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Montana's growing market segments.

Montana's Growing Market Segments

Typically, the population of slow-growing regions tends to age more rapidly than in faster growing regions. Much of this outmigration is occurring among younger segments of the population; these are young adults searching for meaningful careers and better jobs. The age composition of the population becomes older in character as these young persons and their young families leave.

At the same time, the biggest "bubble" in population growth in the United States occurred in the two decades following World War II. This "baby boom generation" is now aging, shifting the overall age distribution of the U.S. population in the process. Many baby boomers are also delaying marriage and child-bearing (or skipping these altogether), leading to aging in the U.S. population, irrespective of region.

With aging of the population occurring generally in the United States, a region within it that is simultaneously experiencing significant outmigration can expect fairly dramatic changes in the age composition of its population. This is the case with Montana.

Recent U.S. Bureau of the Census estimates indicate that since 1985 the population in twelve states has declined. Four states have lost more than 2 percent of their populations. Montana is one of these, losing 2.6 percent of its population between 1985 and 1988. Migration of about 40,000 people during the last three years accounts for much of this loss.

Population

Projections

Before discussing population projections for Montana, it must be noted that these types of projections are difficult to make and tend to change almost from one year to the next. However, they provide some guidance on what to expect in the future under current and emerging trends.

According to recent projections by the U.S. Bureau of the Census, the U.S. population is expected to grow from about 246 million in 1988 to 268 million by the year 2000, an increase of about 9 percent. Most recent estimates for Montana place the state's population at about 804,000, down from a high of around 825,000 in 1985. Montana's population is expected to decline slowly over the coming decade, falling to about 794,000 persons by 2000.

In line with these projections, the median age of Montana's population is expected to surpass that of the nation as a whole, increasing from 29.0 in 1980 to 33.1 in 1990 and 37.1 in 2000 (compared with 30.0 in 1980 and 36.5 in 2000 for the nation). While the nation as a whole is aging along with the baby boom generation, Montana is aging more rapidly because of its declining population base.

Historically, Montana and the Northern Rocky Mountain region in general have been relatively "young" in terms of the age compositions of their populations. However, under these projections, the state's population will become relatively "old" in relation to that of the nation as a whole.

Growing Segments of the

Population

While Montana's overall population is expected to decline, certain segments within it will grow considerably. As shown in table 1, the Census Bureau's population projection for Montana is broken down by age group. In comparing actual population counts in the most recent census, 1980, with projections for 2000, you can see that certain age groups will see dramatic increases.

Montana's middle-age and older population will swell in size while the younger population shrinks. The population thirty-five to forty-four is projected to increase by 45 percent from 1980 to 2000, while the forty-five to fifty-four age group will grow by 58 percent. Combining estimates for these two age groups, the middle-age population between thirty-five and fifty-four will increase from 162,000 persons in 1980 to 245,000 persons in 2000, an increase of over 50 percent.

The number of people between fifty-five and seventy-four will remain roughly the same size between periods. However, the state's population seventy-five and older is projected to grow by 55 percent by 2000, increasing from 33,000 persons in 1980 to 51,000 over the twenty-year period.

In general, Montana's population will increase considerably among most segments of its "adult" population. People twenty-five and older increased from just over half of the total population in 1960 to 57 percent of the population in 1980, and will increase to 66 percent in the year 2000. As the age structure of the population undergoes this shift, so too will spending and trade patterns in the state.

Growing Household

Numbers

Households are important not only as places where most members of the population reside and spend much of their lives, but places where the incomes of individuals accrue and centralized decisions are made on how it may be best spent and invested. As such, the direction and rate of change in household numbers are of greater significance in determining the level of trade and economic activity in a region than simply population change.

At the same time, significant shifts in the age characteristics of the population can greatly affect the rate of change in household numbers. The household incidence rate is a measure of the proportion of a given age group in the population who also are heads of households (or "householders"). This rate is much higher for persons in their mid-twenties than persons in their late teens, and higher yet for persons in their early thirties and older ages. Hence, as the population shifts from younger to older age groups, household numbers will increase accordingly, even with little or no growth in population. Under current population projections, this is likely to occur in Montana.

As shown in table 2, overall household numbers in the state are projected to increase by 12 percent from 1980 to 2000, even with a projected increase in population of only 1 percent. The greatest growth in households will occur among householders between the ages of thirty-five and sixty-three, increasing from 131,000 households in 1980 to 181,000 in 2000 (a 38 percent increase). Among householders sixty-five and older, households will increase by 19 percent, going from 55,000 in 1980 to 66,000 households in 2000. Meanwhile, households headed by persons under thirty-five will decline considerably.

By the year 2000, about 78 percent of all households in the state will be headed by persons over thirty-five, as compared to 66 percent in 1980.

