The Shortage . . . 20 year outlook on everything. Todd A. Berry, PhD - - PowerPoint PPT Presentation

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The Shortage . . . 20 year outlook on everything. Todd A. Berry, PhD - - PowerPoint PPT Presentation

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The Shortage . . . 20 year outlook on everything. Todd A. Berry, PhD Future Wisconsin Summit 12.09.2015 Todd A. Berry, PhD Future Wisconsin Summit 12.09.2015 Overview Confessional and audience advisory The issue:

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

“The Shortage . . . ‘20 year outlook on everything.’”

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

 Confessional and audience advisory  The issue: People, the future, the economy  The challenge: Numerically, graphically  Impacts, implications: Conceptually, numerically . . . with ex’s and speculation  Responses to the challenge?

A ‘Brave New World’ for the economy,

Overview

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

Baby Boomers

Post-Millennials

  • 1. The issue, conceptually
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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

 Pop. growth spurs economic expansion  New workers, more households  Demand grows, multiplies  More economic activity  More future workers

Demography is economic destiny

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

Inc.

h h g

MI u

  • Pop. Growth and Employment Growth

% Chg. By State, 1980 - 2011

Population and job growth linked

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

4 6.4 8 9

  • Wis. Pop. Growth Slows, 1950 - 2040

Millions (line), Avg. Ann. % Chg. (Bars)

  • 2. The challenge writ large
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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

2010 2020 2030 2040 % Chg. 0-24 1.89 1.88 1.95 1.95 3.0% 25-64 3.02 3.06 3.00 3.01

  • 0.3%

65 & over 0.78 1.06 1.42 1.54 97.5% Total 5.69 6.01 6.38 6.49 14.1%

Working/ 1.13 1.04 0.89 0.87 Dependent

  • Cons. behavior? Tax revenue? Intergen’l issues? Politics?

*Workers (mill.) *

Closer look: Numerical forecast

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

1.75 1.16

Births Stagnate, Deaths Grow! (1980s-2030s)

Underlying dynamic (remember the tub?) Or . . . ?

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

500,000 1,000,000 1,500,000 2,000,000 60 70 80 90 00 10 20 30 40 18-44 < 18 65+

Actual Size, Wis. Age Cohorts over Time

The challenge in parts (I): Boom!

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

500,000 1,000,000 1,500,000 2,000,000 60 70 80 90 00 10 20 30 40 < 18 65+

Actual Size, Wis. Age Cohorts over Time

The challenge in parts (II): Bust!

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

Job Number (Blue) Track Working-Age Pop (Red)

Bottom line: New workers, new jobs?

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

Growth or Decline 2015-40 Labor Force Cohort 25-64

dn > 10

up < 10 dn <10

up >10 ―

State dynamics magnified locally

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

 Flat household formation; more seniors: Impact on income, consumption, markets?  No-growth workforce labor supply? wages? investm’t income?  Employers: Training, technology, location?  Public services: Funding? Competit’n— education vs. HSS? Electoral dynamics?

  • 3. Impacts: Raising questions
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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

Population Households ’10 ’40 ’10 ‘40 25-34 705.1 722.0 350.4 362.1 12.7% 11.5% 15.4% 13.0 25-64 2,975.0 2,966.0 1,653.0 1,652.4 65+ 742.7 1,457.2 508.9 1,105.7 13.4% 23.1% 22.3% 36.4%

. . . numerical basis for answers

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

Implications for income, economy

 Avg. HH income varies with age (’10) ex.: 45-64 $74,974 vs. 65+ $44,541  Age distribution changes, e.g. 65+: ‘10: 22% ‘40: 36% 45-64: ‘10: 44% ‘40: 32%  Avg. HH Inc. (10$): $62,4 to $59,0 [-5.3%] 

'10 Avg. HH Income

'10 Dist

'40 Dist

Cons 14 wtd10 wtd40 18-24 $29,916 5.0% 4.2% 32179 1608.2 1362.6 $63,885

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

Implications for consumer behavior

 Avg. HH consumption (‘14) < 65 $56,433 vs. 65+ $43,635  Age distribution changes, ‘10 to ‘40   Avg. HH Cons. (14$): $53,4 to $51,7 [-3.2%]

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

Implications for wages―market works

1.1% 0.6% 0.3% 0.2% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% <4% 4%-6% 6%-8% >8%

Median Chg. Real Wage Unemployment Rate

1.8 x or 0.5 pts.

Median Annual Chg. in Real (infl-adj.) W age as Unemploym’t V aries, 1976 -

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

Impacts illustrated (I): Tax collections

 If average income (’10$) down 5.3% FY16 inc. tax $7.86b u $417m loss  If HH consumption down 3.2% FY16 sales tax $5.05b u $162m loss FY16 excise tax $0.68b u $22m loss . . . $600m loss in three major taxes

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

Proper perty ty tax axes es in t in the e ag age e of li limi mits? s?

