Michael Hicks: A first look at the census results – The Daily Reporter
The Census Bureau is currently rolling out its population estimates from the 2020 counts. We have state counts and now local municipalities.
These numbers are used to determine the number of United States House seats each state receives and to draw the boundaries of congressional districts within states. The census is also used to draw the boundaries of state Senate and House districts, at least for the 49 states that have bicameral legislatures.
This is the 41st time the United States has conducted a census. The first took place in the summer of 1790, as the Constitution required two years earlier.
Demographers are also keenly interested in the decennial census. These numbers give us a better idea of whether the annual population estimates made by other government agencies are accurate, and they provide a more complete picture of changes in the US population. More detailed data coming in over the next two years will tell us more about age structure, education, race, ethnicity, ancestry, marriage patterns, family structure and hundreds of other data.
Economists care about data for even more immediate reasons. A region’s population growth is the strongest single sign of regional economic health and a marker of prosperity. Thus, population growth alone is often the best measure of recent improvement in economic conditions. Perhaps more importantly, population growth is a strong measure of a region’s future economic prospects. For this reason, municipal leaders should pay close attention to population growth.
The 2020 census revealed unsurprising results. Indiana’s population increased last year by 23,943. This metric is “from” a date in March, so it largely measures pre-pandemic growth. What this tally omits is the nearly 14,000 COVID deaths that are above expected mortality levels in the state.
That means almost two-thirds of Indiana’s population growth in 2020 was wiped out by COVID, a population equivalent to Chesterton, Auburn or Bedford. This should be sobering data. In a better world, it might even cause the many critics of Governor Holcomb’s pandemic restrictions to reconsider their objections.
Many of the trends of past decades have continued in 2020. The greater Indianapolis area absorbed nearly 75% of the state’s population growth. Most of the rest happened in Fort Wayne. This continues the 21st century trend of the Indianapolis metro area absorbing more than 100% of new jobs and nearly 80% of new people statewide. Few places outside major metropolitan areas are growing.
As we dive down to the municipal levels, the strong percentage growth in population is occurring in places in the Indy area. For example, Ingalls (Madison County), Whitestown (Boone County), and Bargersville and Trafalgar (Johnson County) all grew at rates five times that of the country as a whole, and closer to 15 times the rate of state growth. Larger communities generally grow more slowly, but that hasn’t stopped Winfield, Pittsboro, New Palestine, Plainfield, Avon, McCordsville, or Zionsville from experiencing rapid growth.
A few places outside the Indianapolis area also grew rapidly. St. John (Lake County), Greenville (Floyd County), Utica (Clark County), and Huntingburg (Dubois County) have experienced strong population growth. I omit many small communities, where a small annexation or a few families can have a strong growth effect. Hopefully these places will continue to attract people for years to come.
Nearly one in three Hoosiers live in communities that are not developing. About 20% live in places that are growing faster than the national average, and the remaining half live in places that are experiencing relative population decline. This reflects deeper, longer-term structural issues in the state’s economy that suppress population growth. These places with high population loss should be familiar to everyone.
Muncie and east-central Indiana have seen major declines that continue a half-century trend. Communities in Terre Haute and west-central Indiana also extended their long-term decline. The Elkhart-Goshen and South Bend-Mishawaka metropolitan areas have reversed several years of growth. These types of trend reversals are likely related to weak factory employment in the 18 months before the pandemic. Regions that extend half a century of decline remain decades away from reversing the trend.
These data are interesting and useful, but it is really essential to understand why economists consider population growth as a measure of prosperity. There are three reasons that are related but worth considering separately.
The first of these is that people are the engine of economic growth. As inputs to the production of goods, people matter much more than capital investment, tax rates, incentives or infrastructure. It is inevitable that local elected officials will get excited about a new business bringing a significant investment to a community. In reality, they should be much more enthusiastic about people.
The second reason is that the bulk of economic production, around 70% of household expenditure, is allocated to the purchase of services. Almost all services are produced and consumed locally. Since 1970, all net employment growth—in fact, more than 100%—has gone to service production. That’s over 100 million jobs. The production of goods, which are consumed outside of a local region, decreased by 8 million. One of the main drivers of local economic growth is quite simply the consumption of local services.
I know it crosses the minds of many readers that consumers could boost local economies. Many of you have been told that making things locally and selling them elsewhere is the source of economic growth. You were deceived, and the best way to explain this is simply to note that the global economy has grown sixfold over the last century. To the best of my knowledge, we do very little trading with Mars.
The final reason people matter is that population growth, especially net immigration, is a signal that the community is doing something right. The ability to attract people is the most important measure of economic development. To be honest, it doesn’t matter which is second. This is why the decennial census and annual estimates of population growth are so important to economists who study and advise on economic growth.
Michael J. Hicks is the director of the Center for Business and Economic Research and the George and Frances Ball Distinguished Professor of Economics at Ball State University’s Miller College of Business.