Minnesota politicians have been intoning some version of the late Gov. Rudy Perpich’s mantra — “jobs, jobs, jobs” — for so long that they appear to be having trouble updating their talking points to fit current conditions.
The economic ingredient that’s in shortest supply in Minnesota now and in the next decade is not jobs, important though jobs are and ever shall be. Economists have been saying for a few years now — and employers are starting to scream — that what Minnesota needs most are “workers, workers, workers.”
That new emphasis isn’t tripping off political tongues yet. So I noticed while taking in the GOP take on the latest state budget forecast on Feb. 26.
State Rep. Jim Knoblach turned the assembled Capitol press corps’ attention to projections of Minnesota growth in employment, personal income and wages through 2019, compared with national averages. In each case and each year, the rate of growth is projected to be slower in Minnesota than the nation as a whole.
“Frankly, we’re not comparing very well,” Knoblach said. “You have to ask yourself: Why is that? I would submit that part of it is because of this state’s tax and regulatory climate and some of the very large tax increases we’ve seen over the last several years. It’s no secret that this is one of the worst states in the country when it comes to our tax climate, our business climate. We need to be doing things that help our jobs climate.”
Knoblach undoubtedly speaks for many employers when he blames Minnesota’s tax and regulatory regime for assorted ills. But state tax policy isn’t the main driver of the lag in employment, personal income and wage growth Knoblach cited, state economist Laura Kalambokidis advises.
Baby boomer retirements are.
“It’s simply a factor of demographic change,” Kalambokidis explained last week. As the large boomer generation leaves the workforce, it leaves behind a considerably smaller Generation X cohort and millennials who have not yet reached their full economic potential.
The picture isn’t dire. Minnesota’s workforce is forecast to keep growing through the end of this decade, just more slowly than in previous years and than in parts of the country with a different demographic mix.
For individual Minnesotans, this isn’t necessarily bad news. Workers will benefit from “further upward pressure on average annual wage growth,” the new forecast says. It offers the tantalizing prospect of raises reaching “3.5 to 4 percent per annum when the labor market is at full-potential” by the decade’s end.
What’s more, jobs shouldn’t be hard to find. Minnesota’s unemployment rate, 3.5 percent in December, is forecast to drop as low as 3.1 percent before this year is out and stay below the traditional “full employment” threshold of 4 percent through the rest of this decade.
The share of working-age Minnesota adults who are employed is down from historic levels, which some say is a sign of economic weakness. Not so, Kalambokidis said. The number of “discouraged workers” in Minnesota — people unemployed for so long that they no longer register in unemployment rate calculations — has fallen below prerecession levels. Rather, she said, the drop in worker participation “is purely a demographic phenomenon. We have a big group of people moving into an age range (their 60s) that has always seen a lower worker participation rate.”
The consequences of baby boomer retirements will be the Minnesota economic story for a goodly stretch of years, Kalambokidis said. It ought to be a big part of the state’s political story, starting with the 2016 legislative session, which begins Tuesday.
Legislators can’t slow down aging. But they can try to shore up the labor supply by shifting the state’s policy focus from jobs to workers. That will involve paying attention to workers in these circumstances:
• The underprepared: This state’s chronic race-based educational achievement gap has produced a sizable share of adults who aren’t sufficiently prepared for today’s jobs. More adult remedial education blended with job training is in order, even as work continues to eliminate the gap where it starts, in children’s early years.
• Young parents: The high cost of child care and inflexible employment policies are reasons some new parents drop out of the workforce. The state can help with richer child care tax credits and low-income family subsidies, and with policies that encourage employers to offer paid parenting and sick leaves.
• Older workers: AARP says caregiving for an elderly relative is the biggest single reason for early retirement in America. At a minimum, workplace discrimination against employees who are also elder caregivers should be outlawed.
• The talented and footloose: The University of Minnesota’s comparatively low nonresident tuition has served this state well as a talent magnet. The Board of Regents should go slow in raising that tuition. And Minnesota should invest in the infrastructure and services that mobile Americans value — quality education, mass transit, broadband.
• New Americans: International in-migration has kept Minnesota’s population growing when other Midwestern states have lagged. Those newcomers possess underdeveloped workforce potential. Minnesota should keep its welcome mat out and look for ways to hasten immigrants’ transition to jobs that match their abilities.
If Gov. Mark Dayton and legislators take this assignment to heart, they can make this year’s short session a pivotal one. And they can credibly appeal to voters this fall with a theme befitting today’s Minnesota — “workers, workers, workers.”
Lori Sturdevant is a Star Tribune editorial writer and columnist. She is at email@example.com.