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Population growth should be at top of next Mackinac agenda

June 3, 2018

Crain’s Detroit Business

By: Dustin Walsh

This year’s Mackinac Policy Conference sought to tackle some of Michigan’s most pressing issues — workforce, collaboration and social issues. These are all fine discussions and certainly highlight problems in Michigan’s growth, but they are ancillary to the state’s biggest impediment to economic growth.

Population growth, or the lack thereof, is the reaper lurking in the shadows of Michigan’s future and should be the sole focus of next year’s policy conference.

Ask any economist about economic growth, and they’ll point to two factors: increased productivity and population growth.

Since 2010, Michigan has witnessed the longest and most severe slowdown in productivity growth since before World War II, growing only roughly 1.3 percent or less per year, according to data from the U.S. Bureau of Economic Analysis. Some of the slowdown can be attributed to Michigan’s rapid hiring coming out of the recession — more workers in the labor force reduces productivity output if the other factors remain the same. And there’s no indication, despite technology expansion, that productivity will increase above that 1.3 percent high.

Michigan fares even worse in net migration — the number of foreign and domestic people moving into the state minus the number of people leaving. The state has lost 87,519 more people than it gained 2010-2016, ranking among the worst in the country alongside New Mexico, Mississippi and West Virginia, according to the U.S. Census Bureau. The net migration in Florida and Texas was 325,986 and 217,542, respectively, in 2016 alone. Washington, North Carolina, Arizona and Colorado round out the top six in net migration.

Michigan is getting older too. The median age for Michiganders was 39.7 years old in 2016, up from 36.9 years old in 2005. This comes down to massive declines in fertility rates, a national phenomenon. Women are birthing fewer children across the U.S.

The latest data from the Centers for Disease Control and Prevention shows the fertility rates of U.S. women at 1.77 lifetime births per woman, down 16.4 percent since 2007. To put that into perspective, there were 537 fewer births in 2016 in Michigan versus 2011 and 4,463 more deaths between the same time frame.

We’re quickly approaching the Rubicon where there will be more deaths than births, causing more rapid population decline.

This may not seem inherently like a business problem. But it’s undeniable.

Tens of thousands of jobs are currently unfilled with more coming online daily. Gov. Rick Snyder claims we’ll have a workforce shortage of more than 800,000 jobs by 2024, mostly in the fields of information technology, computer science, manufacturing, health care and professional skilled trades.

Coupled with the rapidly retiring baby boomers — 10,000 a day in Michigan by some estimates — and we have an economic maelstrom.

Ask Japan.

Japan’s population was estimated at approximately 126.7 million last year, down more than 230,000 from 2016, marking the seventh consecutive annual decline. By 2040, Japan’s population is estimated to fall by more than 900,000 a year and the number of older citizens, aged at least 65, is expected to peak at 40 million, according to Japan’s The Mainichi newspaper.

Japan’s economic and government officials now worry the country may not be able to maintain critical governmental functions by 2038 due to increased costs and weak tax revenue thanks to diminished economic growth.

Michigan is no different. While Detroit’s population decline is flattening out, and we’re all patting ourselves on the back for its comeback, Michigan’s rural communities continued to be routed by depopulation. Gone are the jobs, opportunities and people. And it’s spreading.

Population loss will become an absolute critical issue for the U.S., — especially if immigration reforms reduce the number of those entering our country to work — but it presents an early opportunity for Michigan if its leaders are willing to focus on the problem. Because remember, when the U.S. economy trips, Michigan’s falls down a well.

So, while political and business leaders should be commended for discussing critical, albeit obvious, issues facing this state, it’s time to look at look at the long game. Solving today’s talent crisis is a game of checkers. Solving the disastrous consequences of population decline is a multidimensional chess match. Blindfolded.

The 2019 Mackinac Policy Conference should take on the big picture before other states organize around solving their population problems and reap the benefits of population gains, i.e. economic growth.


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