Outmigration as an Economic Indicator

1
Outmigration as an Economic Indicator
A Case Study of Southwest Minnesota
Including Economic Development Districts 6E, 6W,
8 and 9

• Prepared by
• Southwest Regional Development Commission
• Upper Minnesota Valley Regional Development
  Commission

22 June07
2
Southwest Minnesota

• Continuous, ongoing population loss over the last
  thirty years.
• A large component of this population loss is
  outmigration.
• Why outmigration should be used as indicator of
  distress.

3
Population Change Since 1970
4
1970s
No Rural Renaissance for SW Minnesota

• Growth in the East
• Contraction in the West

5
1980s
Hard Times in SW Minnesota

• McLeod County (R6E) outpaced state average
• Contraction in 22 of 27 counties,
  includingevery county in R6W, R8

6
1990s
Mixed Bag for Rural Minnesota

• Growth in the East
• Growth in Trade Centers
• Contraction in the West

7
Projected Population Change

• State Demographic Center issued projections after
  the 2000 census
• Population loss moderating after 2010
• Greatest growth next to Twin Cities metros
• Stagnation in the West
• Recent estimates less positive

8
Today Tomorrow
1990s Continued

• Growth in the East
• Growth in Trade Centers
• Contraction in the West

9
(No Transcript)
10
Population Change by Age
11
Population Change by Age

• Aging population SW MN leading trend
• New Entrants to workforce (age 15-24) declining
  share of regions population
• Young Families to shrink
• Older Working Age grows with the Baby Boomers
• Age 65 will be largest group by 2030

12
Population Change by Age
13
Population Change By Age

• Oldest residentswill be increasingshare of
  population

14
Age Component of Change

• Region-wide, more births than deaths
• Negative natural increase in over 50 of counties

15
Labor Force

• SWMN labor force has grown, even as population
  stagnates or contracts.
• Greatest growth in Trade Centers, near Twin
  Cities metro.
• Greater numbers of people participating in the
  labor force.
• Projections indicate trend is not generally
  sustainable.

16
Labor Force
Unemployment Trend

• Regions change withState of Minnesota

17
Labor Force
Unemployment Trend
18
Labor Force
Makeup of labor force is following population
trends.

• Aging population SW MN leading trend
• Fewer New Entrants (under age 25) to replace
  retiring workers
• Young Families reduce share
• Older Working Age grows with the Baby Boomers
• Age 65 becoming more concentrated

19
Labor Force
20
Labor Force
21
Labor Force
Aging of Labor Force

• Oldest participantswill hold increasingshare of
  labor force

22
Per Capita Income

• BEA Income stats equivocal on regions economy.
• Since 1980, only one SWMN county topped MN PCI
  (1985).
• 2004 county PCI 63 - 88 of MN PCI, 69 to 96
  of US PCI

23
Per Capita Income
24
Migration

• Population Change Natural Increase
  Net-Migration
• Net-Migration In-migration Outmigration
• In SWMN, Migration usually means Net
  Outmigration.

25
Migration

• SWMN shows net outmigration since 2000.
• Greatest outmigration from Lyon, Nobles, Redwood,
  Kandiyohi.
• US Census Bureau estimates net gain from
  international migrants.

26
When Vikings Leave

• Thirteen students made up the last graduating
  class of the Milan Vikings in 1990. The entire
  school housed about 100 children from K-12. The
  school didnt close its doors in 1990. It
  combined with three other small towns to form the
  Lac qui Parle Valley School district. The Milan
  school building housed grades 4-6 for both Milan
  and nearby Appleton until 2007, when it was
  decided that all the elementary children from
  Milan would go to Appleton and the Milan school
  building would close and be sold. Milan is
  vibrant town of 320, working very hard to create
  economic opportunities. But when the students
  leave Milan to go to college, there are few
  reasons for them to return.

27
Outmigration as an Economic Distress Factor

• Federal Indicators of Economic Distress
• Scan of Research
• Outmigration as a Distress Factor in Southwest
  Minnesota

28
Federal Indicators of Economic Distress

• Federal Public Works and Economic Development Act
  of 1965, as amended (PWEDA), Economic Development
  Administration (EDA) public works and economic
  development funding and technical assistance 42
  USC 3121 et seq

(1) there continue to be areas of the United
States experiencing chronic high unemployment,
underemployment, outmigration, and low per capita
incomes, as well as areas facing sudden and
severe economic dislocations because of
structural economic changes, changing trade
patterns, certain Federal actions (including
environmental requirements that result in the
removal of economic activities from a locality),
and natural disasters
29
Federal Indicators of Economic Distress
Congress clearly intended that outmigration be
used as an indicator of economic distress.
Section 206(1) 42 USC 3146 directs the
Secretary to consider relative need of eligible
areas based on

• (A) the severity of the rates of unemployment in
  the eligible areas and the duration of the
  unemployment
• (B) the income levels and the extent of
  underemployment in eligible areas and
• (C) the outmigration of population from eligible
  areas and the extent to which the outmigration is
  causing economic injury in the eligible areas

30
Federal Indicators of Economic Distress

• EDA rules spell out more specific criteria for
  distress. These rules currently consider Per
  Capita Income and Unemployment rates to determine
  if a county has "economic distress" 13 C.F.R.
  301.3(a)(1)

(i) An unemployment rate that is, for the most
recent twenty-four (24) month period for which
data are available, at least one (1) percent
greater than the national average unemployment
rate (ii) Per capita income that is, for the
most recent period for which data are available,
eighty (80) percent or less of the national
average per capita income or (iii) A Special
Need, as determined by EDA.
Special Need includes Substantial outmigration
or population loss, but not mentioned elsewhere
in the Rule.
31
Scan of Research

• Population, employment and income are commonly
  used indicators of economic well-being.
• Comfortable to use, easily available for many
  different geographic areas in long-term time
  series.
• Fairly simple to count people at rest, jobs and
  figures reported on income taxes.
• Easy does not always mean accurate or reliable.

