Stat of the Day: Millennials, Migration and Marketers
During the period 2000 to 2009, the Census bureau estimated that a net of about 2.5 million people moved out of the Northeast and another 1.8 million people left the Midwest. The beneficiaries of that huge out-migration were, of course, the South and the West. That meant that on average over the past decade a net of about 40,000 people a month left the Northeast and Midwest for the other two regions.
Between two-thirds and three-quarters of the people who moved from one region to another were under age 40. Since the bureau started gathering this data, young adults have always been more likely to move than older people who often put down roots and are reluctant to pull them up.
The result, however is that consumer markets in Northeastern and Midwestern states are generally aging faster than those in the other two regions. One indication of this is that nine of the 10 states where median age increased the most were in those two regions. The nation's most rapidly aging states were Maine, New Hampshire and Vermont, where the median rose an average of four years from 2000 to 2010, more than twice the 1.9 year increase for the nation.
Most consumer marketing, however, targets one or more age groups, not the median. So perhaps what matters more is what is happening to a key cohort of millennials age 25 to 34 where spending is likely to increase the most during this decade. By 2020 they will all be 35 to 44 and if recent history in any guide, will be spending at least an additional $10,000 per household per year or nearly $2 trillion more over the next 10 years.
Consumers aged 25 to 34 declined 5% in the Northeast and 2% in the Midwest from 2000 to 2010, a loss of over half a million millennials. By contrast that age cohort rose 7% in South and 8% in the West for a combined gain of 1.7 million millennials.
By 2010 62% of this key age cohort lived in the South or West compared to just 59% in 2000. Clearly the bulk of new consumer spending by this important family-forming and home-buying age group is going to happen in the South and West.
The resulting increase in business activity in those two regions is likely to mean more job openings in retailing and service industries. That may draw even more young people from the Northeast and Midwest, continuing the pattern of the past decade and leaving those two regions with an increasingly older population.
The chart above shows that millennials aged 25 to 34 outnumber pre-boomers aged 65 or older in the South and West, but the reverse is true in both the Northeast and Midwest regions. In some places a loss of young adults is not viewed as a problem because it's thought that might reduce local taxes for public schools. But a long-term loss of millennials has dire economic consequences that may be irreversible. We'll talk about which states are winning and losing next week.