14
Doldrums in the Midwest
THE MIDWEST, WITH about 66.5 million people as of 2008 representing about 22 percent of the U.S. population, has a demographic profile similar in many ways to that of the stagnating Northeast but has more pockets of favorable population growth. While the Midwest overall is experiencing significant net outmigration, numerous urban areas are bucking the trend and experiencing healthy population growth fueled in large part by incoming migrants, both domestic and international.
At the turn of the 20th century the Midwest, with a population of 26.3 million representing 34.7 percent of the nation’s overall population, was the largest region by population. By the year 2000, the population of the Midwest had more than doubled; however, this growth was far surpassed by that of the West, which saw its population increase by more than fifteen times, from about 4 million to 63 million, and that of the South, which more than quadrupled, from 25 million to more than 100 million.
The Midwest’s first population boom began after the American Revolutionary War, as settlers from the East flooded into the region to claim federal government land grants and to till the region’s fertile soil. The region remained predominantly rural and became known as the nation’s “breadbasket” thanks to an abundant harvest of cereal crops such as corn, oats, and wheat. Population growth accelerated in the late 1800s and the first half of the 1900s due to the industrialization of the Midwestern Great Lake states—Illinois, Indiana, Ohio, Michigan, and Wisconsin—which, joined with the Northeastern states of New York, Pennsylvania, and New Jersey, along with West Virginia, served as the nation’s steel-driven manufacturing belt. This industrialization drew in millions of migrants, from Easterners looking for new opportunities, to Europeans bypassing the East, to Black Southerners fleeing the segregationist South in what was known as the “great migration.” This industrialization was seen in the rise of Midwestern cities such as Chicago, St. Louis, Detroit, Minneapolis, Cincinnati, Cleveland, and Milwaukee, among others, but much of the Midwest remained rural and thinly populated on a relative basis.
The manufacturing belt began a slow decline in the 1960s, a decline that in the ensuing years has been exacerbated and accelerated by numerous factors—such as recessions, high state tax rates, worldwide free-trade agreements, and exceptionally high labor costs, to name a few—and perhaps reached its apogee during the Great Recession that started in 2008. As the manufacturing belt metamorphosed into the “Rust Belt,” it lost its appeal as a destination for incoming migrants, and spurred significant out-migration of its residents, a key factor in the population stagnation in both the Midwest and Northeast that seems to be continuing to this day.
The U.S. Census Bureau delineates the Midwest Region as the states of Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin.
And without further ado, and because you are getting so good at this demographics stuff, I think we’ll turn immediately to the tables and let the numbers tell you the story, which you should then be able to relate back to me.
RATES OF POPULATION CHANGE 2010–2015
With the exception of North Dakota, and perhaps to a smaller degree, South Dakota, I imagine that you’re ready to tell me that the Midwest’s population change numbers for 2010 to 2015 are fairly anemic. Probably reminds you a bit of the Northeast’s numbers, though not quite as bad.
But did you notice anything about the different states’ rates that might have struck you as a bit odd? Not necessarily in comparison with the Northeast states, but if you recall the Northeast table for this period you might have noticed that, excepting Pennsylvania, the states with the largest populations (and those considered the most economically powerful) experienced among the highest rates of population growth.
Not in the Midwest, as the three largest states by population (and size of their economies)—Illinois, Michigan, and Ohio—experienced the smallest percentage increases in population. I have not conducted any research yet, but based on this anomaly I can almost assure you that these three states are suffering economic challenges above and beyond those of the large Northeastern states. Now let’s see how the region has fared over the past twenty-five years.
TABLE 14.2
RATES OF POPULATION CHANGE 1990–2015
OK, as with the Northeast, not as bad as the shorter-term numbers, but still below the national average of about 29 percent for this time period. As with the shorter 2010 to 2015 time period, the large population states considered the region’s economic powerhouses are tending to see the least growth. One also needs to keep in mind that growth in the region has been decelerating, with 7.9 percent growth recorded in the 1990s, followed by 3.9 percent in the 2000s, and currently on track for 2.8 percent growth this decade.
And what about components of this decelerating growth?
COMPONENTS OF POPULATION CHANGE 2010–2015
*As noted in previous “Components of Population Change” tables, the sums of the natural increases, domestic migration, and international migrations do not necessarily add up to the net changes in population. This is because the U.S. Census Bureau includes a “residual” in this number to account for “changes in the population that cannot be attributed to any specific demographic component.” I toyed with using the “true” net change in population numbers according to calculating the aforementioned sums but decided that for the sake of consistency I should utilize the “official” numbers despite the odd variance and potential confusion that might ensue should a reader count the sums.
No doubt you determined that out-migration combined with low fertility is the cause of the deceleration. I mean, it’s hard not to notice that with the exception of the Dakotas, people are fleeing from the Midwest. And while the number of people fleeing the Midwest is not as extreme as in the North, unlike the North the Midwest is not making up for the domestic migration loss with a significant international migration gain. While the North experienced a small net 152,239 migration gain, the Midwest experienced a net migration loss of 269,501.
