“America is uniquely ill-suited to handle a falling population,” so proclaimed a recent headline in The Economist.
The article’s author visited the city of Cairo, Illinois and surrounding Alexander County to illustrate the social and economic challenges confronting parts of America undergoing population decline. In Cairo’s case its population topped out in the 1920s at around 15,000, today its down to 1,700; while Alexander’s population is just 18 percent of its 1940s peak of 25,500.
To UP residents these figures have a familiar ring to them. The purpose of this article is to discuss the implications of a falling population for the region using The Economist’s framework, but first a brief overview of the reasons behind population decline is provided.
Slow Population Growth: A National and International Issue
The decade between 2010 and 2020 was the slowest period of US population growth since the Great Depression of the 1930s. The primary cause: a falling birth rate. The total fertility rate, a measure of how many children a typical woman will have in her lifetime, fell from 3.65 in 1960 to 1.61 in 2023, which is well below the figure of 2.1 that is necessary to maintain a stable population. A low fertility level is not unique to the United States, Canada’s fertility rate is 1.4, while China and Spain’s stand at 1.2.
Michigan’s Population Growth
Over the past 40 years Michigan’s population growth has lagged behind other Midwestern states and the US in general, growing just 8.6 percent between 1980 and 2021 compared with the US figure of 45.5 percent. The state’s slow population growth is a function of a falling birth rate and a net migration loss arising from more people moving out of state that moving to Michigan. As the 2023 Growing Michigan Together Council Report noted ‘it’s clear that population decline and its contributing factors are a significant threat to our state’s future prosperity and well-being.’
Implications of Population Decline
The Economist article argues a shrinking population “is bad for many reasons.” As people leave a community once prosperous businesses are forced to close. In the UP, according to County Business Pattern data, the number of private businesses fell between 2000 and 2020, from 8,981 to 7,590, a 13 percent drop. The largest percentage declines occurred in Alger (33%), Ontonagon (31%) and Gogebic (30%) counties. Alongside the drop in the number of businesses, total UP employment fell from 95,726 to 84,590, with Marquette being the only county where total employment increased.
A shrinking population poses challenges for local schools. In the UP, the number of children enrolled in local schools fell by nearly 25 percent between 2002-3 and 2023-4, with the largest losses in the western UP School districts, without enough students, schools struggle to maintain sports teams and other extra-curricular activities that help create a community.
As people leave and are not replaced it can lead to a fall in housing values. If the drop in housing values is sufficiently high, homeowners may stop maintaining their properties as the cost of repairs is higher than the return they will generate. The resulting blight, in turn, leads more people to leave as there is little incentive to stay and results in a ‘death spiral.’ This process has been played out across the UP for the past century as cities and towns have shrunk in size. In some instances, they disappeared entirely as is the case for the Keweenaw Peninsula’s ghost towns, places that were briefly occupied during the late nineteenth century and early twentieth century Copper mining boom.
One particular challenge for communities with a declining population is government worker pensions. As the population ages, the burden of paying for these pensions increases, but there are fewer people to help pay for them. The Michigan Department of the Treasury maintains a Community Financial Dashboard where it’s possible to identify the extent of unfunded pension liability (the difference between the current assets plus projected investment returns minus the total of all projected employee payments).
Taking for example, the three UP cities that have lost over a thousand persons over the past twenty years: Sault Ste Marie’s unfunded pension liability went from $17 million in 2011 to over $33 million in 2022; Menominee’s increased from $4.4 million to $9 million during the same period and Ironwood’s increased from $7 million to $9.1 million. The equivalent figures for Marquette, are $22.5 million and $41 million. In commenting about the pension liability issue for The Economist, Dr. Christopher Berry, Harris Professor of Public Policy at the University of Chicago noted succinctly, “Places that shrink are screwed.”
A shrinking population poses challenges for policy makers since they are well aware that the quality of life often worsens for those left behind. As a result, government officials are often prepared to invest state funds or provide support to private investors for job creation. In March of this year, for example, the Michigan Economic Development Corporation agreed to allocate $50 million toward the Copperwood Mine in Gogebic County, with its promise of 380 newly created jobs and $15 million in annual tax revenue. The mine is strongly opposed due to its proposed duration (11 years) and by environmental groups for its use of Lake Superior water, destruction of wetlands and plans to store mine waste over a vast area.
The challenges posed by Michigan’s lagging population growth were effectively encapsulated in the recently published, Growing Michigan Together report. “Michigan’s greatest strength is its people and we are losing them…And when they leave, our communities suffer from lost tax base and wages needed to support our public amenities, schools, roads, transit, and housing.”
The politics of decline are well documented. Among US counties that lost population between 2010 and 2020, 90 percent of them voted for President Trump in 2020, with his promise of Making America Great Again. Unless the country’s population grows faster more places are likely to shrink, posing a set of challenges for communities that are not easily overcome.
