Transcript But What About Tomorrow: Minnesota and the New Economy Tom Stinson University of Minnesota October 2013

But What About Tomorrow:
Minnesota and the New Economy
Tom Stinson
University of Minnesota
October 2013
We Are Headed to a New Economy
• The Great Recession is over and the economy is
growing -- but we will not return to where we
once were
• We are moving to a New Economy
• The U.S. is not alone -- it is happening globally
• Those who recognize this and adapt first will be
most successful
• The next four years will be critical
Minnesota Has Been Very
Successful
Especially for a cold weather
state at the end of the road
Recent Economic and Demographic
Events Have Changed the Outlook
for as Far as We Can See
The U.S. Economy Has Been
Growing Since June of 2009 – But …
• U.S. payroll employment is still well
below its pre-recession peak
• Unemployment is above 7 percent
• U.S. 2012 per capita income just 9.9
percent above 2007’s level
• Real per capita income down 0.8
percent
The Number of Minnesotans Turning 65
Increased by 36 Percent in 2012
From 2010 to 2020 Minnesota Will
See Large Increases in Age 60-75
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
18,718
11,704
45,947
94,468
114,360
96,218
42,126
-54,577
-83,386
-10,434
72,058
46,602
-18,500
-21,628
13,298
41,849
23,234
29,978
Annual Percent Change Minnesota
Total Labor Force
Minnesota State Demographer forecast, revised January 2012
The Old Normal
+ The Great Recession
+ Long Run Demographic Changes
= The New Economy
The “New Economy” Probably Will
Include
•
•
•
•
•
•
•
Labor and talent will be the scarce resources
Higher interest rates
Slower economic growth
A single-minded focus on productivity
Increasing numbers of retirees
A more diverse population
More uncertainty about the future
Economic Facts of Life
Standard of Living depends on output per resident
Output = Output per Hour * Hours Worked
If the ratio of workers to residents declines
productivity will need to increase if we are to
maintain our current living standard
Productivity Is Not Just
Producing at a Lower Cost
Increasing Productivity Also Means
Making things better
(improved quality)
Making better things
(innovation, new products)
Workforce Development
Will Be Crucial to Minnesota’s
Economic Future
• Number of workers
• Quality of workers
– New entrants
– Incumbent workforce
High School Graduation Is No Longer
Enough
• 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
Education Is the Key to Productivity
Minnesota High School Graduation Rates
SY 2010-11 4 year regulatory adjusted cohort graduation rates, U.S. Dept. of Education
“I skate to where the puck will be,
not to where it has been.”
Wayne Gretzky
Famous Canadian Philosopher