Trouble Ahead

When the U.S. Census Bureau recently released its annual population estimate for Michigan, it revealed an alarming trend. Between July 1, 2019, and June 30, 2020, the state lost 18,240 residents — the first year-over-year drop in more than a decade.
49
Grand Entry – A popular city in Michigan, Grand Rapids consistently draws new residents year after year, but a growth rate of less than 1 percent in recent years leaves room for improvement. // Courtesy of the City of Grand Rapids

When the U.S. Census Bureau recently released its annual population estimate for Michigan, it revealed an alarming trend. Between July 1, 2019, and June 30, 2020, the state lost 18,240 residents — the first year-over-year drop in more than a decade. 

Although Michigan was the only state in the nation to have lost population between 2000 and 2010, U.S. Census Bureau estimates since 2010 indicate a growth of slightly less than 1 percent, whereas the nation as a whole grew more than 6 percent. Michigan’s population peaked in 2004 at 10,055,315 people, but it hasn’t broken the 10 million mark since 2007. The most recent estimate shows Michigan with a population of 9,966,555.

Formulated mainly from birth/death records and migration projections while using the 2010 census as a base, the 2020 census results due sometime this year will reveal the true state of Michigan’s population. The results have been delayed due to the COVID-19 pandemic.

“It’s possible that the two-year estimated decline is a data error that will be corrected with the 2020 census, but I’m surprised to see the year-to-year loss, as I was expecting the population to slightly increase,” says Donald Grimes, an economist and researcher with the University of Michigan in Ann Arbor. “Even if we don’t have a population decline and we grew slightly, Michigan is in deep trouble on the demographics going forward.”

He adds that “for years, Michigan has witnessed negative domestic migration.” That is, there are more college-educated and other workers leaving the state than are coming in. “We’re also seeing more baby boomers retiring and leaving the state for warmer climates,” he says.

If, in fact, the state’s population trend is heading in the wrong direction, the ramifications are concerning, according to demographers and economic development specialists.

Demographer Kurt Metzger, a consensus consultant to the Lansing-based Michigan Non-Profit Association who co-founded Data Driven Detroit, agrees with the University of Michigan Population Studies Center and state demographer Eric Guthrie that Michigan could lose a congressional seat based upon the 2020 census results.

“It’s not only about losing political representation in Washington, D.C.,” Metzger says. “The level of federal funding is at risk because part of the formula is based upon population. In addition, businesses use population data to locate stores and determine whether they want to expand or move their operations to Michigan.” 

In February the U.S. Census Bureau announced that due to COVID-19-related delays, it will deliver redistricting data — information the states need to redraw or “redistrict” their legislative boundaries — to all states by Sept. 30.

According to experts, the three factors that determine population are births, deaths, and inbound and outbound migration, both domestically and internationally. Based on past trends and projections, there’s growing concern over a “perfect storm” brewing on the horizon.  

“In 2019 we had the lowest number of births since 1941, and 61 out of our 83 counties had more deaths than births,” says Metzger, who, along with Guthrie, the state’s demographer at the Department of Technology, Management, and Budget, acknowledges that it’s a disturbing  fact.

“Over the next decade, as our baby boomer population experiences increased mortality, for a period of time we’ll probably see more deaths than births,” says Guthrie, who, as state demographer, serves as a liaison between the state and the U.S. Census Bureau while also assisting state, county, and local government officials, nonprofits, businesses, and the general public with demographic data needs.

Meanwhile, the fertility rate in the U.S. and Michigan continues to drop, says Reynolds Farley, a retired University of Michigan professor of U.S. population trends who teaches a course about Detroit and the census in a census year. 

“There’s been a persistent decline in the fertility rate,” Farley says. “In the 1960s, women averaged about three children in their lifetime, and now it’s down to 1.7. In 1980 there were about 70,000 more births than deaths in Michigan, and now there are about 20,000 more births than deaths.” 

A smaller workforce also presents challenges to growing Michigan’s economy.

“It’s not just about the population numbers, it’s also the issue of workforce size,” Grimes says. “I think Michigan’s economy will continue to perform at the national average for a while, but unless we can retain and attract more well-educated workers in the knowledge economy, we’re going to run into a limit where our labor market is going to be tighter than the rest of the nation and we won’t have the people to fill the jobs.”

The counterbalancing factor to the birth/death ratio and negative domestic migration has been immigration. 

Prior to the most recent U.S. Census Bureau estimates, Michigan had seen positive net migration for the past seven or eight years, according to Guthrie. “Looking at the components, the reason for that is because we had sufficient international migration that offset outgoing domestic migration,” he says. “Retaining young people and increasing migration to the state will be the key to stemming population loss and promoting growth.” 

Experts say no one should overlook the importance immigration plays in the state’s overall economy. 