 Older citizens vote, younger ones do not  Homeowners turnout on prop. tax issues  ‘12 pres. TO x ‘14 homeowners = TOe 65+: 82% x 80% = 65.6% 25-64: 72 x 62 = 44.6  Voters 25+: ‘10 vs. ’40 Chg. 25-64 1.33m 1.32m

  • 0.3%

65+ 0.49 0.96 +96.2 2.7 : 1 1.4 : 1

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

 Medicaid (MA): 59% US/41 WI, clients budget shares: total and growth, not MC

Impacts illustrated (II): Medicaid

 KFF Cost for srs: ‘11 vs. ‘11 w/ ‘40 pop. mix

  • 2011a: $7.03b total, $2.20b on 65+ (KFF)
  • 2011e if 2040 pop. mix [No cost inflation!]

65+: 148k >> 293k, $2.20b >> $4.35b

  • Total Medicaid costs: $7.03b >> $9.20
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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

State budget ripple effects

 State inc. tax down ~5%; sales tax, ~3% excises assume 3% (likely more). 11$ rev. loss: Inc. Sales Excise $533m = $373m $137m $23m $50 500m 0m $9 $900m 00m $1.4b .4b / $13.8b 3.8b F11 11-12 12 ‘Swing’ 10%+  State Medicaid up $880m (11$)

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

 K-12: Age shift, staff shortages, wages  Declining enrollm’ts = lack critical mass in

  • sm. dist’s or high p.p. costs for ‘lean’ product

  All ed: Increased neg. consequences for: unreal expectations, poor advising, no HS diploma, poor pers’l planning and choices  Higher ed.: More competitors for fewer

  • consumers. Issues of quality? discounting?

Other areas . . . e.g., education

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

 Home construction, new homes?  Oversupply of large, high-end? Prices?  Condo/retirement/asstd living demand  Commercial: Rentals? Retail? Technology matters more.

Other areas . . . e.g., real estate

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

 Employers: Accelerate training/career paths, ‘senior’ rules, retirement policy  Technology ‘holes,’ bandwidth  Labor supply and education:  ― K12 grad. rates, rigor/remediation, academic/career advising, tech. training ― Univ’s admissions, time-to-degree, major advising, student debt  Migration: US law, state needs, rare skills

Responding: Quick thoughts

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

!

Rec ecap ap for r the e ar arit ithme metica tically lly an anxi xious us or r the e vi visu sual al le lear arne ner.

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

ww www.wis .wistax.or ax.org

Wisconsin Taxpayers Alliance

85 years of nonpartisan policy research and citizen education

Thank ank you!

  • u! Qu

Questions? estions? Dis Discuss ussion ion?

Thank you to the many here today who underwrite our nonprofit work.

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

9

Age Group Sizes (Millions) Change 1960 - 2010

Wisconsin not special *

The data: Looking back on Wis.*

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

00 2000-10 10-

Inc.

Migration Becomes More Important, but . . .

Reliability? Implications?

Migration ‘subs’ for growth?

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

+ = !

500,000 1,000,000 1,500,000 2,000,000 60 70 80 90 00 10 20 30 40 18-44 < 18 65+

Forecast’s double whammy (0 -44)

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

854,363 871,091 860,142

734,710 747,667

650,000 700,000 750,000 800,000 850,000 900,000 85 89 93 97 01 05 09 13 NB: With new 4K

5 + 17 =22

  • Wis. K-12 Public School Enrollment

Lo Long g tim ime co comi ming! ng! (Did we notice?)

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

US

Wisconsin Population Growth Slow

Cumulative % Change Since 1950

56.3 28.7 37.1 42.7 66.1 34.2 49.6 64.4 85.8 105.2 25 50 75 100 50 55 60 65 70 75 80 85 90 95 00 05 10 U.S. Wis.

WI WI

State pop. growth has long lagged US

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

99.0 92.4 94.3 96.7 101.3 98.9 103.8 101.3 102.3 96.9 99.2 104.4 98.6 101.6

90 95 100 105 01 02 03 04 05 06 07 08 09 10 11 12 US WI MKE WI rem

Context: Economy, job driver

Employment: WI vs. US (2001=100)

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

  • 4.1%
  • 1.5%
  • 0.8%
  • 7.0%
  • 2.1%
  • 5.3%
  • 2.5%
  • 3.3%
  • 7.5%
  • 5.0%
  • 2.5%

0.0% 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004 2009 2014

Employment: WI vs. US (2001=100)

Context: Economic structure matters

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Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

Not news!