I had a chance to listen to Tom Stinson, the economist for the State of Minnesota, address a business group recently about some of the challenges facing our state. In the near term, he said he expects a bleak economy through the end of 2009. He said inflation in the third quarter of 2008 is likely to come in around 8 percent before falling off at the end of the year.
Stinson said the housing market is near the bottom, but “there won’t be any quick pick-up in housing activity.”
What I found particularly interesting, however, were his long-range concerns. The demographics of our state will create serious challenges that no one will be able to ignore. Stinson said demographic trends will result in significant aging of the general population.
While the number of people between the ages of 55 and 69 will increase dramatically by 2015, the number of people between the ages of 15 and 24 will drop significantly. “The number of people entering the workforce will remain flat between now and 2030, while the number of people retiring will skyrocket,” Stinson said.
Health care spending in Minnesota is $3,671 annual per capita, Stinson said. For people ages 55 to 64, that figure averages $6,694, and for people 65 to 74 it increases to $9,017 and for people older than 75, the figure is $9,914. These expenses, Stinson noted, will be supported by a smaller workforce. “Aging of baby boomers will result in huge increases in resources going into health care,” he said.
Stinson also expressed concern about the quality of the state’s workforce, which will have to make up for declining numbers through increased productivity. Stinson said 91 percent of the people in the state’s workforce have a high school degree; current graduation rates, however, are at 85 percent with growing minority groups averaging even lower rates of high school graduation.
“We are not replacing the workforce with people who are as educated as they once were,” Stinson said. “We are not replacing the skill level we already have in the workplace.”
tMichaelB is the web site for Tom Bengtson, who writes about business, religion, family and politics.
Thursday, August 28, 2008
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