32
Scan of Research
Center for the New Wests Ford Foundation /
EDA-Denver study of Great Plains region,
including Minnesotas tall-grass
prairies (Shepard, Muehlbauer, and Higgs 1992).

• Population measures quickly out-of-date, do not
  account for seasonal housing, multiple
  residences. Political units seldom match
  economic units.
• Employment (and unemployment) measures
  incomplete, no account for job quality, multiple
  job holders, self-employment.
• Income measures least understood of the three
  indicators. Census BEA Per Capita Income
  figures vary widely. PCI doesnt account for cost
  of living.

33
Scan of Research
Unemployment Income arent perfect
indicators. Supplementary Information in the
Federal Register (on EDA Final Rule) acknowledges
comments regarding criteria discussed in this
report. Example American Community Survey.

• EDA received approximately 100 identical or
  nearly identical comments on 301.3(a)(4)(i)
  specifying use of the most recent American
  Community Survey (ACS) published by the U.S.
  Census Bureau.
• ACS being phased into use as a replacement for
  Census long form.
• The purpose and methodology of the ACS widely
  criticized (e.g. MacDonald 2006).
• Because of timing and disclosure issues, ACS is
  unlikely to provide accurate information at a
  local level for small, rural places without
  substantial additional federal investments.

34
Scan of Research
University of North Carolina study for EDA on
persistent out-migration, population loss and
regional economic distress (Feser Sweeney
1998, 2003).

• there is a fundamental difference between (a)
  OPL out-migration/ population loss and (b)
  unemployment and income in terms of their
  relationship to economic well-being.

35
Scan of Research

• Identified severe outmigration in portions of
  SWMN, nearby northern Iowa and the Dakotas

36
Scan of Research
Feser Sweeney found that

• Migrants from areas suffering severe OPL are more
  likely to be highly skilled, wealthier and
  younger than migrants from other areas.
• Losing these residents reduces a communitys
  ability to recover and grow in the future.
• Communities faced with long-term outmigration are
  reluctant to invest in capital facilities,
  leaving fewer people who are less able to pay
  more for less.

37
Outmigration as a Distress Factor in Southwest
Minnesota

• Cottonwood County (Region 8) only recent area in
  SWMN to meet EDA Unemployment criteria (1995).
• Population down 17 in the 1980s, worse than
  average out-migration.
• Below PCI indicator in 1995 2000.
• Twice state average share of workforce in
  manufacturing (Toro plant, PM Windom beef-packing)

Alls well now? What about
Underemployment Unemployment artificially
reduced by part-time jobs Wages Average weekly
wages below state averages in every industry
38
Outmigration as a Distress Factor in Southwest
Minnesota
Income figures are much less consistent than
unemployment. Farm Income can vary greatly
year-to-year.

• In 2005, Sibley County (R9), Renville County
  (R6E), had 80 or less than US average PCI.
• Renville Co. has suffered outmigration, but no
  worse than other ag counties in the region.
• Sibley Co. lost 3 of its population from
  1970-2000, but is projected to gain 20 by 2030.
• Swift Co. (R6W) also below 80 PCI long-term
  trend, prison clouds stats.

39
Outmigration as a Distress Factor in Southwest
Minnesota
What about Outmigration?

• Martin County (R9) suffered largest negative net
  migration in SWMN in the 1990s.
• Lost 10 population since 1970, loss projected to
  continue. Fairmont trade center 10,000 pop
• Labor force flat to modest growth.
• Unemployment rate typically below US average.
• Regions second highest PCI in 2005.

Unemployment and income statistics simply fail to
reflect the forces prompting residents to leave
the county.
40
Outmigration as a Distress Factor in Southwest
Minnesota

• Lyon County (Region 8) had 2nd highest
  outmigration in the 1990s. Highest since 2000.
• Pipestone (R8), Yellow Medicine (R6W) and Murray
  (R8) next worst out-migration in the 1990s.
• Lyon has highest outmigration since 2000,
  followed by Nobles (R8), Redwood (R8), Kandiyohi
  (R6E).
• Traditional indicators dont indicate distress.
• 2.5 overall population gain in the 1990s.
• 13 growth in the labor force in the 1990s.
• Unemployment levels consistently below state
  level.
• PCI 85-90 of US average.

What is the hidden source of economic distress
not currently captured?
41
Outmigration as a Distress Factor in Southwest
Minnesota
Most other counties in SWMN continue to
experience outmigration.

• Watonwan
• Yellow Medicine
• Faribault
• Brown
• Pipestone
• Waseca
• Renville

• Cottonwood
• Lac qui Parle
• Chippewa
• Sibley
• Lincoln
• Rock
• Big Stone

What is the hidden source of economic distress
not currently captured?
42
Conclusions

• There is long-term economic distress in Southwest
  Minnesota, indicated by outmigration.
• Outmigration takes away residents a community
  needs most young people, professionals, and
  those with skills in demand for new growth.
• Considering outmigration as an indicator of
  distress creates a more complete picture of
  regional economic health.

43
References

• Amato, Joseph A. To Call It Home The New
  Immigrants of Southwestern Minnesota. Marshall,
  MN Crossings Press, 1996.
• Cottonwood County 2001 Labor Force Assessment
  Minnesota Dept. of Economic Security, November
  2001.
• Feser, E.J. and S.H. Sweeney. Out-Migration,
  Depopulation, and the Geography of U.S. Economic
  Distress. International Regional Science Review
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• Feser, E.J. and S.H. Sweeney. Out-migration,
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