Transcript Slide 1

Demographic Change And The
“New Normal”
Tom Gillaspy, State Demographer
Mn Dept of Administration
May 2011
U.S. Employment Is Not Expected to Return to
Pre-Recession Levels Until 2013
U.S. Payroll Employment
(Millions)
U.S. Unemployment
Rate (%)
156
14
Jobs
Unemployment
148
12
140
10
132
8
124
6
116
4
108
2
100
2006
0
2007
2008
2009
2010
2011
2012
January 2011 Marked The Beginning Of A
New Demographic Era
First Impacts Will Be Felt In The Workforce & Economic Growth
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The workforce is aging
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The workforce will grow much more slowly
Retirements will increase sharply
The number of new, young labor force entrants
will decline
Economic growth will depend increasingly on
productivity growth
The Budget Forecast Has Improved, A Bit
• Budget forecast has improved—only $5 billion
shortfall expected
• The change from November largely due to
increased revenues from capital gains
• Increased capital gains revenue was due to
December federal tax compromise
This decade And Next Will See Unprecedented
Increases In Minnesota’s 65+ Population
Minnesota High School Graduates Will
Decline About 5% Over The Next 5 Years
State Demographer projections for the Office of Higher Education
From 2010 to 2020, The United States Will
See Large Increases Age 50s and 60s
Source: Census Bureau projections revised 2009
Numbers in thousands
Minnesota’s Labor Force Is Aging
In 1990, the peak was 30; in 2009 it was 46
80,000
70,000
1990
Labor force
60,000
2009
50,000
40,000
30,000
20,000
10,000
0
Age
1990, 2007 ACS, smoothed 3 year averages
Minnesota State Government
Workforce Is Aging
MSRS active employees
Labor Force Growth Is About To Slow Sharply
Ave Annual Change
1.6%
1.52%
1.4%
1.12%
1.2%
1.0%
0.75%
0.8%
0.6%
0.43%
0.4%
0.27%
0.2%
0.10%
0.13%
0.0%
19902000
2005-10 2010-15 2015-20 2020-25 2025-30 2030-35
Social Security Administration, 12 month total of monthly new annuitants
Dec-10
Dec-09
Dec-08
Dec-07
Dec-06
Dec-05
Dec-04
Dec-03
Dec-02
Dec-01
Dec-00
Dec-99
Dec-98
Dec-97
Dec-96
Dec-95
Dec-94
Dec-93
Dec-92
Dec-91
Dec-90
Dec-89
Dec-88
Dec-87
Dec-86
Dec-85
Dec-84
Dec-83
Dec-82
Dec-81
Dec-80
Dec-79
Dec-78
Dec-77
Dec-76
Dec-75
New Social Security Retirement
Annuitants
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
Mean Age Of Persons Initially Awarded OASDI Benefits
Declined Then Leveled
SSA. Annual Statistical Supplement table 6.B5
Change In Minnesota Number of Retirees
Based on Social Security OASI Retiree Rate & 2008/2009 ACS
Labor Force Participation By Gender By Age & State
Demographer Projections By Age/Gender By Year
For Many Occupations, Replacements Will
Outnumber New Job Growth
Projected Openings In Minnesota Occupations 2009-19
DEED projections. Percent of 2009 level
Some Other Considerations In The
Labor Market
• More retirees and fewer younger workers should
improve opportunities for job seekers
• But employers may respond in other ways
1. Increase focus on productivity gains, filling jobs on
less than a one-for-one basis
2. Relocate jobs to other, more favorable labor markets
3. Recruit workers from other markets
• Alternative responses may be heightened with a
growing skills mismatch.
What are some of the skills that modern
manufacturers are looking for?
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Knowledge of mechanical and electrical engineering
processes
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Ability to work with computerized systems
Ability to read and write machine programming code
Ability to read manufacturing blueprints
Ability to operate automated manufacturing systems
Understanding of hydraulic, pneumatic, and
electrical systems
Today, Manufacturers Need Workers With Technical
Skills That Machines Cannot Adequately Perform
Old Normal
New Normal
1.
Learning one or two specific
technical roles
1.
2.
Physical strength & flexibility
2.
3.
Ability to follow fixed, unchanging
procedures
General attention to production &
safety procedures
Following orders
Operating, maintaining, designing
machinery
3.
4.
5.
6.
4.
5.
6.
Mechanical reasoning, logic,
troubleshooting &
spatial visualization
Personal flexibility,
communication &
cooperation
Initiative, persistence &
independence
Attention to detail, self-control
& dependability
Making independent decisions
Operating computers or comp
machinery for a wide range
of critical functions
Source: Changes in the required skills and traits of manufacturing personnel from Pearson TalentLens
Overall US Economic Growth Slows As
Labor Force Growth Slows
US BEA, McKinsey Global Institute, We will need a 2.3% annual increase in productivity just to reach
our 20 year average growth of 2.8%
Productivity Is Not Just Making Things
Cheaper
• Productivity is also
Making things better—Quality
Examples; Increased high school graduation rate,
making the best medical devices made in the world
Making better things—Innovation
Examples; cures for chronic diseases, develop new
energy sources
The pressure for disruptive innovation is
increasing
One Response to Labor Demand Has Been
Immigration
Minnesota’s Foreign Born Labor Force Has Increased, Especially in Younger Ages
1990 Census, 2009 ACS, smoothed
The Old Normal
+ The Great Recession
+ Long Run Demographic Changes
= The New Normal
The “New Normal” Probably Means
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Higher interest rates
Slower economic growth
Chronic government deficits & cuts in service
Worries about how to pay for past promises
Disruptive events/innovations more frequent
A single-minded focus on productivity
A whole new set of opportunities
Creative Destruction/Disruptive
Innovation Will Occur
Forces for change are heightened during periods of
economic stress
Wholesale program changes will happen
Disruptive changes are not evolutionary
Some game changers will occur
There will be short term losers as well as winners
A set of new opportunities are revealed
“I skate to where the puck will be,
not to where it has been.”
Wayne Gretzky
Famous Canadian Philosopher