Demographic decline signals the shift from the Innovation Economy (Creative Class migration) to the Legacy Economy (return migration). The economic pull of place defines the Innovation Economy. California has been a major beneficiary of this talent flow. But what happens when the state runs out of people to attract? California is dying:
Our longtime solution — attracting new workers from outside California — is no longer a viable source of relief. Migration, both interstate and from abroad, has been dropping since 1990. And today, California must compete with other states and aging economies from across the industrialized world that are starved for workers because of low birthrates. Alternatively, the effects of an outsized senior population can be tempered (somewhat) by pushing baby boomers to delay retirement for five or even 10 years. But is that even desirable?
Emphasis added. Everyone is starved for talent. This is the era of dying places. For many years, California managed a domestic migration deficit via immigration. Texas Governor Rick Perry describes the new normal:
Perry wouldn’t criticize House Republicans for slamming the brakes on federal comprehensive immigration reform, saying that any proposals to offer legalization or citizenship to undocumented immigrants is merely an “academic debate” until the nation’s southern border is completely secured.
And he says that Mexico’s recent moves towards privatizing oil production could take much of the pressure off of the United States to address the problem of undocumented immigrants.
“You will have rather substantive migration back to Mexico from the United States,” he predicted, saying that the move would create attractive jobs in the energy sector for Mexican immigrants who will return home. “The whole immigration issue may really change over the next 12 to 24 months.”
Mexico’s economy is pulling back home Mexican emigrants. But that’s not all. Mexico, like California, is dying:
Fifty years ago Mexico was one of the world’s great producers of people. In the 1960s Mexican women had an average of seven children each; now they have only 2.4, and before 2020 the number is expected to drop below two (see chart 6). That would give Mexico a lower fertility rate than the United States, which is expected to maintain its current rate of about 2.1.
By 2020, Mexico will have a lower birth rate than the United States. Many cities and states depend on domestic and international migration for population growth. The ubiquitous baby bust is an economic bust. Ask the Rust Belt. Ask Pittsburgh:
The paradoxical state of declining population without an exodus of youth comes from our unique demographics. The region’s population is estimated to have gone down by 9,112 people between 2000 and 2001. What may be surprising is that 55 percent of that number represents a decline in the population age 65 and over. Less than half of the regional population decline comes from local residents who are ineligible for Social Security.
The elderly population is shrinking because of a combination of factors. Natural population aging along with a steady stream of retirees seeking warmer climates are the main causes.
The remaining population decline is still something for public policy and local officials to address. Labor shortages now and in the future are a real inhibitor to growth and we need to find ways [to] attract more people to come here. That is a very different problem from how we normally portray the situation, which is that current residents are leaving the region en masse because of a lack of opportunities here or unsatisfactory local amenities. The collective Pittsburgh psyche has been harmed by a negative self-image fueled by a history of outmigration that we cannot forget. We need to consider the possibility that large-scale outmigration is the history and not also the future of the region.
Pittsburgh dealt with demographic decline long before California even considered the prospect. That’s why I think the Steel City is well positioned to benefit from the rise of the Legacy Economy. Pittsburgh business is largely independent of talent migration because it had to be. Pittsburgh colleges and universities annually produce more graduates than the region can handle. That will look very attractive to Silicon Valley companies anchored to a state that can no longer depend on migration as a “viable source of relief.”
