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How the Recession Has Changed American Migration

Wednesday, February 17, 2010

The old saying that Americans have been moving from the Snow Belt to the Sun Belt fails to capture either what has been happening from 1990 to the onset of the current recession in 2007 or what is happening today.

Demography is destiny, or at least a significant part of it, and America’s changing demography has had enormous consequences in every realm of life. Americans historically have been a mobile people. But the old saying that Americans have been moving from the Snow Belt to the Sun Belt fails to capture what has been happening from 1990 to the onset of the current recession in 2007. And there are entirely new realities due to the recession that are remaking states and regions in important ways.

First, let’s consider the period from 1990 to 2007. In some states—notably New York, New Jersey, and California—immigrants poured in and Americans left. Some states had robust growth both from immigration and internal migration—the megastates of Texas and Florida and also the “sand states” of Nevada and Arizona which, during most of this period, had the nation’s highest percentage of population growth.

The industrial Midwest, particularly Michigan and Ohio, lagged behind in growth, starting well before the bankruptcy and government takeover of General Motors and Chrysler. The South Atlantic states from Virginia to Georgia had sustained impressive growth, attracting significant numbers of immigrants for the first time in their history, but attracting even more Americans migrating from other states. Georgia and North Carolina even pushed New Jersey out of the list of top ten population states (and are now threatening to take over Michigan’s position at number eight).

Texas is arguably the nation’s most sustained and serious economic success story.

These patterns prevailed for most of the time between the recession that ended in 1991 and the recession that began in 2007 (the brief recession in 2001 had only a small impact on migration patterns). But this most recent recession, deepened by the financial crisis of 2008, has had a profound effect on migration patterns.

Fortunately, we do not have to wait for the census of 2010 to survey the changes. The Census Bureau prepares estimates of state populations every year, which have proved of tolerable accuracy, and just before Christmas 2009 the Census Bureau released its estimates of state populations as of July 1, 2009.

The estimates showed that both domestic mobility and immigration were sharply down in 2007 to 2009 from the levels recorded during most of the decade.

Here’s one way to visualize what has been happening. Below, I rank the states by percentage of population growth in the economic growth years 2003 to 2007 and then add the percentage growth in the recession years 2007 to 2009. (In each case, the year’s population is as of July 1.) The ten largest states are indicated by capital letters.

Barone 2.16 A

Quick perusal of the figures shows that growth rates have changed sharply in the recession years in some states, but not in others. Let’s try to place the states in different categories to see the different patterns.

Recession Gainers. These are states (plus the District of Columbia) where the annual growth rate in the recession years 2007 to 2009 was greater than in the prosperity years of 2003 to 2007. All have been characterized during the decade by large immigration inflow and large domestic migration outflow. What seems to have happened is that the recession slowed domestic outflow while immigration inflow continued at previous levels (exception: Massachusetts and D.C. saw significant domestic inflow in 2008 to 2009, the latter because of substantial gentrification).

Barone 2.16 B

All these states have been experiencing massive domestic outflow because of high state and local tax rates and high housing costs. Decline in housing prices has probably slowed domestic outmigration, but this can hardly be taken as a sign of economic health. Neither can the continuing (though diminished) immigration inflow, since the availability of high welfare benefits in these states may be one of their attractions for many immigrants; in 2008 to 2009, high welfare benefits accounted for 42 percent of the nation’s entire immigrant inflow.

These recession gainers are increasingly, at least in their major metro areas, two-tiered societies, with a highly educated and high-income native-born elite (augmented by high-skill immigrants) combined with an increasing body of relatively uneducated and low-income immigrant masses. Middle education and middle income have been squeezed out, though at a lesser rate in the recession. Politically, these states have voted heavily Democratic, with both tiers casting large Democratic percentages.

Sharp Decliners. These states have seen a substantial falloff in growth in the recession years. They fall into two classes. One is northern New England: the recession seems to have choked off movement to resort and small town areas; New Hampshire’s low-tax advantage seems to have diminished over the years, as neighboring Massachusetts has lowered its tax rates and Democrats who may increase taxes have dominated New Hampshire state government. The other class consists of auto-dependent Michigan and Ohio, which had a dire decade up through 2007 and an even worse one in 2007 to 2009. None of these states has had a significant immigrant inflow, unlike the Recession Gainers, which owe their current population growth to continued immigration.

 

Barone 2.16 C

The northern New England states have attractions which may enable them to resume significant growth if and when the economy recovers. Michigan and Ohio obviously face far more serious challenges.

