Midwest Migration a Sign of a Financial Powershift

Can Midwest States Hold on to Growing Populations?

What makes a strong state? Is it its low unemployment rates, resource availability, robust infrastructure or strong community? Arguably, it's a pairing of all these dynamics but, more importantly, it's their ability to hold up under pressure.  In what many Americans would describe as a period of heightened economic pressure, patterns of internal migration serve as an indicators of a state's stability. Current trends shed light on the factors that contribute to strong states, and weak ones.

Over the last five years, more people have moved into Midwest states than migrated out.  It's a trend that hasn’t been seen in more than 70 years. While opportunity for growth is certainly part of the economic equation, the trend appears to be rooted in dependability.  The Midwest is a safe bet according to Americans.

What Factors are Making the Midwest so Popular?

Homes are not just more affordable now in the Midwest, they’ve been affordable compared to national averages for decades. Held alongside states like California, Colorado and Montana where housing has gone from affordable to completely unattainable for the average family, the statistics are reassuring. It’s unlikely that homes here will experience huge value swings.

Housing stability can be attributed to the well established industry and infrastructure supporting the region. Geographically speaking, the Midwest is a critical point along supply chains for a variety of industry sectors. Technology, healthcare and manufacturing have called the Midwest home for a long time making these states both economically established and part of innovative developments. Americans looking for career growth opportunities without having to spend their entire paycheck on housing see the Midwest as the most promising place to do that.  

Weaker states don’t have the same job diversity and logistical connectivity.  Growth in those states was likely the result of an innovative boom or a startup endeavor.  If the region lacks the infrastructure of good roads, good schools, affordable housing, childcare and amenities the boom is susceptible to a rapid bust.  It's why states like California, New Mexico and Vermont have lost portions of their populations to Midwest cities that are growing despite elevated economic pressure.

Is the Midwest the Most Affordable Place to Raise a Family?

The Midwest migration trend is especially interesting because of the age demographic. Unlike single and unmarried individuals leaving home to test their skills in the big city, it’s young families who are leaving the expensive big city for places where their dollars go a lot farther. These families are at peak earning ages, increasing incomes through job growth and having babies.  It's not only a shift in population density, it's a migration of finances. 

More peak incomes reside in the Midwest now than in a very long time. And that money contributes to community development. Instead of thinking about it as one individual and one house, the Midwest is gaining some 20 to 30 years of income per individual that moves there in the form of property taxes, income taxes and sales taxes that contributed to the robust infrastructure and economic momentum that is currently making the region so attractive. 

States with declining populations will face continued financial strain as they lose crucial funding for road maintenance, education and community development programs. As local businesses find it more difficult to pay employees and jobs availability declines, economies can fizzle, pushing even well connected communities to dismantle. Living in a hip city isn’t enjoyable if you can barely afford necessities.

With housing costs that can be $300,000 below national average rates, the Midwest would be attractional. But coupled with better public transportation, educational support, career development and childcare the region is perceived to be a secure place to raise a family with a better quality of living opportunity. 

Young families also attract grandparents. Retirees who might once have followed the snowbird trend by purchasing properties in sunny southern states are now making lateral moves to stay in close proximity to their children and grandchildren. The same economic benefits that make the Midwest accessible for first time homebuyers also make the Midwest attainable for retirees looking to downsize, remain close to amenities and stay in close proximity to family.

Universities Playing a Role in Midwest Growth

Some of the population development in the region has nothing to do with migration and everything to do with strategic attempts to keep Millennials in the Midwest.  Universities play a crucial role in this endeavor. Often the longstanding anchor of many of the fastest growing metropolises today, Universities act as the initial draw for young people looking to pursue meaningful and financially lucrative careers.  

But, they also serve to help Midwest states retain populations.  When students attend a university they also tap into the network that the university has built over decades of students graduating and entering into the workforce. Not only can universities educate, they can also connect students to jobs post graduation.  

All states are strategic in their efforts to leverage university networking relationships to keep young people and their future incomes in regional areas. But, the Midwest, being the most affordable place to live makes it far more feasible to keep graduates close. Rent in Bozeman averages $2,000 per month while you can find similar housing for $850 a month in Des Moines.  Similarly, a single family home in Ft. Collins, CO, home to Colorado State University, is approximately $150,000 more than a single family home in Ann Arbor, MI, which houses the University of Michigan. Kansas, Michigan, and Wisconsin have high job placement rates for university graduates and keep over 70% of students living and working in their states.

Where people choose to build their lives is where economic power will follow. If the steady flow of families, incomes, and opportunity into the Midwest continues, this could be the early stages of a broader financial power shift. Midwest appeal may not be temporary as its well established structures are holding up under economic challenges.