Will Minnesotans be able to stay rich without growth?

It's the first day of a new year, the perfect moment for a new columnist to declare that everything is changing.

Recession, if it comes in 2023, will be short-lived. Inflation will diminish further. But it won't go back to the 1% to 2% range we got used to during the 2010s.

Instead, economic cycles and inflation will be influenced for years to come by a bigger, historic change: Labor is going from abundant to scarce.

The change is being felt all across America, but it's most extreme in a handful of states — and Minnesota is one of them.

It's an exciting change in some ways. Since the Great Depression nearly a century ago, American life has been shaped by the fact that people outnumbered jobs. That gave employers tremendous power and made the rest of us scared of getting fired. Both employers' power and workers' fear will gradually fade.

But, in other ways, it's a huge challenge. Americans, with Minnesotans in the lead, are joining the Japanese, Germans, Italians and Finns by trying to solve an economic riddle: Is it possible to stay rich without growth?

Eventually, all countries may face the question. The world's population growth is leveling and may decline later this century.

Until then, says Alfred Marcus, a U of M business professor and author of a recent book on global demographics, "There is a huge divide in the world between countries that are old and countries that are young, and it's getting bigger. The U.S. is now one of the old countries."

Minnesotans are just a bit younger than the median age of Americans overall. But we are already changing from labor abundance to scarcity for two reasons. First, baby boomers are retiring, and we had a lot of them working. Second, technology has made it possible to work for a Minnesota business while living someplace warmer, and the pandemic proved that out.

The state's workforce has about 94,000 fewer people in it than at its peak of 3.16 million in February 2020. That's a 3% drop, twice the decline of the U.S. workforce in that time. Just five states have lost more workers, or wannabe workers, than us.

Those numbers are expected to keep going down. Gen X is much smaller than the baby boom generation. Millennials, while now the largest group in the workforce, won't ever be as large as the boomers were at their peak. Gen Z is a smaller group than the millennials.

"In my lifetime, there have always been more people seeking jobs than there have been jobs available," said Marcus, who is 74, born in the early years of the baby boom.

"That has changed," he said. "The labor market is going to be tight, and it's going to continue that way. It's an extraordinary development."

For now, Minnesota's overall population is still growing slowly. The economy fell in the first half of 2022, and grew below the U.S. rate in the third quarter. Through brainpower, good harvests and productive mining, the state's economy could keep moving upward with fewer workers. But not by much.

And math suggests there will be a toll. As the workforce shrinks, society's fixed costs will be covered by fewer people. Eventually, we'll have to let go of some of the nice-to-have things and focus on basics. When those tradeoffs happen, the people who lose out will be angry, of course.

Meanwhile, across the country, boomer retirees will keep spending and making demands on a shrinking labor force. That will keep wages rising and, in turn, prices. That's why a return to 2% inflation and ultra-low interest rates is unlikely.

A decade-plus of cheap capital is ending just as a century or so of cheap labor does.

In the bounce-back from the pandemic, some people first blamed the disappearance of workers on the federal stimulus payouts of 2020 and 2021. Now, they're starting to realize something bigger is going on, state Demographer Susan Brower told me over a coffee a few days after the November election.

"It's recruiters and mid-level managers who see it because they are the ones who aren't getting responses to job postings," Brower said.

But those mid-level people tell her their bosses don't get it.

"One layer up, the people making the decisions about wages, what I'm told is it hasn't sunk in," she said. "It sounds like they think their folks are just complaining or not doing their job."

All the obvious solutions to boost the workforce involve social tradeoffs. One is to attract more immigrants and invite more refugees, the people most responsible for Minnesota's growth during the past couple of decades. But a lot of Americans don't want more immigrants, putting their prejudices above their pocketbooks.

Some say banning abortion would help. But abortion in America has fallen for 30 years — and faster than the birth rate. Besides, try saying this out loud: "You must have your baby because a business in 2041 is going to need a worker." That sounds both horrible and idiotic.

Climate change, maybe a washed-away coastline somewhere, could drive people to Minnesota. But wishing for a catastrophe anywhere is also horrid.

Gov. Tim Walz is candid about the effect of population and workforce decline on Minnesota and his agenda.

"Workforce is the number one issue," he told me and a colleague recently. He's had trouble connecting with the Minnesotans who already feel the pain, though.

A few days after the November election, the Star Tribune analyzed how voting margins changed for Walz, a Democrat, compared to his first election in 2018. I later asked our data editor, MaryJo Webster, to plot the data from that story against the population change in the 2020 census from 2010. We found Walz didn't win any county where population fell during the decade.

Walz has good ideas about marketing the state and investing in its quality-of-life attributes to attract more people. He also wants to make sure immigrants and refugees are working at the same professional level that they were in the places they left.

He could go farther by forcing state lawmakers and regulators to ask themselves before passing a bill or making a rule: Will this make it harder for someone to get a job in Minnesota? If the answer is yes, then reconsider.

The state should lower barriers to work. Some certifications for jobs should be eliminated, or fees reduced. Noncompete agreements on workers should be banned. Driver's education should be free.

I could go on, but — as with all economic matters — government plays the minor role. Business owners and bosses have their own entrenched ways to get past. They'll have to change business models, cost assumptions and hiring practices.

The biggest change, however, needs to be made by individual Minnesotans. First, we have to recognize that our abundant life in Minnesota and America isn't guaranteed. Then comes the recognition that it will take harder work to maintain it.

Today, the fear of losing a job is soul-crushing, but it's also an incentive to work hard and well.

To keep our wealth and status in the years ahead, we'll have to confront a paradox: Just when our fear about losing work is diminishing, the need for us to do our best work is intensifying.