Crashing Boomers. For most of the last two decades, Nevada and Arizona have led the nation in percentage population growth. No more: in 2008 to 2009, Arizona ranked sixth and Nevada 18th in percentage of population growth, and Nevada actually had net domestic outflow. So, for the first time in Census Bureau estimate history, did Florida—a sharp and shocking reversal of history. Housing foreclosures in the 2007 to 2009 recession have been concentrated in these three states and in California, the four “sand states” which have accounted for more than half of all the nation’s foreclosures. The heavy reliance of their local economies on the real estate and construction industries have resulted in juddering crashes when house prices began falling. California doesn’t appear in this category because the areas most heavily hit by foreclosures—the Inland Empire and the Central Valley—don’t account for most of the state’s population, as metro Phoenix and Las Vegas do in Arizona and Nevada.

 

Barone 2.16 D

What is the prognosis for the Crashing Boomers? Hard to say. Florida, with continuing immigrant inflow and sudden domestic outflow, is starting to look more like New York, New Jersey, and California than like neighboring Georgia or North Carolina, which had similar percentage population gains during most of the decade. Arizona and Nevada could conceivably be headed in the same direction, with immigrant inflow suddenly exceeding domestic inflow (or outflow, in the case of Nevada) in 2008 to 2009.

Still Booming Boomers. Growth still continued at robust though diminished levels in 2007 to 2009 in Georgia, Idaho, North Carolina, and South Carolina, and at continued robust levels in Texas.

 

Barone 2.16 E

However, a glance at the November 2009 unemployment numbers shows above-national-average unemployment in Georgia and the Carolinas; it’s not clear whether they can sustain the growth levels seen here for 2007 to 2009. Texas, in contrast, is arguably the nation’s most sustained and serious economic success story. It has the lowest unemployment rate of the ten largest states, robust immigration inflow, and even higher domestic inflow. In 2008 to 2009, Texas had 18 percent of the nation’s population growth, 10 percent of its immigrant inflow, and by far the highest domestic inflow of any state (143,423). Altogether, these five states had domestic inflow of 262,170—a number unnervingly similar to the domestic outflow of New York, California, and Michigan (284,315).

Flyover Favorables. One of the unsung success stories of this decade has been the relatively robust growth of states in the Great Plains and northern Rocky Mountains states, which has not flagged significantly even in the 2007 to 2009 recession. For years, many of these states suffered from the steady outmigration of young people and the aging of their populations, and those trends continue in rural counties. But in this decade, both large metro areas like Denver and Minneapolis-St. Paul and small metro areas like Sioux Falls and Fargo have had steady and healthy growth—with no housing bubbles bursting, relatively low tax levels, low or medium rates of immigration, significant domestic inflow (yes, even in the Dakotas in 2008 to 2009)—or, as compared to recent decades, vastly reduced levels of domestic outflow.

 

Barone 2.16 F

Outside of Denver-Boulder and Minneapolis-St. Paul, these Flyover Favorables have little in the way of “cool cities,” and in any case those central cities have not been the notable high-growth areas. These areas have some of the lowest unemployment rates in the country, and their economic stories deserve more attention than they have received.

Unheralded America. “Steady as she goes” could be the motto of the remaining 20 states. The Pacific Northwest (Oregon, Washington) has been doing well during years of prosperity and recession, as has metro Washington (Virginia and, though hurt by recent tax increases, Maryland). Some states here are tax havens to varying extents (Alaska, Delaware, and Oregon have no sales taxes; Alaska, Tennessee, and Washington have no state income tax). Southern states with scenic mountain areas have been attracting unfashionable and not particularly affluent retirees (Arkansas, Kentucky, Missouri, Tennessee, even West Virginia); Louisiana is growing due to the return of Hurricane Katrina evacuees. These states include some heavy manufacturing states (Alabama, Indiana, Pennsylvania, Wisconsin), an island paradise (Hawaii), a nearly-half Hispanic state (New Mexico), and a majority Mormon state (Utah). Most have been growing at less than the national average in years of both prosperity and recession, but Utah, with its high 1950s-level birth rates, had the nation’s second-highest percentage of population growth rate in 2008 to 2009.

 

Barone 2.16 G


Michael Barone is a resident fellow at the American Enterprise Institute.

FURTHER READING: Barone specializes in analyzing elections and districts. He has recently analyzed the special Senate race in “Massachusetts: ‘the Educated Class' versus the People,” explained “Why Parties Last Longer in Britain,” reviewed “A Keystone Election” in Pennsylvania, and discussed the correlations between “Delayed Childbearing and Voting Behavior.” Barone also thinks that, “Under Obama, Crony Capitalism Again Rules the Day,” the “GOP Should Push Education and Pro-Family Tax Reform,” and that President Obama’s presidency is based on two “Mistaken Assumptions.”

Image by Darren Wamboldt/Bergman Group.

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