THEORETICAL POPULATION CHANGE ABSENT INTERNATIONAL MIGRATION 2010–2015
As with the previous tables, the numbers suggest something is rotten in Illinois, Michigan, and Ohio. And, as alluded to in previous chapters, I would guess that it has something to do with the decline in the region’s manufacturing jobs.
With regard to the region’s racial and ethnic composition and recent change, there are no real surprises. As you may recall from Chapter 11, the Midwest has the greatest proportion of Whites, smallest proportional representation of Hispanics and Asians, and second smallest proportion of Blacks.
Similar to the rest of the country, the Hispanic and Asian populations are experiencing robust growth, while White population growth is stagnant. As with the North, the Non-Hispanic White population is in decline, and I would guess that out-migration is playing a role in this decline. Black population growth is the smallest of all regions, and I assume that out-migration—the reverse migration to the South—is also playing a role in its anemic growth.
TABLE 14.5
RACIAL AND ETHNIC COMPOSITION OF U.S. POPULATION 2014
TABLE 14.6
RACIAL AND ETHNIC POPULATION CHANGE 2000–2014—MIDWEST
Looking forward, the Census Bureau as of 2005 released projections based on the 2000 Census that indicated that the Midwest’s population growth rate will remain relatively weak going toward 2030, with most Midwestern states expected to have lower growth rates than the Northeastern states.
The projections estimate that the Midwest’s overall growth will be only slightly better than that of the Northeast, and excepting the Dakotas, no Midwestern states are likely to reach the national projected 2030 population increase of 29.2 percent. The projections call for the Midwest’s population to grow by about 6.1 million people between 2000 and 2030, a 9.5 percent increase, just above the 7.6 percent increase expected for the Northeast, but far below the West’s 45.8 percent or the South’s 42.9 percent. With a projected 2030 population of about 70.5 million, the Midwest’s share of total U.S. population is expected to drop to 19.4 percent, from a current 22 percent.
TABLE 14.7
PROJECTED POPULATION CHANGE 2000 TO 2030—MIDWEST
Eight of the twelve Midwestern states are projected to have among the lowest growth rates in the country for the 2000–2030 time frame, joining seven other states (primarily from the Northeast) and the District of Columbia with projected growth rates below 10 percent.
And based upon a midpoint check of these projections, it appears that Census Bureau analysts overestimated growth for some Midwestern states, and that few states will likely be able to reach the estimates for 2030. As of the midpoint year of 2015, Michigan was more than 650,000 short of its midpoint estimates and Illinois was almost a quarter million short. Other laggards include Minnesota, by about 180,000, and Wisconsin, by more than 100,000.
The Bureau underestimated both North and South Dakota, with North Dakota’s 2015 population already exceeding the projections for 2030, and that of South Dakota almost meeting the 2030 projected number. Of course, the vibrant shale oil–based economy of these states is likely responsible for stimulating this population growth, and should the boom collapse I would expect a reversal in these states’ migration trends.
TABLE 14.8
PROJECTED VERSUS ACTUAL POPULATION CHANGE 2000 TO 2015
While birthrates in the Midwest states are generally lower than those of the Southern and Western states, most are higher than those of the Northern states, with eight coming in higher than the 2014 national average of 12.5 births per thousand, and four coming in lower. And like the rest of the country, all Midwest state rates, excepting North Dakota, have been trending down in recent years. North Dakota, with a rate of 14.7, has the highest rate, followed by South Dakota, 14.6; Nebraska, 14.0; Kansas, 13.4; Minnesota, 12.8; Iowa, 12.6; Indiana, 12.6; and Missouri, 12.5. As seen with other parameters, Midwestern states with higher populations seemed to have lower birthrates, with the lowest rates held by Michigan, 11.5; Wisconsin, 11.6; Ohio, 12.1; and Illinois, 12.4. Thus, while the region’s birthrate is not the primary cause of lagging growth, it is certainly not providing much of a boost to the population as it is in the South and, more particularly, the West.
The stagnating population is perhaps more obvious in the Midwest than the North because it seems to be more pronounced in specific areas of the region. While population stagnation in the North is generally more spread out across that region, and far fewer cities are experiencing outright decline, in the Midwest stagnation and outright decline are noticeable in dozens upon dozens of municipalities across the region. On the other hand, some Midwestern municipalities are experiencing healthy growth.
A primary example of decline is Detroit, once proudly known as Motor City, but now perhaps best known as capital of the Rust Belt. The city has lost more than 1.1 million residents since its heyday in the 1950s as the world’s largest auto manufacturing center. As with other cities that have experienced population losses over the past fifty years, some of Detroit’s exodus was short-range, local migration to the suburbs. However, suburban Detroit has also suffered intermittent population declines, especially from 1970 to 1990.
This ongoing exodus has long impacted the city’s housing market, but the last fifteen years have been exacerbated by the collapse of the U.S. auto industry. The median cost of a Detroit house in 1994 was $42,000 while the median price has dropped to as low as $11,000 in some neighborhoods as recorded in 20151.
Other Midwestern steel and auto industry cities experiencing noticeable population losses include Cleveland, Ohio, down more than 115,000 since 1990; Dayton, Ohio, down more than 41,000; Flint, Michigan, down more than 41,000; and Gary, Indiana, down more than 38,000. And I could keep going with this list, but you get the general idea.
