New Hampshire’s Population Stalling and Aging

Recently the U.S. Census Bureau released their updated intercensal state population estimates by age and race. These new estimates account for the new population counts as determined by the 2010 population census. There are two items that I found of interest in the new data.

First, overall population in New Hampshire, as shown in the first chart below, has stalled out since 2008. Also shown in the first chart is the median age which is soaring. In 2000 the median age was 37.2 years but has increased by 11 percent to 41.1 years in 2010.

Second, the composition of New Hampshire’s population by age cohort, as shown in the second chart below, shows shrinking numbers of  young people and growing numbers of retired people.

Between 2000 and 2010, the number of people under the age of 18 dropped by 8 percent to 286,836 from 310,390. This is somewhat misleading since the drop is actually greater because the drop did not begin  until 2002 when the under 18 population peaked at 312,719.

At the same time, the number of people over the age of 65 increased by 20 percent to 178,625 from 148,468.

Overall, this is a very disturbing picture of New Hampshire’s demographics. Without strong in-migration from other states, New Hampshire’s future workforce will be smaller and older which will create formidable headwinds in the effort to generate sustainable economic growth.

Per Capita versus Per Household Personal Income

For state-to-state comparisons, per capita personal income is the standard-bearer.  Its simple to calculate and simple to understand; however, it’s also simply misleading.

Why?  States where the average household is larger are penalized under a per capita ranking  because children don’t earn anything.  I discovered this problem when I noticed what an outlier Utah was in the per capita personal income rankings where Utah ranks as the 49th highest in 2009 at $31,612.  However, Utah also has the largest average household size at 3.23 people.  And there is a large variance among states with the lowest household size belonging to North Dakota at 2.32 people.

As such, failing to hold constant the difference in the size of households rewards states with small households and penalizes states with large household using a per capita personal income metric.  To illustrate, let’s look at Maine versus New Hampshire.

In 2009 per capita terms, Maine ranks as the 30th highest at $36,479 while New Hampshire ranks as the 10th highest at $42,585.  New Hampshire’s per capita personal income is 16.7 percent higher or $6,107 dollars for every man, woman and child.

However, the average household in New Hampshire is larger than it is in Maine.  New Hampshire’s households average 2.62 people (the 24th highest in the country) while Maine’s households average 2.42 people (the 49th highest in the country).

After adjusting personal income by household, New Hampshire ranks as the 14th highest per household personal income at $111,402 while Maine ranks as the 41st highest per household personal income at $88,261.  New Hampshire’s per household personal income is 26 percent higher, or $23,141, than Maine’s . . . adjusting for household size makes a big difference.  Also note that Maine’s relative economic performance falls from 30th under per capita to 41st under per household . . . another big difference.

My take away from this is that per capita personal income is a seriously flawed metric.  A state can, in the short-term, enjoy a bonus to its per capita income by simply having fewer children which shrinks the average household size.  However, as Maine is now discovering there is a long-term price to be paid called Demographic Winter.  Last year the U.S. Census Bureau reported that Maine’s population in 2009 fell for the first time since at least the 1960’s.  Think economic development in Maine is already tough . . . try doing it with a shrinking population base!

Another blog will be posted soon to further illustrates why per household personal income is the better metric.