Mass Migration - These states experienced sustained negative migration over the last five years, with New York and Illinois seeing the largest drop in population. Annual estimates of the resident population for the United States: April 1, 2010 to July 1, 2020. Year-over-year migration is rounded to the nearest thousand. Latest figures available. Source: U.S. Census Bureau, Population Division
Mass Migration – These states experienced sustained negative migration over the last five years, with New York and Illinois seeing the largest drop in population. Annual estimates of the resident population for the United States: April 1, 2010 to July 1, 2020. Year-over-year migration is rounded to the nearest thousand. Latest figures available. Source: U.S. Census Bureau, Population Division

“One advantage Michigan has is the influx of international migrants,” Grimes says. “They’re typically from Asia, Arab countries, and Europe; tend to be better educated than our aggregate population; and have been attracted to our strong universities and opportunities in the automotive and medical fields. 

“Immigration of talent has been our savior in some sense, so I was surprised by the estimated loss of Michigan’s population because I thought we would have seen continued slight growth. Perhaps it’s due to a decline of immigration because the Trump administration had policies that discouraged it.”

Sandy Baruah, president and CEO of the Detroit Regional Chamber, the third largest chamber in the country, also emphasizes the importance of immigration to Michigan. 

“It’s always been a key component to our nation’s success, and Michigan’s, not just because it adds economic actors. It also brings fresh energy and innovation into our economy,” Baruah says. “The challenge for the state is that immigration policies are set at the federal level; however, I think it will be allowed to flow more under the Biden administration. That will be great for our businesses, as they want access to the best talent.” 

Most everyone agrees there’s very little policymakers can change about the continuing downward spiral of births or the rate of mortality in an aging population. Experts believe stemming the exodus of young talent and increasing domestic and international inward migration hold the key.  

“I work with data, so being alarmed is really not a part of that work, but I can say that if the goal is to increase Michigan’s population, then we need to make sure we’re laser-focused on the migration component and that Michigan becomes a place where people can work, live, and be successful,” Guthrie says. “Migration is always the hardest component in a projection series, because of a lack of data and the variability in migration decision-making.”

For years, policymakers and economic development specialists have tried to address the age-old problem of young graduates leaving Michigan at a rate that far exceeds the number of young people who relocate to Michigan.

Lou Glaser, president of Michigan Future Inc., a nonpartisan organization whose mission is to be a source of new ideas on how Michigan can succeed as a world class community, says the state is falling further and further behind.

“Everybody is still assuming that the way you attract companies is by subsidizing businesses rather than creating places where people want to live,” says Glaser, who points to the Downtown Denver Project as the most successful model for creating a high-wage economy.

“We need to completely change our approach to economic development to one where talent attracts capital. A lot of our graduates are still going to Chicago, New York, Boston, L.A., Seattle, San Francisco, and Denver because they’re talent magnets. Those places all have high density, high amenities, and great mass transit, where you don’t have to own a car. Metro Detroit has been lacking that for decades. Unless we turn that around, we’re not going to be competitive for the Amazons of the world going forward.”

Metzger says e-commerce giant Amazon, which three years ago turned down Detroit for a second headquarters following a national search, passed on the Motor City for a number of reasons. “We didn’t have enough of a concentrated talent workforce, no regional transit, and low education levels,” he reports. 

Due to the concentration and buildup of the automotive industry more than a century ago, Michigan has world-renowned colleges and universities that conduct billions of dollars in research each year. “We do a really good job sending people to college, but we don’t get as many who finish and graduate,” Grimes notes. “We need to make sure people complete their four-year degree.”

Sustained Movement - These states saw consistent growth in population over the last decade. The largest growth rates go to Texas and Arizona. Annual estimates of the resident population for the United States: April 1, 2010 to July 1, 2020. Year-over-year migration rounded to the nearest thousand. Latest figures available. Source: U.S. Census Bureau, Population Division
Sustained Movement – These states saw consistent growth in population over the last decade. The largest growth rates go to Texas and Arizona. Annual estimates of the resident population for the United States: April 1, 2010 to July 1, 2020. Year-over-year migration rounded to the nearest thousand. Latest figures available. Source: U.S. Census Bureau, Population Division

Grimes agrees that for the higher-paying 21st century economy, there needs to be more focus on providing a place where people want to live and work, in order to encourage and secure a greater concentration of well-educated talent. 

“Grand Rapids is a great model and has certainly taken that approach successfully,” Grimes says. “Ann Arbor has seen job growth, and in Detroit we’re seeing a glimmer of a turnaround. However, Michigan still needs to compete with other states in trying to encourage business relocation and expansion through traditional tax incentives. You have to do it, because all the other states are still doing it. We can’t be the only one to disarm.”

Baruah says the Detroit Regional Chamber continues to bring elected officials from different localities and businesses together to help grow Michigan’s economy. Although he says the current and past two Michigan governors — Gretchen Whitmer, Rick Snyder, and Jennifer Granholm — all pushed major economic development initiatives beyond business incentives, “we haven’t necessarily had the clear and concise statewide development approach that some other states do.”

