March 11, 2020

Millennials Find New Hope In The Heartland

The contributors address a fundamental topic for future economic success
in the Heartland: Will Millennials return and remain at higher rates?

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FOREWORD

In “Millennials Find New Hope In The Heartland,” Heartland Forward Senior Fellow Joel
Kotkin and his contributors address a fundamental topic for future economic success
in the Heartland: Will Millennials return and remain at higher rates? The answer to this
question is critical as Millennials are the largest generation, eclipsing the Baby Boom
generation, and they represent the largest portion of the American workforce. The economic
ramifications have made this cohort a highly prized demographic target. If Millennials do not
find the Heartland more attractive, even the most well-conceived and articulated economic
development strategies will be rendered mute. Growth of the Millennial population in the
Heartland is, perhaps, the single most important indicator for its economic vibrancy.

In the aftermath of the 2008-2009 Great Recession, there was substantial evidence that tech fueled
growth on the coasts lured highly educated Millennials from the Heartland and kept
many from the coasts at home. Leading technology innovation ecosystems on the coasts,
such as Silicon Valley, San Francisco, Seattle, Portland, Raleigh, Boston and D.C., acted as
magnets for young talent. Millennials flocked to where the best professional opportunities
materialized. As young adults, many deferred marriages and starting families to focus on
advancing their careers and to experience the culture and lifestyle amenities that these thriving
coastal cities offered. As previous generations were told by Horace Greeley to “Go West, young
man,” to seek their fortunes, Heartland Millennial women and men ventured both West and
East after the Financial Crisis and severe economic contraction devastated the region.

Many coastal media concluded that the Heartland had little to offer Millennials and this
narrative reinforced a pattern that was underway. One New York Times columnist suggested
that the region was full of “jobless men,” with many experiencing “deaths by despair.” Certainly,
many rural areas in the Heartland witnessed a plunge in white male labor force participation
and the associated opioid epidemic, but this perspective was vastly overstated.

As this study documents, there is evidence that Heartland locations are doing better at retaining
and attracting members of the Millennial generation in recent years. While it is premature to
conclude that the majority of communities in the Heartland have turned the corner, the balance
is moving more in their favor. Most metropolitan and micropolitan demographic data detail on
Millennials is available just through 2017. Anecdotal information available for 2018 and 2019 intimates
that the pattern of Millennial expansion in the Heartland accelerated. The data and interviews
of Millennials contained in this report suggest that both push and pull factors are at play.

The coastal tech boom led to rapid Millennial population growth, and when combined with
restrictive land-use policies that limited new housing supply, it caused housing prices to escalate.
As Millennials aged, they approached the period in their life cycles when it was time to start families
and move into larger residences. In addition to rising home prices and rents, many other costs of
living surged. Animosity towards business increased in many coastal states making it harder to
justify further expansion. Lower housing prices in the Heartland served as a pulling factor. A number
of Millennials interviewed in this study cited that their opportunity for civic engagement, cultural
inclusion and to make an impact sooner was much better in the Heartland. Several indicated that
entrepreneurial aspirations were easier to achieve with lower barriers to entry. Some might call this
democratizing access in the Heartland. Additionally, tech and other knowledge-based economic
activity began to improve in many Heartland locations, presenting renewed career opportunities.
The economic component is vital for how Millennials view the attractiveness of the Heartland.

In the metrics used in this report (Millennial population growth, Millennial share of population, Millennial
educational attainment, job growth and average annual earnings), Austin, Texas, was the top-ranking
Heartland metropolitan area and the fourth-ranking metro area overall. Austin holds the distinction
of being 11th in the U.S. for concentration of high-tech industries. Millennials are attracted to the
community for economic and amenity reasons. Midland, Texas (sixth overall), is the focal point of the
Permian Basin which pumps one in five barrels of oil in the U.S. Rapid expansion in shale oil exploration
and associated activities make Midland the most closely tied metro to the fortunes of the industry.
Lake Charles, Louisiana (tenth), recent economic success is due to investments allowing it to become
a natural gas export hub. Additionally, it has been supporting entrepreneurs. The Nashville, Tennessee
metropolitan area (14th), is an economic model worth emulating. Nashville’s real GDP rose 4.1 percent
in 2017 and positioned it fifth amid metropolitan areas with real GDP in excess of $100 billion.

In addition to Heartland metropolitan areas, micropolitan areas in the Heartland fared well in the
evaluation metrics in the study as well. Pecos, Texas, ranks first in the micropolitan rankings and is
at the epicenter of the shale oil exploration boom in the Permian Basin, enabled by technological
advances in horizontal drilling techniques and hydraulic fracturing. Lewisburg, Tennessee,
(sixth) has taken advantage of its strategic locational advantages between the flourishing
metros of Nashville, Tennessee, and Huntsville, Alabama. This manufacturing boomtown has
been attracting Millennials. Starkville, Mississippi, was ninth and Athens, Ohio, 13th. Both have
research universities. Overall, the Heartland had 21 of the top 50 micropolitans in the nation.

