By Michael Hicks | Ball State University
The Census Bureau is now rolling out their population estimates from the 2020 counts. We have state and now local municipal counts. These figures are used to determine the number of House seats each state receives, and to draw congressional district lines within states. The census is also used for drawing senate and house seats within states, at least for those 49 states that have a bicameral legislature. This is the 41st time the United States has conducted a census; the first was conducted in the summer of 1790, as required by the Constitution two years earlier.
Demographers are also keenly interested in the decennial census. These counts give us a better idea if the annual population estimates conducted by other government agencies are accurate, and it provides a more comprehensive snapshot of changes in American population. The more detailed data that will arrive over the next couple years will tell us more about the structure of age, education, race, ethnicity, ancestry, marriage patterns, family structure, and hundreds of other pieces of data.
Economists care about the data for even more immediate reasons. Population growth of a region is the strongest single sign of regional economic health and a marker of prosperity. So, population growth alone is often the best measure of recent improvement in economic conditions. Perhaps more importantly, population growth is a robust measure of future economic prospects for a region. For that reason, civic leaders should be closely attentive to population growth.
The 2020 Census revealed unsurprising results. Indiana’s population grew last year by 23,943. This measure is “as of” a date in March, so it largely measures growth prior to the pandemic. What this count omits is the nearly 14,000 COVID deaths that are above the expected levels of mortality in the state.
That means nearly two-thirds of Indiana’s population growth in 2020 was erased by COVID, a population equivalent of a Chesterton, Auburn or Bedford. This should be a sobering piece of data. In a better world it might even give cause for the many critics of Governor Holcomb’s pandemic restrictions to reconsider their objections.
Many of the trends of the past decades continued in 2020. The greater Indianapolis region absorbed almost 75% of the state’s population growth. Most of the rest occurred in Fort Wayne. This continues the 21st century trend where the Indianapolis metropolitan area absorbs more than 100% of new jobs and close to 80% of new people statewide. Few places outside the large metropolitan regions are growing.
As we dive down to municipal levels, the big growth as a percent of population comes in places within the Indy region. So, Ingalls (Madison County), Whitestown (Boone County), and Bargersville and Trafalgar (Johnson County) all grew at rates five times the nation as a whole, and closer to 15 times the state rate of growth. Larger communities typically grow more slowly, but that didn’t stop Winfield, Pittsboro, New Palestine, Plainfield, Avon, McCordsville or Zionsville from fast growth.
A few places outside the Indianapolis region grew quickly also. St. John (Lake County), Greenville (Floyd County), Utica (Clark County), and Huntingburg (Dubois County) saw robust population growth. I’m omitting lots of smaller communities, where a small annexation or a few families can have a solid growth effect. Hopefully these places will continue to attract people in the years ahead.
Almost one in three Hoosiers live in the communities that aren’t growing. About 20% live in places that are growing faster than the national average, and the remaining half live in places that are in relative population decline. This reflects deeper, longer-term, structural problems in the state’s economy that suppresses population growth. Those places with significant population loss should be familiar to everyone.
Muncie and East Central Indiana saw large declines that continue a half-century trend. Terre Haute and West Central Indiana likewise extended their long-term decline. Both Elkhart-Goshen and South Bend-Mishawaka metropolitan areas reversed several years of growth. These types of trend reversals are likely linked to the weakness of factory employment in the 18 months prior to the pandemic. The regions extending a half-century of decline remain decades away from reversing the trend.
These data are interesting and useful, but it is really critical to understand why economists view population growth is a measure of prosperity. There are three reasons that are related but worth considering separately.
The first of these is that people are the driving force of economic growth. As inputs to the production of goods, people matter far more than capital investment, tax rates, incentives or infrastructure. It is inevitable that local elected leaders get excited about a new business bringing a large investment to a community. In reality, they should be far more excited about people.
The second reason is that most economic production, some 70% of household spending, is allocated to the purchase of services. Almost all services are produced and consumed locally. Since 1970, all the net job growth, actually more than 100% of it, has gone towards the production of services. That’s more than 100 million jobs. The production of goods, which are consumed outside a local region, has declined by 8 million. One major engine of local economic growth is simply the consumption of local services.
I know it boggles the mind of many readers that consumers might drive local economies. Many of you have been told that making stuff locally and selling it elsewhere is the source of economic growth. You’ve been misled, and the best way to explain this is simply to note that the world economy has grown some six-fold over the last century. To the best of my understanding, we are conducting very little trade with Mars.
The final reason people matter is that population growth, particularly net in-migration is signal that the community is doing something right. The ability to attract people is the most important economic development metric. To be honest, whatever is in second place hardly matters. That’s why the decennial census and the annual estimates of population growth are so decidedly important to economists who study and advise about economic growth.
Michael J. Hicks, PhD, is the director of the Center for Business and Economic Research and the George and Frances Ball distinguished professor of economics in the Miller College of Business at Ball State University.