Jobs are coming, but there is bad news

"We have entered the age of entitlements in Minnesota and the United States and in some respects the entire world," said state demographer Tom Gillaspy during a lunch talk on Tuesday at Minnesota Public Radio. "It's an unprecedented time."

Gillaspy was referring to an ominous trend reflected in the latest census data: The state is experiencing a dramatic increase in the number of people who are over 65 and drawing Social Security and other benefits and a decrease in the number of young people entering the workforce to pay for those benefits.

"By the end of the decade, for the first time, we'll have more people over 65 than in K-12 education," Gillaspy said.

The implications are far-reaching. The age imbalance will make it harder to rectify the state budget in the future.

"This decade, it's not going to be nursing homes that are driving the whole thing," Gillaspy said. "That's a couple of decades out. This decade the big issue will be the labor force. It's an odd thing to talk about when unemployment is high."

He predicted, quite ominously, that, "things are about to start popping" as more older people retire and fewer younger people are available to take their jobs.

"By the end of the decade, workforce growth will be essentially nil," said Gillaspy, who noted that the change won't be gradual. "We'll see a big jump in retirement next year and strong increases for a decade after that."

He said that although employment forecasts talk in terms of job growth, for the foreseeable future, employment will center on filling vacancies not creating new jobs.

"That forecast isn't that great," Gillaspy said. "People look at that and say 'There aren't many opportunities.' But when the flood of people retires, we're going to have lots of replacement openings, across every occupation. As far as I know, those will, for the first time ever, exceed the number of new job openings."

That may sound like hopeful news to those who are out of work. But without huge, coinciding increases in productivity from automation and other innovations -- which is possible -- the state and the nation will continually be handed social services bills it can't afford to pay, he said.

That could affect the retirement age, pensions, and whether retirees receive health care benefits.

"Chronic government deficits aren't going to end anytime soon," Gillaspy said. "Unless we can deal with the underlying cause, we'll be back two years later with another $5 billion deficit. And two years later, until there is virtually nothing left except things like medical assistance. We have to see some changes. This is a non-sustainable situation."

On a hopeful note, Gillaspy said that with public investment in education, infrastructure and research, we may be able to invent our way out of the problem.

"These are exciting times," he said. "This will be a more exciting decade I think than any in history. This is a time for heroes. This is a time for leaders and exceptional things. It's not a time for business as usual."

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