And actually, it’s scarier than these numbers suggest because 1990 doesn’t represent these cities’ population peaks. The declines are much greater when recorded from each of their population peaks: Cleveland, Ohio, down about 525,000 from its 1950 peak; Dayton, Ohio, down about 121,000 from its 1960 peak; Flint, Michigan, down about 97,000 since 1960, and you get the picture. . . .
But out-migration and population loss isn’t restricted to steel and auto industry cities. Census Bureau data shows that hundreds of counties across the Midwest lost population between 2000 and 2014, with all but five states—Indiana, Wisconsin, Missouri, South Dakota, and North Dakota—recording more population declines by county than increases.
However, every state had pockets of growth, and in some cases—particularly those urban areas not heavily reliant on the steel or auto industries—significant growth. And while no Midwestern city or urban area can really be considered a boomtown, more than twenty metropolitan areas—including Minneapolis–St. Paul, Minnesota; Indianapolis, Indiana; Madison, Wisconsin; Columbus, Ohio; Kansas City, Missouri; Springfield, Missouri; and Des Moines, Iowa, to name some of the largest—experienced population growth between 2010 and 2015 above the U.S. average of 4.1 percent.
In short, the Midwest as a whole is experiencing population stagnation, with some areas, particularly in Michigan and Ohio, facing significant population declines; but other areas, primarily those urban areas not associated with the auto and steel industries, seeing fairly healthy growth.
The region’s mixed economic performance and related population dynamics are noticed by economic analysts, such as the American Legislative Exchange Council (ALEC), which points to mixed economic performance among the region’s states. Using fifteen parameters that primarily deal with taxation and regulation, five Midwestern states—Michigan, Ohio, Illinois, Wisconsin, and Missouri—join four Northeastern states and Mississippi as having among the worst economic performance rankings for the 2003 to 2013 period, with the report strongly suggesting that the extensive out-migration of people will continue from these states absent state government policy changes. Both Dakotas scored high in the rankings, while Iowa, Nebraska, Minnesota, and Kansas came in more or less in the middle, with Indiana nearing the bottom 10.
Noting that people “vote with their feet and move to states that offer better economic opportunities,” ALEC’s 2015 State Economic Competitiveness Index—Rich States, Poor States—calls out Illinois and Michigan as being the Midwestern states suffering the worst out-migration due to economic conditions. However, while the report applauds Michigan—as well as Indiana and Wisconsin—for recently enacting pro-growth reforms “after decades of poor policy choices,” it chastises Illinois and Minnesota for continuing to pass “tax and spend policies.” In short, the report suggests that recent state government fiscal policy moves could alleviate out-migration from Michigan, Indiana, and Wisconsin; while Illinois and Minnesota will likely see continued population out-migration until the fiscal policy changes to encourage a return of business growth.
However, this return of business growth doesn’t necessarily mean a return of “manufacturing” jobs. In fact, some analysts believe that 2015 was a record year for U.S. manufacturing in both the Midwest and the country as a whole. But, as noted by economist Michael J. Hicks, director of the Center for Business and Economic Research at Ball State University, the high manufacturing output of the region and nation is being done by “far fewer workers.” Hicks believes that “folks with master’s degrees in robotics working in Palo Alto, California” have caused far more manufacturing job losses than have cheaper workers in Juarez and Beijing, and that there isn’t going to be a mass return of manufacturing jobs to the United States.
Despite that dire prognostication, Hicks notes that for every manufacturing job lost, the country has created ten jobs elsewhere, while other economists increasingly point to the nation’s manufacturing sector as being in transition. A transition based on innovation, automation, and technology, and one that should spur associated job growth to support the transition and its means.
And if the aforementioned Kauffman Foundation and Information Technology and Innovation Foundation’s report on the “New Economy” is any indicator, some Midwestern states may be starting to make such a transition. As noted, the annual report tries to determine which states are best positioned to capitalize on America’s transformation to the “New Economy,” with the term describing a set of qualitative and quantitative changes that have been transforming the structure, function, and rules of the economy. The New Economy is global, entrepreneurial, and knowledge-based “in which the keys to success lie in the extent to which knowledge, technology, and innovation are embedded in products and services.”
No Midwestern states made the top 10 in New Economy Index overall scores in the most recent rankings—“The 2014 State New Economy Index”—though Minnesota, Illinois, and Michigan did make the top 20. Minnesota was named eighth in the country with having a “knowledge-based” workforce with New Economy skills, and second in having a “digital economy” necessary for transitioning into the New Economy. Michigan was ranked fifth, and Wisconsin eighth, in the “digital economy” category. Michigan also earned ninth place for having “innovation capacity” as measured by patents issued, share of high-tech jobs, number of scientists and engineers, and other parameters that suggest ease in transitioning into the New Economy.
Of course, several Midwestern states received low overall rankings and low rankings in the various New Economy indicator parameters. But let’s stick with the positives and focus on how some states are positioning themselves for future success, and close with the thought that any such success could spur these states’ economies and change the anemic Census Bureau projections for future population growth.