Changing Role of

Women in

Montana's

Economy

Accompanying these changes in the age structure of Montana's population and households, are several other trends. Typical of what is occurring throughout the nation, women are increasingly leaving the home and formally entering the labor force, sometimes because of necessity to make financial ends meet and sometimes because of the growing career or job orientation among women.

At the same time, women are increasingly delaying child-bearing or deciding against it altogether. As illustrated in figure 3, the fertility rate among women is steadily falling. The number of children born among Montana women between twenty-five and thirty-four went from 2.7 children per woman in 1960 to 2.5 children in 1970, before plunging to 1.6 children per woman in 1980. Among women thirty-five to forty-four, the fertility rate dropped from 3.4 children per woman in 1970 to 2.9 in 1980.

As indicated in figure 4, the percent of women entering the state's labor force is steadily rising. The labor force participation rate among women twenty-five to thirty-four went from 29 percent in 1960 to 41 percent in 1970 before jumping to 62 percent in 1980, more than doubling in the twenty-year period. The rate among women thirty-five to forty-four years of age went from 39 percent in 1960 to 63 percent in 1980, an increase in labor force participation of about 62 percent.

Among older women the change has been less dramatic, but the rate is still increasing. For women forty-five to sixty-four, the labor force participation rate increased from 41 percent in 1960 to 48 percent in 1980. Indications are that these trends are continuing.

As a result of these changes, women accounted for about 42 percent of the state's total labor force in 1980 as compared to 29 percent twenty years earlier.

Growing Household

Income

Because more women are working, more Montana families have more than one member of the household bringing home a paycheck. The percent of families in the state with more than one person working outside the home increased from 43 percent in 1960 to 57 percent in 1980. The effect of this on the income of the average household is shown in table 3.

The median income of the typical male worker in Montana increased from $17,907 in 1969 to $18,517 in 1979 (both in 1987 dollars), an increase of only 3.4 percent over the ten-year period. Meanwhile, the median income of the typical female worker went from $5,513 in 1969 to $7,160 in 1979, an increase of nearly 30 percent.

The large difference between male and female median incomes reflects both the concentration of high-paying jobs among male workers and the greater incidence of part-time employment among female workers. The larger increase in the typical female worker's income during the period reflects changes in these trends, with more women getting higher paying jobs and more women working full time rather than part time.

While the median income of the typical male worker in the state was barely keeping ahead of inflation, the inflation-adjusted income of households grew by nearly 9 percent from 1960 to 1979, going from $21,554 to $23,435. This increased "buying power" among households was largely achieved through rising female labor force participation and a steadily increasing median income for female workers.

As this occurred, the number of persons per household was declining as previously mentioned, going from 3.1 persons per household in 1970 to 2.7 persons in 1980. With the number of persons who are dependent upon household income declining as real income per household grows, the buying power of the typical household member is being greatly enhanced (although the needs and consumption patterns of adults whose numbers are increasing are quite different than those of children and teenagers whose numbers are decreasing).

The 9 percent increase in the median income of households between 1969 and 1979 translates into nearly a 25 percent increase for individual household members, with the latter going from $6,953 per household member in 1969 to $8,680 over the ten-year period. With the population aging, persons per household declining, and female labor force participation growing, the buying power of individual household members should continue to grow.

More Educated

Population

Concurrent with these trends in the age composition of the population, household numbers and size, and female labor force participation, is the long-standing trend in educational attainment. Montana's population has long been a leader in this regard, with the median years of schooling for the state consistently greater than nationally (although the state's edge in this area is diminishing over time).

The level of education being attained by the state's adult population is steadily rising. As indicated in figure 6, the percent of women twenty-five and older with one or more years of college education grew from about 21 percent in 1960 to more than 35 percent in 1980. This increase in educational attainment has been even greater among Montana men. Men twenty-five and older with at least some college education increased from 18 percent in 1960 to nearly 38 percent in 1980.

Hence, as the state's population is becoming an older, more mature population, it is also becoming a more educated population.

While the overall population will see little or no growth, the state's adult population will grow considerably, particularly among middle-age and older age groups. This provides the impetus for slow, but steady growth in household numbers in the years ahead and a steadily increasing, more mature work force.

Larry D. Swanson is director of economic analysis, Bureau of Business and Economic Research, University of Montana, and assistant professor of management in UM's School of Business Administration. This article is based on Dr. Swanson's presentation at the fourteenth annual Economic Outlook Seminar.
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Copyright 1989 Gale, Cengage Learning. All rights reserved.

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Author:Swanson, Larry D.
Publication:Montana Business Quarterly
Date:Jun 22, 1989
Words:2016
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