Besides agriculture, the ethanol plant, and the college (along with some restaurants, stores, banks, etc.), I'm not sure what else would drive the economy in Morris.
Morris is a nice town with good schools - the K - 12 schools capitalize on the plethora of college students that volunteer or perform service learning in them. One thing that should be stated is that the U of M, Morris has a stellar reputation that is highly regarded throughout the midwest and the nation - it is known for having excellent, highly rigorous academics, great professors and staff, small class sizes, it is very diverse, affordable, and highly progressive (Morris' efforts to reduce footprint/ go totally green have been newsworthy in recent years - I believe there is a plan to be totally off the grid within several years). So, the K-12 and local population benefit from the college and the college's extension services and Center for Small Towns there.
One nice thing about living in Morris are the interesting folks and diversity that can be found there (due to the college) that you may not otherwise find in small towns. There are occassional culture clashes between the townsfolk and the university folk but you would expect that anywhere. Some really nice lakes and towns close by - Lake Minnewaska is a big one.
It is generally a clean town, about what you expect in a rural college town but some neighborhoods are very nice and well-kept. I would consider it a good place to raise a family, especially with the college and college's activities/ events right there for good educational exposure for the kids. And when your kids get to high school, if they excel in school and are accepted, there would be the option of PSEO (i think it stands for post-secondary educational opportunities or the like), in which they could complete their last 2 years of high school and first 2 years of college simultaneously by attending Morris, again, a great school and huge $ saver for parents.
Job market - check out the local papers and
www.minnesotaworks.net, or local hubs like Alexandria, MN for jobs. I would assume that it, like most outstate rural areas, is not exactly booming/ not a lot of options available, and if one family member gets a really good job, it would be worth the very low cost of living for their partner to just find whatever might be available or maybe try and telecommute (I had a friend that took an interim faculty position at morris, and his wife's company allowed her to telecommute during their time there).
Downsides of living in Morris - it can sometimes feel very isolated if you are used to living in or close to a large urban environment. Although you can get just about everything you need in Morris, the closest "big" town/ business hub to Morris is Alexandria, MN which is about a 45 - 50 minute drive. The local businesses in Morris tend to close pretty early in the evenings and weekends (I believe there is a large, conservative, Mennonite family that owns a lot of business and surrounding land around Morris so word had it that this family had a lot of pull/ say in the goings-on in the town, number of bars/ restaurants there, etc.). And it does get North Minnesota cold in the wintertime - located on a vast expanse of MN prairie and not too sheltered from the elements, it can get the very harsh, cold prairie winds throughout winter so you'll want to be prepared for that.
So if you're willing to commit to a rural existence and bear the MN winters, I think Morris could be a great place to raise kids - I can say that it's definitely a great place for young adults to attend the university, and townspeople generally seemed pretty friendly there. Good luck with your decision.