One challenge in developing such an approach is consistency. “The problem is, we’ve had a lot of initiatives that make a lot of noise, then (they) disappear,” Metzger says.

Still, Baruah believes regional cooperation has dramatically increased over the last decade.

“Coming out of the Great Recession, I believe businesses and individuals in the region and across the state realized we’re in this together,” he says. “We’ve seen more regional cooperation, with examples such as the TCF Center, transit and service infrastructure initiatives, and the Detroit Institute of Arts and Detroit Zoo regional millages.

“If we aren’t able to make the appropriate public investments, we’ll end up accelerating the population decline because people don’t want to live in a place that isn’t investing in itself. We need initiatives that make the business environment conducive to our existing companies, (where most of the job growth comes from), and those that will retain and attract people, new businesses, and entrepreneurs.”

Some envision that Michigan may have additional opportunities to grow and attract talent surrounding health care, research and development in the vehicle mobility sector, and renewable energy. “One industry that will likely boom is medical care, because we’ll have a great increase in the 60-and-over population,” Farley says. “We’ll need more elder care facilities, and physicians and caregivers who specialize in older populations.”

Grimes and others also see growth opportunities and an attraction of young talent within the electric and autonomous vehicle sector. “I’m not sure all those jobs will be in Michigan and I’m not sure the Big Three will win that race, but anything our state government can do to help our companies win, they should,” Grimes says. 

Some wonder if the phenomenon of working remotely that has occurred due to the coronavirus pandemic may play a meaningful role in population migration. A study released last June by Stanford University found about 42 percent of U.S. employees are working from home full time. It’s a trend that’s projected to continue beyond the pandemic.

“The acceleration of remote working could potentially have a noticeable impact on how businesses locate and hire, so we have to watch this very carefully,” Baruah says. “If I have headquarters in Detroit and have an employee in Troy, does it really matter if he or she is in Denver or Troy? At the same time, the cost of living is a factor, and we’re already seeing people fleeing high-cost areas such as the Bay Area to lower-cost, higher quality of life areas. I think Michigan has a real opportunity to capitalize on that.”

There has been some talk that because of COVID-19 and the ability to work remotely, more people will be moving out of central cities and into suburbs and rural areas. “Maybe there will be some evidence of that, but I’m not sure that it’s going to be overwhelming,” Grimes says.

Surveys released in the past year by the Harris Poll reveal conflicting information. In April 2020, soon after the pandemic began, one survey found nearly one-third of Americans were considering moving to less densely populated areas. That same month, the Brookings Institution’s William Frey wrote that his analysis of census estimates found that “after people flocked to the big cities in the early 2010s, major metro areas with populations of more than 1 million have seen growth slowdowns and even losses over the past four years.” 

However, in February the Harris Poll issued a new report that revealed that seven out of 10 people surveyed in metro New York, Los Angeles, Chicago, Houston, Phoenix, and Philadelphia said they preferred to live in a big city — suggesting that despite some dire predictions, the “urban revival” trend hasn’t been derailed. 

In an effort to capture remote workers who may consider a move, several U.S. cities, including Topeka, Kan., Tulsa, Okla., and Savannah, Ga., have offered varying relocation financial incentives to workers — including helping to pay for the down payment on a home.

four seasons Michigan offers multiple recreational options, and while some say it’s more difficult to attract residents due to cold winters, cities like Montreal and Toronto report annual population gains. // Courtesy of the City of Ann Arbor
Four Seasons – Michigan offers multiple recreational options, and while some say it’s more difficult to attract residents due to cold winters, cities like Montreal and Toronto report annual population gains. // Courtesy of the City of Ann Arbor

Last October, Cornerstone Alliance in Benton Harbor, a nonprofit, investor-governed economic development organization primarily focused on increasing employment opportunities, private sector capital investments, and the local tax base, along with a number of its partners in southwest Michigan, announced a “Move to Michigan” campaign geared toward Chicago workers that offered up to $15,000 on a new home and a choice of more than $5,000 in additional perks including annual memberships to an athletic club, car service to and from the regional airport for one year, and annual passes to Berrien County Parks and St. Joseph and Benton Harbor beaches. 

The goal was to attract 25 new households — singles, couples, and families with children — that would total 75 new residents in Berrien County. As of March 1, more than 1,000 applications were received from 19 states, with around 70 percent coming from the Chicago region, according to Rob Cleveland, president and CEO of Cornerstone Alliance. 

Meanwhile, when Michigan — and the rest of the country — receives the 2020 census results, the race will continue, perhaps with even more determination in trying to enact initiatives to retain and attract workers and businesses in the hopes of implementing sustained growth.  

“If we want to grow and not just age in place, like we’re doing pretty quickly, the time to act is now,” Metzger says. “We can’t just sit back and hope that because we have all this fresh water and don’t have severe weather, that’s enough of a sell.” 

Facebook Comments