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Economic Forces Drive Population Shifts Across U.S., Census Shows

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By Don Lee

RISMEDIA, December 30, 2010—(MCT)—One of the hallmarks of the American economy has been the mobility of its people—the speed with which they pulled up stakes to seek better opportunities elsewhere. But the deep recession ambushed long-running population trends, sharply slowing the migration to the Sunbelt while giving a boost to states with more jobs and affordable housing.

Now as the recovery seems to be gaining steam, a central question is whether the population distortions caused by the massive 2007-2009 downturn represent a long-term change, or whether the previous trends will reassert themselves as the economy grows stronger in coming years.

The first set of data from the 2010 Census, released earlier this month, underscored the big role economic forces can play in driving population shifts.

While the movement of people—and political power—from the Northeast and Midwest to the South and West continued, there were significant changes within that pattern, including a dramatic slowdown in what had long been some of the nation’s fastest growing states.

And those same forces are likely to shape the current decade, at least the first part of it.

“Over time, the population numbers will reflect the rate of job growth,” said Stephen Levy, director of the Center for Continuing Study of the California Economy in Palo Alto, Calif.

As a result, Texas, the nation’s second-largest state after California, was the big winner in the decade just ending. With its low home prices and pro-business, pro-growth policies, Texas felt relatively little effect from the housing meltdown and has bounced back from the recession faster than other big states. Its unemployment rate has fallen to 8.2%, whereas California’s remains stuck at above 12% and the nation’s is hovering near 10%.

And the population of the Lone Star State surged nearly 21% to more than 25.1 million over the decade, adding to its expanding economic base and its congressional delegation—the latter a significant source of future economic vitality because of the growing delegation’s ability to steer federal spending to the state.

Businesses are following the people. Laura McGuire and her husband, George, are getting ready to expand their home health care business in Texas next month. The couple’s been running Griswold Special Care franchises in San Antonio since 2003 but will open two offices in Houston, one of the fastest growing cities in America.

Laura says many of her clients are coming from more expensive states. “I see people selling their shacks in California and buying homes three times as big here,” she said. Statewide, half of existing homes in Texas sold for less than $147,000 last month, compared with a median price of nearly $297,000 in California.

Many Americans want to move but can’t, because they can’t sell their homes. Others owe more than their homes are worth. And many young people, who account for the bulk of the moves, are stuck living at home, delaying marriage and having children as they contend with the sluggish economy.

Overall, the nation’s population increased 9.7% between 2000 and 2010, the smallest 10-year growth rate since the decade of the Great Depression. As in the 1930s, the latest slowdown was due to fewer immigrant arrivals and a shrinking of the nation’s birth rate, in part because of the economic downturn and the hardships inflicted on many families.

Without the recession, Florida, long one of the fastest-growing states, would probably have added another half-million more residents over the last decade, says University of Florida demographer Stanley Smith. The state’s 2000-2010 growth rate was 17.6%—less than half the pace of the 1970s.

“I view it more as a temporary phenomenon, although a very dramatic deviation from the trend,” said Smith, who tallies the population for the state. Smith believes that Florida’s climate and absence of a state income tax, among other factors, will help restore a stronger in-migration as the economy improves.

But that may be a long time coming for Florida and other states such as California that leaned heavily on housing and other hard-hit industries. The latest report shows home prices across the country continued to slide in October, dropping 1% overall from a month earlier, according to Standard & Poor’s/Case-Shiller analysis.

Florida’s unemployment rate, 12% last month, remains one of the highest in the land. And with greater congestion, weak job markets—and in Florida’s case an aging population that has contributed to more deaths and a lower natural rate of increase—analysts say such states may be looking at a persistently weaker population growth over the next decade than they have been accustomed to.

That in turn could mean slower economic growth and more budget pressures on state and local governments.

Bob Palmieri of Long Island, N.Y., doesn’t plan to follow the trail of his parents, who in the 1970s were among the droves of seniors from New York and New Jersey who retired to Florida. For one thing, Palmieri says he’s better off financially, so he’s not looking for a cheaper place to retire.

Nevada and to a lesser extent Arizona also are in this camp. Their big housing bust and high unemployment curbed what had been a surging tide of new jobs and residents moving in from other states.

Many of the new residents had come from California, but the recession and real estate slump limited the inflows from the Golden State—even as the new Census suggests there was a much bigger exodus of Californians in the first several years of the last decade than previously thought.

The 2010 Census put California’s population at more than 37 million, a 10% increase from 2000, but that was about 1.5 million fewer than estimates by the state Department of Finance.

One likely reason for this discrepancy: The surge in housing prices before the crash made it harder for nonresidents to relocate to California, while many more people in the state may have left after the dot-com bust early in the last decade, Levy said.

If California’s population growth in the last decade was just average—giving the state no new House of Representative seat for the first time in 90 years—that’s largely because the state’s job growth during the last 10 years was also just average.

To see what a much stronger job market can mean, look at South Dakota. With unemployment at just 4.5%, it grew by nearly 8% in the past decade, thanks in part also to Latinos. Though Latinos make up just 3% of South Dakota’s residents, they contributed 22% of the growth over the last decade, underscoring their increasing importance in the political and economic arena, says William Frey, a demographer at the Brookings Institution.

Frey, for one, says there’s little in the latest Census head-counts, or other statistics for that matter, to suggest that the multi-decade trend of migration to the South and West won’t continue.

But the pace of movement has been restrained—and redirected within the region—by the sagging employing and housing markets. And that pattern has yet to change.

Frey’s calculations show the rate of people moving across state lines was 1.4% between 2009 and 2010—down from 1.6% in the previous year and well below the more-normal rate of over 2%.

Where there is migration, many are moving within in the South—continuing to flee rural areas for urban centers, drawn to places with major ports or other links to ethnic communities, says G.U. Krueger, a Los Angeles-based economist who studies regional economies.

Georgia and the Carolinas, for example, outpaced other Southern states growing by 15% or more during the last decade. And on the West Coast, Krueger thinks the international connection may help explain why Washington state managed to add 14% more residents and gain another House seat despite problems elsewhere on the coast.

Meanwhile, the recession exacerbated the long-running decline particularly in Middle America—with Illinois, Iowa, Michigan and Missouri each giving up a representative. Ohio lost two seats. Michigan was the only state to show an outright population drop in the last decade.

Rob Paral, a Chicago consultant and demographics researcher, says it doesn’t help that new arrivals from abroad have dropped as well in recent years with the faltering economy. Without them, he says, there’s little to prop up the population of these states, especially in rural parts. “They may have the cheapest housing, but they have no jobs,” he said.

(c) 2010, Tribune Co.

Distributed by McClatchy-Tribune Information Services.

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