PRB

A population boom in energy-rich counties is breathing new life into parts of the Midwest and Appalachia that have experienced long-term population decline or slow growth compared with the rest of the United States, according to new data released by the U.S. Census Bureau.¹

Between 1950 and 2010, North Dakota had one of the slowest population growth rates among the 50 states, second only to West Virginia. Since 2010, North Dakota has been the fastest-growing state, with a 7.6 percent increase in population, compared with a 2.4 percent increase nationwide. The increase in North Dakota’s population from 2010 to 2013 (50,802) nearly matched population growth in the state during the entire 60-year period from 1950 to 2010 (52,995).

Although the population rebound has been most striking in North Dakota, growth is not limited to that state. Many other parts of the Midwest and Great Plains—especially parts of South Dakota, eastern Montana, western Kansas, and parts of West Texas—are also experiencing a population boom, or at least a reprieve from the population losses that have plagued the region during previous decades (see map).

In most of these areas, population growth was preceded by a sharp increase in shale oil extraction, as identified on this map by the Energy Information Administration.² The U.S. Census Bureau reports that nationwide, employment in oil and gas extraction, mining, and quarrying increased by 23 percent from 2007 to 2012, making it among the fastest-growing industries in the country.³ Much of this growth has been concentrated in the Bakken Oil Field in the western part of North Dakota, resulting in rapid population gains in that region. This population growth is not without controversy, given that the industry responsible for it has both supporters and detractors. The industry is called hydraulic fracturing, or more commonly “fracking.”

In Appalachia—another historically slow-growing region—natural gas extraction from shale deposits has been a key driver of recent economic growth.⁴ However, the population gains in the Marcellus Shale Region (primarily in Pennsylvania and West Virginia) have been relatively modest compared with the gains in North Dakota. This difference may reflect the scale of the oil boom in North Dakota, compared with natural gas drilling in Appalachia. Between 2007 and 2012, employment in the oil and gas industry in North Dakota increased by 354 percent, compared with a 259 percent increase in Pennsylvania.⁵ Population growth in North Dakota also stands out because the boom occurred primarily in sparsely populated rural counties, while many of the shale extraction sites in Pennsylvania and West Virginia were in counties located within or adjacent to metropolitan areas.

New Residents, New Challenges

In areas with slow-growing or declining populations, a sudden influx of new residents can jump-start the economy by adding to the tax base and creating demand for new products and services. Data from the Census Bureau’s American Community Survey can help identify emerging social and economic trends in North Dakota and other fast-changing states and local areas. For example, between 2000 and 2013, the population in western North Dakota increased 19 percent, compared with a 5 percent increase in the Midwest overall. Employment in agricultural and extraction-based industries in western North Dakota increased sharply, and the unemployment rate in that region fell from 5 percent in 2000 to only 3 percent in 2012. In the Midwest, unemployment rose from 5 percent to almost 9 percent during that same period.

Median income in North Dakota increased and poverty fell with the availability of higher-paying jobs; in 2012, the U.S. average annual income for workers in the oil and natural gas industry was $107,198, compared with $49,289 across all industries.⁶ Between 2000 and 2012, median income in western North Dakota grew by 40 percent, while income fell 14 percent in the Midwest. Poverty rates also diverged, dropping from 13 percent to 9 percent in western North Dakota, but increasing from 10 percent to 15 percent in the Midwest.

However, there are potential downsides to rapid population and economic growth. Adding new residents creates a greater demand for housing, health care, transportation, adequate roads, and police protection.⁷ In North Dakota, the violent crime rate increased 8 percent between 2011 and 2012, with a sharp increase in crime in the western part of the state.⁸ Traffic deaths are up sharply, from 92 deaths in 2010 to 147 deaths in 2012.⁹ Local schools may not have enough classrooms or teachers to meet the needs of the growing student population. After more than a decade of little change in the school-age population, the number of children under age 5 is increasing rapidly, and kindergarten enrollment could grow by nearly 30 percent in coming years.¹⁰

Migrants often have different characteristics compared with the local population, resulting in a clash of cultures. Many of those moving to North Dakota are young adults looking for work, while long-term residents are more likely to be older, and include many retirees. Young men in their 20s accounted for 29 percent of the recent population growth in western North Dakota. Median age in the region fell from 37 in 2000 to 36 in 2012, while the median age increased in the Midwest as a whole, from almost 36 to 38.

The influx of younger oil-field workers has also resulted in a gender imbalance in western North Dakota. Among young adults (ages 20 to 39), men outnumber women by 24 percent. But at the time of the 2000 Census, there were only 3 percent more men than women in the same age group.

The Big Picture for Rural Areas

Despite the population gains in North Dakota and other parts of the Midwest, rural areas in general are still lagging behind the rest of the country in population growth. Of the 1,649 counties that lost population from 2010 to 2013, 77 percent are located outside of metropolitan areas, and 54 percent rely heavily on farming, manufacturing, or mining. Just as the strong economy during the 1990s created new opportunities for people to live and work in rural areas, the weak economy since 2000 has been pushing many people back to cities to find jobs with decent wages.

Many counties in rural areas have aging populations and too few births to sustain population growth. However, an influx of baby boomers—many of whom are now reaching retirement age—could help provide economic relief to areas experiencing population loss, by increasing the demand for services, housing, and transportation. For this reason, many rural counties are leveraging their natural resources, such as lakes, forests, or mountains —rather than energy resources—to attract new residents and boost their economies.¹¹