10/13/97

KUFM/KGPR

T. M. Power

Confusing Demographic Cycles with Economic Change

Just after schools opened again this fall and the elementary school enrollment numbers were in, there was quite a buzz about the fact that elementary school enrollments were down in Missoula and a good part of Western Montana. Since our public schools rely heavily upon funds from the state government that are distributed on the basis of the number of students actually enrolled, any reduction in enrollment is translated into a reduction in the money available to run the schools, cover teachers’ salaries, cover fixed costs, etc. As a result, schools rarely greet declining enrollments in a positive way. Instead of seeing such declines as a relief from the growth pressures that most of Western Montana has had to cope, the declines are seen as a serious financial problem.

In most "hard times" situations, we also tend to go seeking the villains who created the problem. That was true in this case too. Several observers concluded that it was the weak performance of the Montana economy that had created the problem. Despite the population and employment growth in Western Montana, we were told, earnings were lagging seriously behind while the cost of living, especially the cost of housing, continued to climb. The result has been an economic squeeze on young families. Young families simply cannot afford to live in Western Montana, this explanation asserts, and so, the number of young children enrolling in our schools is falling, a symptom of an ailing economy.

There is a plausible ring to this set of assertions because it is built around some well known features of the Montana economy, the relatively low pay levels and the fly up in housing costs. But there are several confusing and misleading elements to it too.

First, as hard as it is for me as an educator to say, it is not clear that having more young people enrolling in our schools is a boon. If the state welfare system or unemployment division were out recruiting people to take advantage of their publicly supported programs, a lot of people would get upset. But when the University system recruits in-state students or school officials object to stable or declining enrollments, an eye-brow is rarely raised. Rising school enrollments divert limited public and private resources to the support of schools. That is not a great thing.

Second, the Bureau of the Census has been predicting declining birthrates and populations of young children nationwide for sometime. For instance, the population of those under five was projected to decline by two percent even though the total population was projected to grow by 3.5 percent between 1996 and the year 2000. Universities can cheer because the population of 18-24 year olds is projected to increase much faster than the overall population, by 7 percent. Note the divergence here: a two percent decline in one age group (very young children) and a seven percent expansion in another group demanding education. All this not because something is wrong with the national economy but because there are regular demographic cycles that our population slowly moves through.

The Bureau of the Census projections for Montana for the 1996 to the year 2000 period, are slightly different. Because Montana’s population is projected to increase two and a half times faster than the national population. Despite this projected high population growth, however, the projection is for no growth in school-aged children. College aged kids will expand by 13 percent while the workforce expands by 12 percent.

The state pattern is similar to the national pattern, just adjusted upward for the higher growth rate. This demographic information would suggest that maybe we do not need an economic scapegoat to explain what it is that our grade schools are experiencing. Unless we think it would be good public policy to make people have larger families, it also unclear what we can do about these demographics. Of course, out school planners might want to pay greater attention to such demographic trends.

This is not to say that the economy has played no role in this at all. It almost certainly has. The very rapid growth in the first half of the 1990s certainly contributed to a surge in school enrollments. Part of the early 1990s boom was fueled by an unsustainable explosion in construction activity that provided relatively well-paid jobs to young workers. The slower expansion we are currently going through will not continue to generate jobs of that quality. That combined with the fly up in housing costs can be expected to discourage more young adults from settling in Western Montana. That is the element of truth to the story.

It should be kept in mind, however, that one of the primary control valves moderating the rate of migration into high amenity areas is the depression of real wages. It is the economic sacrifice that is asked of those who choose to live here that keeps a relatively unlimited number of people from relocating to otherwise attractive areas. For many in Western Montana’s communities, the slowing of the rate of expansion of the population and economy comes as blessed relief from the hectic pace and growing congestion associated with the first half of this decade. Rather than bemoaning the slow down, maybe we should use it to repair some of the damage done by earlier growth and plan to minimize the damage that almost certainly will accompany future growth.