The Tri-Cities’ deer caught in the headlights challenge

Some civic and government types looked a lot like deer caught in the headlights during ETSU’s session on regionalism earlier this month.

Tri-Cities births v. deaths 2010 – 2018, according to the Census Bureau.

Hearing the CEO of the region’s largest industry say, “The reality is, the way we’re configured today, it’s not feasible to really productively and efficiently interact with this region to try and do business here” is a stinging rebuke. And then hearing one of the top consultants and academics in the nation say that our economic development efforts in this region are not delivering was not only a statement of the obvious but the icing on the cake to a half-day of data presentations and research efforts detailing the region’s lost decade.

Although there wasn’t a detailed discussion on the region’s core demographic challenge, it did get some attention. That core issue is our stagnant population status. The fact that we have a rapidly aging and declining population shouldn’t have surprised anyone. It has been the topic of numerous reports and data updates for a decade. The core issue hasn’t changed. But its growth rate has increased.

Births v. deaths 2010-2018 according to the Census Bureau.

The undeniable force of the challenge is simple. Quite a few years ago the region’s fertility rate dropped to the point that it was not replenishing the population. The death rate was and continues to be higher than the birth rate. No natural population growth necessitates aggressively attracting new residents to sustain and hopefully grow the population.

This isn’t just a local issue. Currently, the U.S. fertility rate has dropped to a level where natural population replenishment is negative.

Combine this with a demographic where about 26 people a day are celebrating their 65th birthday, and you have a couple of major challenges.  An aging workforce typically means fewer workers. A smaller labor force means less productivity – unless a new technology is employed – and that means a stagnant or declining economy.

The challenge compounds when you factor in the fact that much of our economy is consumption-based. Sales tax is the mother’s milk of local governments and a declining population,  especially one that is aging, doesn’t afford parity with yesteryear’s sales tax collections.

Although the need to attract new residents is evident, it’s not universally accepted or liked. But when you look at the primary products the region has to sell – low cost of living, affordable housing, abundant recreation options, and a comfortable lifestyle – it’s what retirees are looking for. But the typical trope is “retirees just add to the demand for services without adding much to the economy.”

There’s enough solid academic research to render that assumption wrong. Here’s just one example. Each new resident accounts for an additional $25,000 a year is retail and services. So, a retired couple adds $50,000 a year to the local economy. So, their demand for services is balanced by their contribution.

Attracting retirees is not the end-all solution to the local demographic challenge. What’s needed is young families. But to attract them you have to have an economy that is creating good jobs.  The local economy is creating jobs, but most of them are on the lower end of the pay scale, and that’s a hard sell when attracting young families. That’s a structural issue what can’t be quickly resolved, while the population issue cries for quick action. At the same time, real median household incomes in both the Kingsport-Bristol and Johnson City Metropolitan Statistical areas have not recovered to pre-recession levels.

According to the Census Bureau, the area we identify as the Tri-Cities had a natural population loss of a little over 14,000 people in the years between 2010 and 2018. Some counties were hit harder than others, just like some counties fare better in attracting new residents. Currently Washington Co. Tenn. Is at the top of that leaderboard.

The short-term conclusion to the demographic issue is attracting retirees is sort of like the first rule in first aid – stop the bleeding. New residents – retirees or young entrepreneurs – are the human capital that the region has to build to stem the stagnant population and economic data that defines the local decade.

One of the warnings those who presented at the regionalism session was that unless solutions are found, the economic and population declines, their momentum will naturally increase to the point where they can’t be reversed.