A prosperous Heartland is essential to the American economy. The nation cannot continue
to concentrate more talent along the coasts to fuel its technological hegemony in the world.
A critical advantage for the American economy has been its great geographical diversity,
enabling the vast Heartland to accommodate agriculture, energy and manufacturing
production. The Heartland is beginning to develop its own unique style of innovation directed
at industry. As the former University of Chicago Nobel Prize-winning economist Gary Becker
once told me, young people are the human capital that creates an innovative economy. A
child born on the coasts has no innate intelligence advantages to one born in the Heartland.
Becker believed that the Heartland had a vast supply of innovative young people that could
be harnessed to drive economic prosperity. The Millennial generation will have a tremendous
impact on the ultimate economic success of the Heartland. I believe a compelling narrative
must be developed and articulated for why talented Millennials should be attracted to and
retained in the Heartland. By intertwining data and telling the stories of Millennials that are
flourishing in the Heartland, Joel Kotkin has made an important contribution to that narrative.

Ross DeVol
President and CEO
Heartland Forward

EXECUTIVE SUMMARY

For much of the past decade, and even before, conventional wisdom has been that bright,
educated Millennials are overwhelmingly headed to a handful of metropolitan areas on
the nation’s ocean coasts. Yet this dynamic is changing, and quickly, as more young
people begin to head into the country’s vast interior in search not only of opportunity and
affordable housing, but also a chance to live where they feel they can make a difference.

All this diverges from the image, entrenched on the coasts, of an entire enormous region
that is seen tied to the past and with little future. CNBC recently ranked the “worst
states” to live in, and almost all were in the Heartland, with Arkansas as the worst.

There are solid reasons for this incipient turnaround, including the aging of the Millennial
population into child-bearing years, the rising cost of living, particularly housing, in the media favored
big coastal cities and rising anti-business sentiment in many coastal states. In our
research, we found that many of the fast-growing communities—from big metros to the smallest
micropolitan areas—are now concentrated in the Heartland, a finding that corresponds to Heartland
Forward’s earlier reports, Most Dynamic Metropolitans and Most Dynamic Micropolitans.

According to our analysis (see below), the Heartland is home to three of the nation’s
ten best performing metropolitan areas for Millennials and five in the top twenty. These
include a range of economies, from tech center Austin, TX to energy centers Midland,
TX and Lake Charles, LA, as well as business magnet Nashville, TN, and emerging
tech and business service center Fargo, ND. These Heartland metros outperformed
much-celebrated coastal cities such as New York, Boston, and Los Angeles.


Additionally, the Heartland’s performance is evident when we look at smaller “micropolitan areas,” which are urbanized areas where the principal city has a population between 10,000 and 50,000.
In this category, five of the top 20 areas are located in the Heartland, including #1 Pecos, TX. The prosperous micropolitan regions cover geographies from energy-rich west Texas to “rustbelt” towns like Athens, OH and Fairfield, IA, and southerly boomtowns such as Lewisburg, TN and Starkville, MS.


These success stories, although not uncommon, are not representative of all the Heartland.
In particular, some rural communities continue to depopulate and decline, but the overall picture,
both demographically and economically, is far brighter than commonly supposed in the national
media. A better future for the Heartland is not only possible but is already in process, something
that will benefit both the residents of the region as well as the entire nation.

RANKINGS METHODOLOGY

In “Millennials Find New Hope In The Heartland,” our analysis provides objective insight into the
communities that offer economic opportunity for Millennials, separating the high performers from
the low. This report presents fact-based metrics for the Millennial population in the Heartland
metropolitan and micropolitan areas. We look through the lens of the Heartland—the 20 states in
the middle of the nation—to rank the top places for Millennials using five equally weighted metrics:

• Millennial population growth: Growth of residents aged 25-34 from 2014 to 2017

• Millennial share: Share of residents aged 25-34 (2013-2017)

• Millennial educational attainment: Share of residents aged 25-34 with at least an Associate’s
degree (2013-2017)

• Job growth: Total employment growth from 2013 to 2018

• Average earnings growth: Growth of average earnings from 2013 to 2018 (inflation-adjusted)

Key definitions for this report include:

• Millennials: The generation of Americans born between the years 1982 to 2003

• The Heartland: The 20 states in the middle of the country: Alabama, Arkansas,
Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Mississippi,
Missouri, Nebraska, North Dakota, Ohio, Oklahoma, South Dakota, Tennessee,
Texas, and Wisconsin; otherwise defined as the U.S. Census regions of East North
Central, West North Central, East South Central, and West South Central.

We standardize all metrics via z-scores. That is, we calculate the mean and standard deviation
of a metric across all metropolitan and micropolitan areas, subtract the mean of the metric
from each metropolitan and micropolitan area’s metric value, and divide that difference by the
standard deviation of the metric. The result is a number telling us how many standard deviations
above the mean (positive z-score) or below the mean (negative z-score) a metropolitan or
micropolitan area’s metric value is. The area’s index value is its average z-score across all five
demographic and economic performance metrics. If an area has a positive average z-score, then,
on average, it performs better than the mean area for each metric.i The regions are categorized
as either a metropolitan or micropolitan area. The metropolitan areas are further categorized by
population size: 1,000,000+, 500,000-999,999, to 250,000-499,999, and less than 250,000.

What is most remarkable is the diversity of the Heartland’s growth areas. Our list of top 50
Heartland metropolitan areas covers states as diverse as Texas, Michigan, Tennessee, Wisconsin,
Ohio, Indiana, