Importance of Demographics and the Corporate Site Location Decision

How a site compares to others sites from a demographic standpoint can be a critical factor in a corporate site location decision. Demographics measures the impact of population on any given issue.  For over two hundred years, the impact of population growth on economic development has been a hot topic.  In 1798, Thomas Malthus, a British essayist, presented a gloomy picture about the role of population growth and economic development. Malthus’ flawed view that population growth would lead to widespread famine was simply wrong.  Today, state and regions are searching for ways to grow population to meet growing workforce demands.

Reviewing demographic data is a strong starting point for measuring economic.  Regions with an increasing population base and a group of younger workers illustrate growing communities.  Homeownership rates and home value illustrate stability in a community but also whether it is affordable to buy a home in a community.  The  percentage of citizens over 25 with a college degree illustrates the likelihood the region can attract high-wage financial services, insurance, health care, high-tech, professional service and other advanced services white collar jobs.  Finally, measures of income and poverty rates illustrate the overall economic strength of the community.  Utilizing a demographic benchmark comparison, the Midwestern state illustrates weak population growth and has a slightly higher than average senior population illustrating the challenge the state has in retaining a younger generation of worker compared to the national average and regional competitors.

State Demographic Benchmark State Comparison

PeopleIndianaMichiganNorth CarolinaKentuckyOhioU.S.
Population Gains 2010-162.3%0.4%6.4%2.2%0.7%4.7%
Persons over 6514.615.815.615.515.914.9
Homeownership Rate69.071.064.866.866.363.9
Median Home Value$124,200$122,400$157,100$126,100$129,900$178,600
Bachelor’s degree24.1%26.9%29%22.7%26.1%29.8%
Median Household Income$49,255$49,576$48,256$44,811$49,429$53,889
Poverty Rate14.5%15.8%15.4%18.5%14.8%13.5%

Source:  U.S. Census BureauRural regions in particular are struggling with demographic measures.

Look at Ohio’s demographic profile of the state in total and the regions in particular for economic insights. Comparing the state of Ohio overall is not the end of the demographic comparison.  All of Ohio is not succeeding or failing at the same rate.  Columbus is far outpacing Cleveland and Cincinnati in nearly every demographic measure as the table below illustrates.  While the Columbus Metropolitan Service Area (MSA) has seen long term and recent dramatic population growth, the Cleveland MSA actually lost population over the last six years and the Cincinnati MSA has barely gained population.

This data is troubling not just for Cleveland and Cincinnati but also for the state of Ohio.  However troubling the challenges of Cincinnati and Cleveland are, the population losses and lower incomes of Ohio’s rural markets is a true crisis.  As the table below illustrates, smaller urban and rural regions in the state of Ohio have a substantially lower per capita income driven in large part by the loss of manufacturing and agricultural jobs as automation makes those sectors of the economy much more productive but much less job rich.

The population loss in non-urban regions of Ohio is even more startling.  As the table below illustrates, the population loss of the 68 rural Ohio counties totaled nearly 40,000 people from 2010-16.

Rural communities, in particular in the southeastern part of Ohio, are clearly struggling from an economic standpoint.  The graphic below compares the poverty rates by counties across the state and illustrates the economic challenges facing rural Ohio in particular. Rural Ohio is not alone.  Rural communities across the United States are losing their workforce in droves as their young people simply do not stay at home when the graduate from school and enter the workforce.  Rural regions are focusing more on quality of life, housing development, and redevelopment of their Downtowns as tools to retain and attract a younger generation. Companies considering these rural areas will look closely at the regions available workforce to determine if they have the population base and skilled workforce to let their facility succeed.