Consumers of Tomorrow - Insights and Observations About Generation Z
… But, What About Tomorrow?
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… But, What About Tomorrow?
Tom Stinson, State EconomistTom Gillaspy, State Demographer
January 2007 2008
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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
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Last Year’s Issues Have Not Gone Away
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From 2005 to 2015, Largest Growth in Minnesota Will Be in Ages 55 to 69
16,2003,9006,700
44,50098,000
119,400107,200
55,500-43,400
-64,100-700
67,20051,800
-9,600-29,200
7,40049,100
37,600
85+80-8475-7970-7465-6960-6455-5950-5445-4940-4435-3930-3425-2920-2415-1910-14
5-90-4
Source: Minnesota State Demographic CenterNumbers are rounded
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The Number of Workers Turning Age 62 Will Jump 30 Percent in 2008
0
10,000
20,000
30,000
40,000
50,000
60,000
7/05 to7/06
7/06 to7/07
7/07 to7/08
7/08 to7/09
7/09 to7/10
7/10 to7/11
7/11 to7/12
Year Turning Age 62
Wor
ked
With
in P
ast 5
yea
rs
2005 ACS
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New Entrants to Minnesota’s Work Force Plateau as Baby Boomers Retire
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1950 1960 1970 1980 1990 2000 2010 2020 2030
18-2465+
Census counts & State Demographer projection, revised 2007
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New Concerns Have Emerged
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Minnesota’s Economy Has Struggled in 2007
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Payroll Employment in Minnesota Has Fallen
98.5
99.0
99.5
100.0
100.5
101.0
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov
Index
US MN
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Minnesota’s Unemployment Rate Has Been at or Above U.S. Average
3.50
3.75
4.00
4.25
4.50
4.75
5.00
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov
Percent
US MN
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Has Something Changed?
… But, What About Tomorrow?
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There Is Not Much the State Can Do About Short Term Economic Fluctuations
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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
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… But, What About Tomorrow?
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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
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Minnesota Employment Growth 2001-07
-3
-2
-1
0
1
2
3
4
5
Jan01
Jul01
Jan02
Jul 02
Jan03
Jul 03
Jan04
Jul 04
Jan05
Jul 05
Jan06
Jul06
Jan07
Jul07
US MN
Pecent Change Since February 2001
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Per Capita Personal Income Growth In Minnesota Is Slowing
11
8 89
109
87 7
11
13
0
3
6
9
12
15
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Rank% of US Avg
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Minnesota Ranks 36th In Job Growth Since 2001
-10
-5
0
5
10
15
20
25
30
NV AZ
WY
UT ID MT FL HI
NM AK
ND TX WA
SD VA MD
OR SC OK AL
NE
GA
US
NC AR
DE
CO RI
CA
WV TN IA NH NJ
KS
MS
MN
MO WI
KY
PA VT IN ME CT
NY LA IL MA
OH MI
Perc
ent C
hang
e
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Past PerformanceDoes Not EnsureFuture Results
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How Do We Encourage Long Term Growth?
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Economic Fact of Life #1
Standard of Living depends on output per resident
Output = Output per Hour * Hours Worked
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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
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Education Is The Key To Productivity
Minnesota High School Graduation Ratio
57%
85%
60% 62%
89% 85%
0%10%20%30%40%50%60%70%80%90%
100%
AmericanIndian
Asian Hispanic Black White Total
2 Yr
Ave
Rat
e
2004-05 through 2005-06 graduates. Based on 10th grade enrollment three years earlier.
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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
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R&D Spending Slowed in the Early 90sWe Are No Longer Above Average
Rank 1972 Rank 2004
Total Academic R&D 19 26
Academic R&D per capita
20 40
Academic R&D per dollar of GSP
20 43
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Budget Pressures Will Change More 65+ Than School Age by 2020
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1950 1960 1970 1980 1990 2000 2010 2020 2030
18-2465+5-17
Census counts & State Demographer projection, revised 2007
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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
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How will Minnesotans 50 years from now view our generation’s stewardship?