Archive Hosted by the AFL-CIO

Minnesota 2020 Journal: Older, Poorer, More Diverse

May 09, 2014 By John Van Hecke, Publisher

Minnesota is changing. We’re not the state that we were 100, 50 or 25 years ago. We’re not even the state that we were in 2007 as the Great Recession began roaring across all 87 counties. Today, we’re older, poorer and more diverse. That means that Minnesota’s public policy initiatives must change to match Minnesota’s needs. What worked in 1964 or 1994 won’t work in the same way in 2014.

If current demographic trends continue, by 2020, more Minnesotans will be 65 or older than will be school aged. This has never happened before. The simple reason is twofold. First, the baby boom generation is aging in good health, likely to live longer than any previous generation. Boomers have been the largest demographic group at every stage of their lives. We shouldn’t expect that to change now thanks to better health care, diet and dramatically safer workplaces and roads. Second, the birthrate is down. People in their 20s and 30s are having fewer babies and having them later than earlier generations.

This generational bulge will fade over the next 25 years as baby boomers slip quietly into that good night. In public policy terms, we have to both plan for where we’d like to be in 25 years and plan for the demographic reality immediately before us. It’s not one or the other but both.

Given the demographic shift towards a growing number of older Minnesotans, healthcare costs related to an aging population will increase. Even with a healthier, better prepared aging population, costs associated with care experienced during the final two decades of life is more expensive than healthcare during the first two decades of life. This is not new news. We’ve known that care costs increase with age for a very long time. Changing demographics however mean assessing a particularly noticeable spike in eldercare costs.

Minnesota’s poverty rate is on the uptick. The resurging state economy will mitigate some of that growth but undereducated, lower-skilled workers lost ground in the Great Recession. As job growth in areas requiring post-secondary educational degrees increases, high school graduates and especially high school dropouts will find extremely limited opportunities for returning to work at pre-recession income earning levels. Absent additional schooling and training, these workers are at great risk of becoming a new, permanent underclass. That shift, in turn, will increase pressure on public resources as workers without post-secondary educations approach retirement with greater than average healthcare needs and little or no retirement savings.

Minnesota’s 1995 poverty rate was 9%. In 2011, that figure jumped to just below 12%. Since the Great Recession’s recovery, high income earners have expanded both annual income and their total percentage of wealth while middle and low income earners’ incomes and accumulated wealth percentages were flat or declined. This is not a sustainable phenomenon. This income trend, if continued over time, suggests unsettling long-term negative consequences for community and family social stability.

Let me say this again, only more bluntly. A very small slice of Minnesotans will make a lot of money; their incomes will rise steadily. Most Minnesotans’ incomes will remain stagnant. A much larger slice of Minnesotans, larger by both percentage and raw numbers than the wealthiest group, will experience real income decline. Most Minnesotans will become poorer rather than wealthier simply because their incomes won’t keep pace with inflation.

Conservative policy advocates will dismiss my data-driven observations as progressive whining. But, those same leaders are ignoring the lessons of Minnesota’s post-World War II economy. It’s much more profitable to sell a lot of stuff to many people rather than sell a few pricey items to a few people. A few luxury stores will always do well but the real money is in mass-scale retail at Target, CostCo, Sears, Supervalue and the like. For that sector to continue growing and earning profit, they need middle and low income customers with a rising rather than stagnating or falling incomes. The get-tough policy crowd may love wage stagnation but they are truly cutting off noses to spite faces.

Immigration is Minnesota’s great economic growth promise. Seven percent of Minnesotans are foreign born, suggesting that immigrants clearly recognize Minnesota’s promise and potential. That’s down, incidentally, from 20% in 1920 when pretty much most of us of were migrants or first generation offspring. Plus, immigration is projected to exceed Minnesota’s birth rate by 2032.

Immigration-driven population growth will charge Minnesota’s economy and provide extraordinary opportunity for international market expansion. And the best part? We’ve done this before. Minnesota’s track record of immigrant economic development is exemplary. Immigrant business growth can and will mitigate the wealth accumulation threat casting a shadow across Minnesota and the US.

