… But, What About Tomorrow?

1. … But, What About Tomorrow? Tom Stinson, State Economist Tom Gillaspy, State Demographer January 2007 2008

2. Last Year, We Said • Minnesota is prosperous • Wise decisions made 50+ years ago made that prosperity possible • Investment in education and human capital • Investment in infrastructure • Investment in research and innovation • But, … we are aging • Productivity is even more important • Wise decisions once again are needed

3. Last Year’s Issues Have Not Gone Away

4. From 2005 to 2015, Largest Growth in Minnesota Will Be in Ages 55 to 69 Source: Minnesota State Demographic Center Numbers are rounded

5. The Number of Workers Turning Age 62 Will Jump 30 Percent in 2008 2005 ACS

6. New Entrants to Minnesota’s Work Force Plateau as Baby Boomers Retire Census counts & State Demographer projection, revised 2007

7. New Concerns Have Emerged

8. Minnesota’s Economy Has Struggled in 2007

9. Payroll Employment in Minnesota Has Fallen

10. Minnesota’s Unemployment Rate Has Been at or Above U.S. Average

11. … But, What About Tomorrow? Has Something Changed?

12. There Is Not Much the State Can Do About Short Term Economic Fluctuations

13. Short Term State Stimulus Seldom Makes a Difference • Economic downturns typically are short • They can be over before a stimulus program is enacted • A recovery is likely to be underway before any additional spending occurs • Only a small amount of capital spending occurs in the first year

14. … But, What About Tomorrow?

15. Minnesota May Be Losing Ground • Per capita income growth has fallen below the U.S. average • Payroll employment has grown more slowly here than elsewhere • Our unemployment rate has been above the U.S. average • Labor force participation rates have fallen • We show signs of slipping in education

16. Minnesota Employment Growth 2001-07

17. Per Capita Personal Income Growth In Minnesota Is Slowing

18. Minnesota Ranks 36th In Job Growth Since 2001

19. Past Performance Does Not Ensure Future Results

20. How Do We Encourage Long Term Growth?

21. Economic Fact of Life #1 Standard of Living depends on output per resident Output = Output per Hour * Hours Worked

22. Economic Fact of Life #3 Productivity depends on The stock of physical capital The stock of human capital Education Health status The stock of infrastructure Advancements in technology

23. Education Is The Key To ProductivityMinnesota High School Graduation Ratio 2004-05 through 2005-06 graduates. Based on 10th grade enrollment three years earlier.

24. Academic Research Is a Key Factor in State Economic Growth “the lags between R&D and economic outcomes are quite long (at least years, and more likely decades) “The state … may do well for a while by drawing upon its existing stock of knowledge capital “How the state of Minnesota will fare in the future … will crucially depend on its recent and future investment in R&D *Long Gone Lake Wobegone, Pardey, Dehmer and Beddow, 2007

25. R&D Spending Slowed in the Early 90sWe Are No Longer Above Average

26. Budget Pressures Will Change More 65+ Than School Age by 2020 Census counts & State Demographer projection, revised 2007

27. 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 has led the frost belt • We have ranked with the leaders on many social and economic indicators • Wise decisions are needed for future prosperity

28. How will Minnesotans 50 years from now view our generation’s stewardship?