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:

SLIDE 1

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

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

SLIDE 2

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

SLIDE 3

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

Baby Boomers

Post-Millennials

1. The issue, conceptually

SLIDE 4

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

SLIDE 5

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

SLIDE 6

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 at 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

SLIDE 8

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!

SLIDE 11

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

SLIDE 13

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? investment income?  Employers: Training, technology, location?  Public services: Funding? Competition— education vs. HSS? Electoral dynamics?

3. Impacts: Raising questions

SLIDE 14

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

SLIDE 15

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

SLIDE 16

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 Unemployment V aries, 1976 -

SLIDE 18

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

SLIDE 19

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

SLIDE 20

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 seniors: ‘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

SLIDE 21

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

State budget ripple effects

 State income 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 $880m (11$)

SLIDE 22

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

 K-12: Age shift, staff shortages, wages  Declining enrollments = lack critical mass

insm. dist’s or high p.p. costs for ‘lean’

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

consumers. Issues of quality? discounting?

Other areas . . . e.g., education

SLIDE 23

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

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

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

SLIDE 24

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 ― University’s admissions, time-to-degree, major advising, student debt  Migration: US law, state needs, rare skills

Responding: Quick thoughts

SLIDE 25

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.

SLIDE 26

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.

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

 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

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

Demography is economic destiny

Population and job growth linked

*Workers (mill.) *

Closer look: Numerical forecast

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

The challenge in parts (I): Boom!

The challenge in parts (II): Bust!

Bottom line: New workers, new jobs?

dn > 10

up >10 ―

State dynamics magnified locally

 Flat household formation; more seniors: Impact on income, consumption, markets?  No-growth workforce labor supply? wages? investment income?  Employers: Training, technology, location?  Public services: Funding? Competition— education vs. HSS? Electoral dynamics?

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

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%] 

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%]

Implications for wages―market works

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

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

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

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

Impacts illustrated (II): Medicaid

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

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

State budget ripple effects

 State income 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 $880m (11$)

 K-12: Age shift, staff shortages, wages  Declining enrollments = lack critical mass

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

Other areas . . . e.g., education

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

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

Responding: Quick thoughts

!

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.

ww www.wis .wistax.or ax.org

Wisconsin Taxpayers Alliance

85 years of nonpartisan policy research and citizen education

Thank ank you!

Questions? estions? Dis Discuss ussion ion?

Workers (mill.)