Current Edition
As ‘boomers’ age, Minnesota’s labor force shrinking
Originally published in the Dec. 25, 2009, print edition.
Beginning in 2010, there will be about 10,000 people per day in the United States reaching age 55. In other words, the “baby boomers” are coming home to roost.
From 2010 to 2020, approximately 300,000 Minnesotans will move into the 55-plus age category. But there will also be 110,000 fewer Minnesotans aged 45 to 55.
After sharing these figures at the recent Minnesota Agri-Growth Council annual meeting, Tom Stinson, a University of Minnesota professor and state economist who keeps track of Minnesota and U.S. population trends, said “competition for the future work force will increase.”
That competition will get even more intense because Minnesota’s labor force is growing much more slowly. From 2010 to 2015, he said growth would be about 3/4 percent per year. But from 2015 to 2020, that slows to only 1/10 of 1 percent per year. “And that really is no growth at all,” Stinson said. Health care and trucking are two industries with substantial labor growth in the future, he suggested.
Workforce development will be crucial to Minnesota’s future. Where will the workers come from? Stinson said some will be a continuation of what’s already happening, meaning people working longer before they retire. That will happen both with farm and non-farm segments. Also some workers will migrate into Minnesota from neighboring states and other countries.
“Our standard of living depends both on output per resident and output per hour,” Stinson said. He said the “three Rs” of Minnesota’s future work force are retention, recruitment and retraining. He also contends that future productivity depends on more private capital moving into the working place, and that education and improved health care are vital to maintain the stock of “human capital.”
Health care spending after age 50 is an issue for all Minnesotans, especially farmers who either carry their own health insurance programs, or don’t have any health insurance. According to Stinson, the current U.S. average yearly cost for health care is $3,600 per person. For the 55-64 age group that jumps to $5,700 per year. For the 65-74 age segment, it’s $9,000 per year. And for the 75-plus age group, health care costs currently average $10,000 per year.
In the 1960s, Minnesota’s per capita spending for health care ranked 26th in the nation, or 95 percent of the U.S. average. With escalating costs, Minnesota now ranks eighth in the nation in health care expenses, 110 percent of the U.S. average.
More urgent to Stinson is getting more people back to work. With unemployment now reaching 10.5 percent, even though gross domestic product is slowly increasing once again, he said the labor market will be slower to recover and won’t begin to come down until the end of summer 2010.
According to Stinson, the recovery will be slower than previous recessions because:
- Interest rates will increase.
- Excess production capacity already in place limits the need to purchase new business equipment.
- Export demand is unlikely to surge short-term because most of the world is in recession.
- Lost wealth and retirement concerns will slow pent-up demand.
Stinson noted that $14 trillion in household wealth has been lost, which translates into a $700 billion reduction in consumer spending.
“We will need to get the most out of all the talent we have in the state,” he said.
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