Minnesota’s public policy initiatives must quickly evolve to meet present and future circumstance. We always need strong schools, affordable healthcare, robust infrastructure and good jobs but we need responsive public policy to achieve the best return on public investment. Because Minnesota changes, policy must change. Minnesota’s future success depends on it. We can sprint forward or fall behind; we just can’t remain in place.

Thanks for participating! Commenting on this conversation is now closed.

5 Comments:

  • Mike Downing says:

    May 12, 2014 at 9:47 am

    Is there a correlation between:
    “Minnesota’s 1995 poverty rate was 9%. In 2011, that figure jumped to just below 12%.”

    and:

    “undereducated, lower-skilled workers lost ground in the Great Recession. As job growth in areas requiring post-secondary educational degrees increases, high school graduates and especially high school dropouts will find extremely limited opportunities for returning to work at pre-recession income earning levels.”?

    Me thinks there is a direct correlation and this educational/skill gap is the primary source of “income inequality”.

    • Mary Chasin says:

      May 12, 2014 at 10:17 am

      Mike, keeping in mind that correlation does not equate to causality, let’s look for, and fix, the cause(s) of educational inequity. That is a huge issue, and I believe it is self-perpetuating without focused, informed intervention.

    • tony says:

      May 12, 2014 at 12:02 pm

      Nice try Mike. During the Great Recession, there were and still are people w/Phd’s working at Starbucks. As we change from a manufacturing base to a service economy, the good union jobs that created a vibrant middle class are gone, service jobs pay at least half of what a union job did. Since 1980, middleclass income has stayed flat & in some cases declined while the 1% has steadily increasing income levels. Best example is if you adjust the minimum wage in 1968 for inflation to today it would be $15/hr. Yes, people need a degree to get those top jobs but we used to subsidize state colleges at 70% of the cost of tuition, now it is 7%. You could pay your way with a part-time job, now you end up with debt amounts the size of a mortgage and 25 years of payments. No homeownership for them!! Meanwhile as the wealth of the nation trickles up to the 1% & corporations, their taxes keep going down to where Federal tax receipts are the lowest since 1950. AS the wealth of the middleclass declines so will our future.

    • Dan Conner says:

      May 12, 2014 at 1:24 pm

      I think Some have a habitually hard time from revealing their disdain for the poor and their bigotry.  First, educational level is irrelevant to working and making a livable wage.  The 1995 date used as a “benchmark” for the base of the Poverty rate is strangely coincidental with the last hike in the minimum wage.  The most effective antipoverty program is to pay people who work, a livable wage.  People working full-time and earning minimum wage are firmly entrenched in poverty.  No one who works full-time should live in poverty.  If that is the case, what is the incentive to work at all?

      There are too many of the really fortunate who are totally disconnected from people.  They value money more than human life.  I suggest the problem is not the poor, at all.  Instead, it is a judgmental, self-righteous, and pecuniary population who would watch people die, so they don’t have to pay taxes.  Then, they mask themselves in some faux Christianity, as if that will save them from damnation.  You see, I don’t think these privileged people are Christians at all.  I think the Chrisianity is simply a subterfuge for gross selfishness and greed..  It’s a lame effort to gain legitimacy.

  • W. D. (Bill) Hamm says:

    May 13, 2014 at 9:58 am

    Many factors come together to create this problem of which most of us only have a realistic understanding of the aging issue. The poorer and less educated segments of this issue are directly tied to Nixon’s Drug War on poverty people of color. It created one of our biggest growth industry for over 4 decades in which time we went from 300,000 inmates in our prison system to our present 2.3 million. No one likes to talk about where the money to finance that growth came from even though it is well documented. Education, (both K-12 and College funding), health care. No one wants to look at the horrible social cost of taking care of these broken families as well as parole and probation costs of tracking these victims of RACIST oppression. We as a society haven’t yet learned the real cost of hating POT smokers. Yes this does boil down to them since 2/3rds of these prison cells are filled with these non violent people who have chosen to use an intoxicant than can’t kill them, has no side affects, does not cause blackouts or pass outs, will not cause you to choke on your own puke, does not leave you too hung over for work the next day, and only causes driving impairment equivalent to 0.05 on the alcohol scale. Not one body to prove that it is unsafe yet not even many of our military incursions have cost us as much as a society as this FOOLS WAR against the POOR.