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

“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: People, the future, the economy  The challenge: Numerically, graphically  Impacts, implications: Conceptually, A ‘Brave New World’ for the economy, numerically . . . with ex’s and speculation  Responses to the challenge? Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

1. The issue, conceptually Post-Millennials Baby Boomers Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

Demography is economic destiny  Pop. growth spurs economic expansion  New workers, more households  Demand grows, multiplies  More economic activity  More future workers Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

Population and job growth linked Pop. Growth and Employment Growth % Chg. By State, 1980 - 2011 Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015 h Inc. g h MI u

2. The challenge writ large Wis. Pop. Growth Slows, 1950 - 2040 Millions (line), Avg. Ann. % Chg. (Bars) Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015 8 6.4 9 4

Closer look: Numerical forecast 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 * Workers (mill.) Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015 Cons. behavior? Tax revenue? Intergen’l issues? Politics?

Underlying dynamic (remember the tub?) Births Stagnate, Deaths Grow! (1980s-2030s) 1.16 1.75 Or . . . ? Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

The challenge in parts (I): Boom! Actual Size, Wis. Age Cohorts over Time 18-44 2,000,000 < 18 1,500,000 1,000,000 65+ 500,000 0 60 70 80 90 00 10 20 30 40 Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

The challenge in parts (II): Bust! Actual Size, Wis. Age Cohorts over Time 2,000,000 < 18 1,500,000 1,000,000 65+ 500,000 0 60 70 80 90 00 10 20 30 40 Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

Bottom line: New workers, new jobs? Job Number (Blue) Track Working-Age Pop (Red) Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

State dynamics magnified locally Growth or Decline 2015-40 Labor Force Cohort 25-64 dn > 10 up > 10 ― dn <10 up < 10 Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

3. Impacts: Raising questions  Flat household formation; more seniors: Impact on income, consumption, markets?  No-growth workforce labor supply? wages? i nvestm’t income?  Employers: Training, technology, location?  Public services: Funding? C ompetit’n— education vs. HSS? Electoral dynamics? Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

. . . numerical basis for answers 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% 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 '40 Dist Cons 14 wtd10 wtd40 '10 Dist Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015 $29,916 18-24 5.0% 4.2% 32179 1608.2 1362.6 $63,885

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

Implications for wages ― market works age as Unemploym’t V Median Annual Chg. in Real (infl-adj.) W aries, 1976 - 1.1% 1.0% 1.8 x or 0.5 pts. Median Chg. Real Wage 0.8% 0.6% 0.6% 0.4% 0.3% 0.2% 0.2% 0.0% <4% 4%-6% 6%-8% >8% Unemployment Rate 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 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 Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

Impacts illustrated (II): Medicaid  Medicaid (MA): 59% US/41 WI, clients budget shares: total and growth, not MC  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 Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

State budget ripple effects  State Medicaid up $880m (11$)  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%+ Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

Other areas . . . e.g., education  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?   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 Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

Other areas . . . e.g., real estate  Home construction, new homes?  Oversupply of large, high-end? Prices?  Condo/retirement/asstd living demand  Commercial: Rentals? Retail? Technology matters more. Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

Responding: Quick thoughts  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 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. ! Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

Thank ank you! ou! Qu Questions? estions? Dis Discuss ussion ion? Wisconsin Taxpayers Alliance 85 years of nonpartisan policy research and citizen education ww www.wis .wistax.or ax.org Thank you to the many here today who underwrite our nonprofit work. Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

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

The data: Looking back on Wis.* Age Group Sizes (Millions) Change 1960 - 2010 * Wisconsin not special Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015 9

Migration ‘subs’ for growth? Migration Becomes More Important, but . . . Reliability? Implications? Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015 Inc. 00 2000-10 10-

Forecast’s double whammy (0 -44) 18-44 + = ! 2,000,000 1,500,000 < 18 1,000,000 65+ 500,000 0 60 70 80 90 00 10 20 30 40 Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

Lo Long g tim ime co comi ming! ng! (Did we notice?) Wis. K-12 Public School Enrollment 871,091 900,000 860,142 854,363 850,000 NB: With new 4K 800,000 750,000 747,667 5 + 17 =22 734,710 700,000 650,000 85 89 93 97 01 05 09 13 Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

State pop. growth has long lagged US Wisconsin Population Growth Slow Cumulative % Change Since 1950 105.2 100 US 85.8 WI WI U.S. 75 64.4 49.6 66.1 50 56.3 34.2 42.7 Wis. 37.1 25 28.7 0 50 55 60 65 70 75 80 85 90 95 00 05 10 Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015

Context: Economy, job driver 104.4 105 WI rem 103.8 US 101.6 101.3 102.3 98.9 101.3 100 99.2 99.0 98.6 WI 96.7 96.9 95 MKE 94.3 Employment: WI vs. US (2001=100) 92.4 90 01 02 03 04 05 06 07 08 09 10 11 12 Todd A. Berry, PhD ▪ Future Wisconsin Summit ▪ 12.09.2015