Population decline remains a tough, chronic problem for much of the Midwest, particularly rural places. It’s not a new problem, but over the next two or three decades, the consequences and speed of decline are likely to become acute rather than chronic. It is time for some hard decisions and honest political leadership. I begin with facts.
Indiana is fortunate to be a compact state. Most rural counties are within an easy commute to a metropolitan county. Still, nearly 3 out of 4 counties are projected to either lose population over the next 25 years or see their populations remain effectively unchanged.
There’s no easy way to say this, but migration is almost exclusively among residents with high human capital. This phenomenon of high human capital migration is among the best-documented facts in the social sciences. So, healthier, better-educated people and those more likely to start a business are the very people most likely to migrate. This is true between and within nations.
Of course, this doesn’t mean that the folks who stay near home have low human capital. It does mean that, if “leavers” outnumber “stayers” over time, the average resident will have less education, poorer health and be less likely to start a business.
One way to think about this is to imagine two large classrooms of students, and the students in each classroom have the same average height. If you randomly move 10% of kids from one room to the other, the average height of students in each classroom won’t change.
Suppose instead that you move 10% from one classroom to the other, but can only choose kids who are in the tallest half of the class. Almost immediately the average height of one class will drop and the other will rise. It works the same way across other measures of human differences.
This condition explains some of the economic somnolence of shrinking communities. It also explains much of the geographic concentration of poor health and drug use. The rates of opioid and fentanyl use was especially high in places with chronic population declines. A big part of this was simply that the people who left over the previous decades were healthier and better educated. They left behind a higher share of people at risk of addiction and disease.
The longer that population loss occurs, the worse this becomes. Many Midwestern counties are in their fourth or fifth decade of population decline. This doesn’t mean the future is hopeless, but it is a pretty good argument for realism and far more aggressive policies.
It is worth noting that it took Ireland about 150 years to recover from two heavy decades of outmigration. Many shrinking counties in the Midwest are forecasted to become smaller for another half century or longer. These forecasts might be wrong, but here in Indiana, population forecasts have mostly erred in the direction of optimism.
It is likely that the 40-plus Hoosier counties with shrinking populations will continue to lose people for most of this century. If you suppose things are bad in those counties now, imagine them in 2060.
State policy has tried to address the problem, with no real success. The same dozen counties that grew over the past 25 years will continue to grow over the next quarter century, fueled heavily by Hoosier families moving within the state.
There are many reasons why state policy has been unsuccessful. Most state support for declining communities focuses on housing and infrastructure. These are supply-side problems, but population decline is really a demand-side problem. Communities lose people because folks choose not to live there.
Subsidizing new home construction in declining communities might be popular, but it won’t reverse population loss. Making a community a place people wish to live is much costlier than paying for broadband, building new homes or extending water and sewer systems. However, public services — especially good schools — are magnets for families.
For places that have lost population, paying for the public services that attract people is difficult because of the overhead costs of doing so. Economists call this “economies of scale” and this is an especially challenging problem in rural communities.
As an example, today about 1 in 5 Hoosier school corporations cannot afford to offer a single Advanced Placement course in the big three STEM courses — calculus, chemistry or biology. Thus, their graduates are unprepared for rigorous college work at a typical state university. All of these are small schools that have been losing enrollment for decades. They are shortchanging students.
These places are unlikely to recover on their own. Funding schools sufficiently well to attract new families would mean large property tax referendums. But, it is primarily urban and suburban communities that pass school operating referendums to improve schools. Those places will grow, making the funding challenge in rural places even worse over the decades to come.
If you think this is a dismal prognosis, you are mistaken. It is realistic, and everyone who studies the issue seriously knows it. When a school cannot afford to offer classes I took in high school almost a half-century ago, it is unlikely to lure more new families than it loses. The prognosis for that community is necessarily dismal.
There is one magic elixir that can reverse population decline: international immigration. Immigrants who come to the U.S. are almost wholly motivated by economic opportunity or freedom. They are also possessed of very high human capital. Of course, for many, it is not well measured. In the developed world, education is a good measure of human capital. Not so among less-developed nations.
Someone who walked here from Guatemala to Logansport has a lot more human potential than the average human anywhere. We would be foolish to ignore it. And just to be clear, I’m not hypothesizing here. The kids of immigrants are probably the single most successful demographic group in America today. That has been true for more than a century and a half.
Immigrants are also less sensitive to many of the quality-of-life considerations that drive native-born migration. Citizens leaving other countries in search of freedom and economic opportunity find better locations across almost every small town in America.
A century ago, the Ku Klux Klan polluted many of Indiana’s cities, scaring immigrants and costing decades of population decline. We’d be far wiser to wish for more immigrants today. For half of Indiana, it may be the only thing that prevents ghost towns.
Michael J. Hicks is the director of the Center for Business and Economic Research and an associate professor of economics in the Miller College of Business at Ball State University. Send comments to [email protected].
