Jobs and Minnesota’s Future

Tom Stinson, State Economist January, 2011

Minnesota Has Been Very Successful

(Especially For a Cold Weather State at the End of the Road)

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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

Nominal GDP Per Capita Has Grown Faster than the U.S. Average Index 1963-65 = 100 1750 1500 1250 1000 750 500 250 0 1965 1970 US 1975 MN 1980 1985 1990 1995 2000 2005

Minnesota’s Real Per Capita Personal Income Exceeded the US Average by 6 Percent in 2009 MN Pct of US 115 110 105 100 95 90 85 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008

Employment in Minnesota Has Grown Faster Than the U.S. Average Index 1970-74 =100 250 200 150 100 US MN 50 0 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006

Minnesota’s Share of U.S. Manufacturing Jobs Has Increased Minn % Share of US Mfg Jobs 3 2,5 2 1,5 1 0,5 0 1970 1975 1980 1985 1990 SIC NAICS 1995 2000 2005

Manufacturing Employment in Minnesota Continues to Outpace the U.S. Average Index SIC 1970 = 100 160 140 120 100 80 60 40 20 0 1970 1975 1980 US (SIC) US (NAICS) 1985 1990 MN (SIC) MN (NAICS) 1995 2000 2005

Minnesota’s Current Success Is Due to Decisions Made 50+ Years Ago

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Private sector and public sector decisions established the foundation for growth in Minnesota’s economy

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Dealing with challenges brought by the baby boom was a key to our success

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Wise investments were made Education has been a key contributor to the state’s success

Midway Through This Decade Minnesota’s Economy Was Struggling

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Per capita personal income growth (2004-06)

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3.5 percent – Rank 47th Real per capita gross state product growth

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1.4 percent – Rank 45 th Payroll employment

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1.2 percent – U.S., 1.6 percent Unemployment Rate at U.S. average

Minnesota Underperformed the U.S. Economy 2004-2006 Per cent Change Per Capita Personal Income 18 15 12 9 -3 -6 6 3 0 Transp Const Mgmnt US Retail MN Mfg Health Non Farm

Minnesota Outperformed the US Economy 2006-08 Per cent Change Per Capita Personal Income 18 15 12 9 -3 -6 6 3 0 Transp Const 04-06 US Mgmnt 04-06 MN Retail Mfg 06-08 US Health 06-08 MN Non Farm

Percent 12 Minnesota’ s Unemployment Rate Is Again Well Below the US Average 10 US MN * 8 6 4 2 0 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009

Minnesota Payroll Employment Is Recovering from its 2006 Struggle Percent Change From February 2001 5 4 3 2 1 0 -1 -2 -3 US MN -4 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10

Minnesota Employment Is Recovering Faster than the U.S. Average Index Dec 2007 = 100 102 100 98 US MN 96 94 92 Jan 08 Apr Jul Oct Jan 09 Apr Jul Oct Jan 10 Apr July Oct

Minnesota Has Lost Nearly 50,000 Construction Jobs Since 2005 80 60 40 20 0 Jobs (000's

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160 146,1 140 120 100 92,4 2005 Total Res Bldg 2006 Trades Heavy 2007 2008 2009 97 56,4 2010

What about the future?

The U.S. Economy Lost 8.4 Million Jobs in the Great Recession U.S. Payroll Employment (Millions) 156 148 140 132 124 116 108 100 2006 2007 2008 Jobs Unemployment 2009 2010 2011 U.S. Unemployment Rate (%) 14 12 2 0 6 4 10 8 2012

We Are Headed to a New Normal

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The Great Recession Is over, but we will not return to where we were We are moving to a New Normal Minnesota is not alone—this a global phenomenon Those who recognize this and adapt first will be most successful The next four years will be critical to Minnesota’s future

Workforce Development Will Be Crucial to Minnesota’s Economic Future

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Number of workers Quality of workers

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New entrants

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Incumbent workforce

From 2010 to 2020, Minnesota Will See Large Increases Age 50s and 60s 85+ 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4 -42,310 -63,650 -30,680 -2,680 -9,980

Source: Minnesota State Demographic Center, rev 2007 Numbers are rounded

16,500 8,440 41,400 54,240 61,920 47,950 5,050 47,330 36,190 20,150 91,370 112,540 102,960

Minnesota Saw a 30 Percent Jump in Workers Turning Age 62 in 2008 60,000 50,000 40,000 30,000 20,000 10,000 0 7/05 to 7/06 7/06 to 7/07 7/07 to 7/08 7/08 to 7/09 7/09 to 7/10 Year Turning Age 62 7/10 to 7/11 7/11 to 7/12

2005 ACS

Competition for the Future Workforce Will Increase

14% 12% 13.0% 10% 8% 6% 6.8% 4.5% 4% 2% 0% 0.7% -2% -2.3% -1.6% -4% 2000-05 2005-10 2010-15

Census Bureau US Proj, Mn State Demographer Mn Proj

-2.2% -3.0% 2015-20 Mn US

Labor Force Growth Is About To Slow Sharply

Updated to 2009 ACS

For Many Occupations, Replacements Will Outnumber New Job Growth Projected Openings In Minnesota Occupations 2009-19

DEED projections. Percent of 2009 level

The New 3 R’s for Economic Success

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Retention

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Recruitment Retraining

Education Is The Key To Productivity Minnesota High School Graduation Ratio

2007-08 Mn Dept of Education 5 year graduation rate. Percent of 9 th graders who graduate within 5 years