In December of each year, as many await the holidays, demographers look forward to the latest state population estimates from the Census Bureau. While the interest is in the volume of growth for most states around the country, those of us with a particular interest in Michigan are usually hoping for growth of any kind. While this decade began with a loss in 2011 (a continuation of a streak that began halfway through the previous decade), modest growth has been the rule for the past three years.
Population estimates are constructed by incorporating the components of population change - births, deaths and migration, both domestic and international. These estimates track population at mid-year, most recently on July 1, 2014. Births and deaths have remained rather consistent over the last 15 years. However, Michigan’s aging population has brought about decreasing births and increasing deaths, resulting in a decreasing net gain over the years.
The Department of Homeland Security provides an estimate of the number of legal immigrants intending to reside in Michigan. This number fluctuates slightly, but is always positive, as statistics are not maintained on persons who emigrate. The primary determinant of Michigan’s bottom line has been net domestic migration – a consistently negative number resulting from more people leaving Michigan than coming in. The last half of the previous decade saw an average monthly net loss of 7,500 residents, resulting in significant overall population loss for the State. The first four years of this decade have brought that monthly loss down to 2,800, leading to the turnaround in our total population fortunes.
The source of the migration data is the Internal Revenue Service. Each year, the IRS matches tax return ZIP codes with that of the previous year’s form. This allows the IRS to determine movement patterns state-to-state, as well as county-to-county. Because these are tax returns, they can also capture any change in income that accompanies the migration patterns. After a long hiatus, resulting from improvements in their methodology, the IRS recently released both the 2011-12 and 2012-13 files.
The 2011-12 data show Michigan losing a total of 10,424 households, or 15,646 total residents. Those households took with them an estimated $485,449,000. So where did our residents go? As one might expect, the winners were the top growth states in the South and West – Florida, Texas, California, Georgia, North Carolina and Arizona. These six states took $526.8 million from our state economy.
While an additional 31 states benefitted from households leaving Michigan, 13 donated to us. While none reached the 1,000-person mark, we must nevertheless be thankful for what we received. The top six donor states – Illinois, New York, Ohio, New Jersey, Indiana and Pennsylvania – contributed $223.6 million to the Michigan economy.
The 2012-13 data confirm the decrease in out-migration. Michigan’s net loss was 9,849 households, or 12,720 residents. But in spite of the decrease, more money left the state with them – $555.5 million. While Florida and Texas remained the top two destination states, increasing their net gains over the previous year, Tennessee and South Carolina replaced California and Arizona in the top six. On the donor side, Illinois more than doubled its previous level of giving, while second place New York held its spot. Eighteen states moved to the donor side in 2012-13, up from just 13 in the previous year. Just five of those eighteen are located west of the Mississippi.
A benefit of the IRS’s new methodology is their analysis of tax returns by the age of the primary filer, tied to their migration pattern.
The greatest share of out-migrants were those under age 26, illustrating the problem that Michigan has in retaining and attracting new college graduates. Tax filers under 26 had both the highest share of in-migrant (3.9 percent) and out-migrant (5.0 percent) households. A number of efforts have been launched in recent years to try to turn this trend around. We will need to monitor future IRS releases to judge their efficacy. The loss in young tax filers was more than double the number of our older “retiree” segments.
Tax filers between 26 and 34, the millennial segment, represented the second-highest share of both in-migrant (3.6 percent) and out-migrant (3.8 percent) households. While out-migrant households in this category outnumbered in-migrant households, the associated income went against the trend.
The most interesting finding is associated with tax filers between 26 and 34 years of age. This is the demographic group (particularly those with a college degree) that states and cities are doing everything they can to attract. While it is true that Michigan loses more individuals in this category than it attracts, the losses tend to be concentrated in the lowest household income categories - under $50,000, but concentrated In the $10,000 - $25,000 category. Michigan gives up 1,979 households with gross incomes below $50,000, but gains 737 households with gross incomes of $50,000 or more. The result is a net gain for Michigan of $59.8 million.
Two years of data do not make a trend but we can see some hopeful signs that we will be able to revisit as soon as the 2013-14 file is released. Will net out-migration continue to decrease as more states become donors to Michigan? Will we be able to lower our losses in the younger age categories and will the income growth we saw in the all important 26-34 year cohort continue and, perhaps, flow forward? I hope to have the answers by early October.