Tuesday, January 18, 2011

The MN Economy in 2025

The economy affects everything including, of course, librarianship. Most libraries receive some sort of state, federal, or local support – derived from sources directly tied to the state of the economy. The shape of the economy dictates the questions we answer, the services we offer, and the users we serve.

In attempting to get our arms around what the Minnesota economy of 2025 may look like, we turned to a commission report to the MN legislature, presentations from the state demographer and economist, and federal statistic projection sources. Background reading.

Our findings and discussions at the December meeting revolved around the following topics:

Aging Workforce Exerts Dual Pressures
A wave of retiring workers has enormous implications for Minnesota’s future economy. Our aging population will require increased spending on publicly-funded services like health care, economic assistance, and social service programs. It will also decrease the amount of overall tax revenue because retiree incomes are largely tax exempt. A smaller and younger workforce will be asked to support this larger retired population.

Current State Revenue/Expenditure Balance Not Sustainable
Rapidly rising health care costs and a projected increase in K12 enrollment will require more and more of the state’s budget. If spending levels in these two areas continue on their current path, there will be little room for expenditure increases (even to offset inflation) in any other area by 2025. Expenditures must be curtailed or revenues increased.

An Outmoded Tax System?
As competition for expenditure dollars increases, the tax system may come under scrutiny. Currently, catalog and Internet sales are not taxed. Neither are sales from service-providing industries (which are projected to play a large part in our future economy). Consumer spending is tied to confidence in the economy, as well.

Productivity and Services Drive Slow Growth
The Minnesota economy will likely be at a slow- or no-growth rate for the years to come. Any growth will likely come through increased productivity rather than business expansion. The economy in MN will rely less on goods-producing industries and more on service-providing industries.

Job Replacements Outnumber New Job Openings
There will be fewer new jobs created – most job openings will be replacement positions. Businesses will likely be reliant on migrant workers (both domestic and international) to fill these positions as population growth is not projected to be large.

So, in summary: 1) We won’t have big economic gains to prop us up. 2) We will have large health care costs to deal with. 3) We will have a smaller workforce. 4) Business productivity will be the key component of economic growth.

With that in mind, consider the following quote from State Demographer Tom Gillaspy and State Economist Tom Stinson: “[The] largest future productivity gains are likely to come from investments that lead to better outcomes [such as] lower lifetime health care costs, reduced recidivism rates, [and] improved graduation rates.” Source

What role might libraries (of all types) play in this successful economic future? What do we have to contribute to the attainment of these “better outcomes?” Let us know what you think in the comments.

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