The EDA Center | at the University of Minnesota  
Commentaries on Greater Minnesota

Periodically we will present commentaries on topics of interest to community and economic developers across rural Minnesota. Below is a list of all commentaries with the most recent listed first.

 

Commentaries
The New Normal
November 2009
Jack M. Geller, Ph.D.
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A few months ago I dedicated a column to what I described as a "bathtub recovery;" the phenomenon of experiencing a sharp macro-economic decline, followed by a protracted plateau, before experiencing a steady economic rise and return to previous production and economic levels. And based upon the continuing economic data that has emerged, it sure seems like we'll continue to bounce along the bottom of the tub a bit longer before seeing the signs of a more sustained recovery.

As I noted at that time, those who projected that the ascent to economic recovery would be as steep as the descent into recession were kidding themselves; especially as it relates to the return of more normal levels of unemployment. According to a September Bureau of Labor Statistics report, the length of the average work week continues to incrementally decline and now stands at 33 hours per week. Bear in mind this number includes all full-time and part-time active workers currently in the workforce. But in consequence, what this means is that as the overall economy recovers and both demand and production tick up, there will be ample room to increase the productivity of the existing workforce well before employers will feel the need to hire new employees. As I said then ... this is going to take a while.

But as with all recessions, we know that at some point the economy will fully recover and both demand and production will reach levels equal to those prior to the beginning of the recession. And at that point we hopefully will feel that things are back to normal; or will it? I'm not so sure.

Why am I so uncertain? Well, first we have to recognize that since the recession began, Minnesota has shed over 140,000 jobs, with more than 46,000 of them being lost in the manufacturing sector. Will all of these manufacturing jobs, especially those in rural Minnesota return when the economy fully recovers? I doubt it. As in any economic downturn, some of these jobs were lost as a result of business failure; and those jobs simply don't return. Other firms were merged or were acquired by larger firms, while other jobs were exported to other locations; including some overseas.

Second, for the first time in many years we are beginning to learn that the health care industry is not immune from the effects of a recession. While the health care sector clearly has not taken the beating that most other sectors have taken, they too have seen selective job losses. Until recently health care jobs seemed like a safe harbor when the economic seas got rough; but no more. And as efforts to curb the costs of health care get more serious, we will no longer be able to assume that the growth in health care jobs will be the norm. So I believe that when the economy fully recovers, we will likely find that the composition of businesses in rural Minnesota and our employment opportunities will be somewhat different.

Third, for almost 10 years now beginning with the release of the 2000 Census data it has been interesting to document many of the structural demographic changes that our state has experienced. Many of these changes will have major impacts on the size, shape and skill-level of Minnesota's future workforce. The two most significant factors are the retirement of the baby-boomers and the increasing racial and ethnic diversity in our state.

We have all known for years that the baby-boom generation represents an extraordinarily large and economically successful cohort that had led our workforce and driven our economy for years. But the boomers are running out of steam as they age and will soon retire from the workforce in very large numbers. In fact, the leading edge of the boomers is already eligible for Social Security and will turn 65 beginning in the year 2011. With the average age of retirement today being around 63, there's going to be quite a few jobs to fill in the next decade.

And that's where the second demographic shoe drops. For you see Minnesota's minority population rose from approximately 6 percent in 1990 to close to 15 percent today. Latinos, African Americans, Native Americans and people of color are the fastest growing population cohorts in Minnesota. So it would be logical to look to these groups to fill the jobs that the boomers are exiting. But unfortunately, the fastest growing groups in Minnesota are also the ones that are experiencing the least academic success. So these educational disparities will have a disproportionate impact on what types of businesses can grow and what types of jobs will be available as employers seek educated and skilled workers.

So will we eventually get back to normal? Sure ... but we may find that it's a new normal.

Geller is professor & head of the Arts, Humanities & Social Sciences at the University of Minnesota, Crookston. He also serves as the director of the federally-funded EDA Center at UMC. He can be reached at gelle045@umn.edu

This document was prepared by the University of Minnesota, Crookston under award number 06-66-05709 from the Economic Development Administration, U.S. Department of Commerce. The statements, findings, conclusions, and recommendations are those of the author(s) and do not necessarily reflect the views of the Economic Development Administration or the U.S. Department of Commerce.

The University of Minnesota is an equal opportunity educator and employer.

 
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