“Demographic Winter” Tightens Grip on Maine’s Economy

Today the U.S. Census Bureau released their July 1, 2012 demographic data by state.  The data paints a grim picture for Maine and shows that “Demographic Winter” has arrived in Maine.  Demographic Winter occurs when a country or state is facing long-term population decline due to falling birth rates, as is now happening in Japan, Russia and much of Western Europe.

As I predicted in my recent study on Maine’s coming Demographic Winter, Maine’s net natural population growth (the difference between births and deaths) has gone negative in 2012: we had 103 more deaths than births—only one of two states to do so (West Virginia is the other).

As you can see in Chart 1, this is a critical turning point that Maine has not seen in the period shown (and very likely in Maine’s history). Negative net natural population growth means that Maine will depend entirely on people from away moving into the state in order to sustain population growth.

Unfortunately, the migration picture is a mixed bag. In terms of domestic migration (people moving from one state to another), Maine is a net loser: 261 more people left Maine than moved in. On the other hand, in terms of international migration, Maine gained 1,120 people. In total, migration added 859 people.

Overall, Maine’s population grew by an anemic 648 people, which represents a growth rate of 0.049 percent—the 5th slowest rate in the country. As net natural population growth moves further into negative territory, it will eventually reach a point where even net in-migration will not be able to compensate. At that point, Demographic Winter will be very difficult to reverse.

Maine’s Demographic Winter will have severe economic consequences. In economic terms, this means fewer workers will be available to businesses, and there will be fewer customers to buy their goods and services.  This dynamic creates the conditions of an economic depression in which business revenue falls year after year simply because there are fewer and fewer customers.

Eventually, businesses close and lay off their employees, which further compounds the problem and creates a vicious downward economic spiral.