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Reversing the economic impact of population decline

I don’t know why I still find the following clip surprising, but I do. It comes from a Board of Trustees meeting in November 2019. Rose Bellanca is attempting to explain the need for additional revenue as a consequence of population decline.

-“Thank you. Just to remind the Board, the reason we are really interested in mixed use –looking at mixed use space –not only because of the comments that we have heard, but when we went through all the –uh-trends in enrollment that this environmental scan, and we read books, and we’ve been talking about it, and we’re starting to see the beginning of it –the enrollment is not going to be where it always has been. And it is going to continue to be more challenging. And that’s not a surprise to any of us.”

This argument is seriously flawed, and I’ve already debunked it, but that’s not why I’m back here. Yesterday, I wrote about the cost of poverty. In Washtenaw County’s case, poverty costs us about $1.3B annually. The fact that our poverty rate is higher than the national average means that we spend even more on poverty than other communities do. Our poverty bill is about $9,000 per household.

Activating people can stem population decline

I’m not an economist, but I understand that economic expansion requires population growth. Educators worry about population decline in the United States because it determines the flow of children into the school system. Community colleges are less affected by school-age population decline because they educate students of all ages.

The US birth rate is about half of what it was in 1950. If economic expansion is the goal, then a declining birth rate is a problem. However, adding people to the workforce (in any way) will counter that decline. So, that would include increasing the birth rate, immigration and activating economically inactive people.

Poverty makes an economy less efficient, so eliminating poverty will make the economy more efficient. In Washtenaw County, about 16% of its residents live in poverty. Not everyone who lives in poverty can contribute to the economy. Children and retirees, for example, both have a limited economic impact.

But among Washtenaw County’s impoverished 16% are people who can (and want to) contribute to the economy. We can’t reduce poverty to 0%, but we can minimize it. The “opportunity cost” of poverty is the largest contributor to Washtenaw County’s poverty bill. It is the cost of having people who could contribute to the economy sitting idle instead.

Putting people to work costs money, but letting people remain idle costs even more. Investing a comparatively small amount to equip people to participate in the economy yields a high, long-term rate of return.

Here’s the bottom line: one out of every six people in Washtenaw County lives in poverty. So, what does it mean when the President of Washtenaw Community College says that she can’t find students?

Personally, I think it means she’s just not looking.

Photo Credit: Jernej Furman, via Flickr