Normal”

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  1. Demographic Change And The “New Normal” Tom Gillaspy, State Demographer Mn Dept of Administration September 2010

  2. 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

  3. Minnesota Has Outperformed the Nation Since 1950Index to US of Disposable Per Capita Income US BEA

  4. 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

  5. U.S. Employment Not Expected to Return to Pre-Recession High Until Spring 2013

  6. Minnesota’s Unemployment Rate Is Well Below the U.S. AverageJuly 2010—Mn 6.8%; US 9.5% Seasonally Adjusted

  7. National Mobility Has Fallen To Its Lowest Point Ever Recorded Census Bureau, 2009 CPS and historical

  8. The Great Recession Has Raised the Level of Social Angst But What Is Really Happening Is That We Have Entered A “NewNormal”

  9. Minnesota Saw a 30 Percent Jump in Workers Turning Age 62 in 2008 2005 ACS

  10. Social Security Retirement New AwardsMonthly Average

  11. Competition For Future College Students Will Increase Census Bureau US Proj, Mn State Demographer revised 2007. The 18 year old population, both Minnesota & nationally are projected to decline starting 2009.

  12. Minnesota’s Labor Force Is AgingIn 1990, the peak was 30; in 2007 it was 46 1990, 2007 ACS, smoothed 3 year averages

  13. Labor Force Growth Is About To Slow Sharply

  14. For Many Occupations, Replacements Will Outnumber New Job GrowthProjected Openings In Minnesota Occupations 2009-19 DEED projections. Percent of 2009 level

  15. World Labor Force Growth SlowingProjected Change In Working Age Population (15-64) U.S. Census Bureau

  16. Labor Force Growth Is Slowing In Much Of The World ILO forecast

  17. One Response to Labor Demand Has Been ImmigrationMinnesota’s Foreign Born Labor Force Has Increased, Especially in Younger Ages 1990 Census, 2007 ACS, smoothed

  18. In 2006, Minnesota’s Foreign Born Workforce Was 240,000 or 8% Of The Total Workforce 2006 ACS

  19. The Economic/Demographic Environment Has Changed for as Far as We Can Forecast • Short run economic cycle has merged with long run demographic cycle • We 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

  20. 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

  21. 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

  22. 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.

  23. 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

  24. Future economic growth will depend increasingly on increasing productivity and less on labor force sizeProductivity Is Not Just Producing at a Lower Cost

  25. Increasing Productivity Also Means • Making things better (improved quality) • Making better things (innovation, new products)

  26. 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

  27. 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.

  28. “If something can't go on forever, it will stop.” Herbert Stein, Chair President Nixon’s Council of Economic Advisors

  29. “I skate to where the puck will be, not to where it has been.” Wayne Gretzky Famous Canadian Philosopher