But, What About Tomorrow

1
But, What About Tomorrow?

• Tom Stinson, State Economist
• Tom Gillaspy, State Demographer
• October 2007

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
  states success

3
Minnesotas Economy Has Changed Since the 1960s
4
Minnesotas Per Capita Personal Income Exceeds
the U.S. Average by 6 Percent

• Minnesota ranked 14th in personal income per
  capita in 2006- - - In 1960 Minnesota ranked
  25th
• Personal income per capita grew at an average
  annual rate of 6.8 percent between 1960 and 2005
• Since 1960 per capita personal income has grown
  faster in Minnesota than in most states outside
  the Southeast

5
Minnesota Ranks Highly in Many Social/Economic
Indicators

• 4th lowest rate of disability among people age
  16-64
• 1st with at least high school degree (90.7)
• 12th with at least a bachelors degree
• 1st home ownership
• 1st United Health Foundation ranking of state
  healthiness 2006 (21 above the national norm)

• 2nd percent of 16-64 employed (76.9)
• 8th lowest poverty rate
• 1st percent with health insurance 2004-06 ave
• 9th median family income in 2006
• 1st Kids Count 2007

Updated September 2007
6
Not All Minnesotans Enjoy the Same Level of
Prosperity

• Regional differences exist in income, education,
  and health
• Racial and ethnic minorities also experience
  large differences in income, education and health
• Many rural areas continue to experience long term
  population decline

7
Substantial Differences Exist In Minnesota Health
Outcomes
CDC data, YPPL is sum of differences of 75 minus
age of death, per 1,000
8
Minnesotas Current Success Is Due to Decisions
Made 50 Years Ago

• Private sector and public sector decisions
  established the foundation for growth in
  Minnesotas economy
• Dealing with challenges brought by the baby boom
  was a key to our success
• Wise investments were made

9
We have come a long way. But what about tomorrow?
10
Aging Is The Dominant Demographic Trend In
Minnesota And The Nation

• It is not normal for a society to age
• Dramatic changes will be seen in 2008 and 2011
  and beyond
• By 2020, the number of Minnesotans 65 will
  increase by 53. By 2030 it will double
• Aging, combined with growth and increased
  diversity will lead to challenges and
  opportunities not fully anticipated

11
Minnesota Will See a 30 Percent Jump in Workers
Turning Age 62 Beginning 2008
2005 ACS
12
New Entrants To Minnesotas Work Force Plateau As
Baby Boomers Retire
13
Competition For The Future Workforce Will Increase
Census Bureau US Proj, Mn State Demographer Mn
Proj
14
Minnesotas Labor Force Growth Projected to Slow
to Historic Lows
Census 2005 ACS, State Demographer projected
2005-30
15
In The Next Ten Years, Minnesota Will Need 46
More Healthcare Practitioners Technicians To
Cover Growth In Demand And Replacements
Mn DEED occupation forecasts 2002-2012
16
Economic Fact of Life 1

• Standard of Living depends on output per resident
• Output Output per Hour Hours Worked

17
(No Transcript)
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Workforce development will be crucial to
Minnesotas economic future

• Number of workers
• Quality of workers
• New entrants
• Incumbent workforce

19
The New 3 Rs for Business Success

• Retention
• Recruitment
• Retraining

20
Where Will Minnesotas Future Talent Come From?
21
Migration Will Become the Largest Source of New
Workers in Minnesota
22
Students Of Color Are Increasing While White
Students Are Declining
Mn Dept of Education data
23
Education Is The Key To Productivity Minnesota
High School Graduation Ratio
2004-05 through 2005-06 graduates. Based on 10th
grade enrollment three years earlier.
24
We can't afford to sleep any longer. American
education is losing ground to the rest of the
world. And the harder truth is that Minnesota,
along with the Upper Midwest, is losing ground to
the rest of America. Art Collins, Chair CEO,
Medtronics, Inc. March 2006
25
Minnesotas Economy Will Grow
26
Real Per Capita Personal Income Is Projected to
Grow 28 Percent by 2016
per capita
27
Minnesota Households Will Earn More and Be
Wealthier in 2016

• Real, per capita disposable income projected to
  grow to 35,199 by 7500 -- by 2016
• Household wealth per capita forecast to grow 60
  percent by 2014
• Inflation adjusted for
• Medical cost increases already included
• Minnesota could do better

28
Aging Of Society Will Impact Private and Public
Spending

• Health care spending will increase
• Retirement concerns will affect household
  finances housing choices
• Shift in government priorities to issues of aging
  and health
• Older voters often more fiscally conservative
• State tax base will be affected as baby boom
  reaches retirement age

29
Spending Priorities Will ChangeThe Three Largest
Cost Drivers In The State Budget
Census counts State Demographer projection
30
CBO Expects Medicaid Spending to Double by 2014,
State Tax Revenues Will Not Keep Up
31
Phases in the Household Life Cycle
32
State/Local Governments Share of Personal Income
Has Declined
Mn Dept of Finance
33
State Taxes Paid by a Married Couple Before and
After Retirement
34
Summary

• Minnesota has been very successful
• We are in a period of rapid and critical change
• What we do today will shape our future for the
  next quarter century
• Productivity increases will be the key to further
  growth throughout Minnesota

35
How will Minnesotans 50 years from now view our
generations stewardship?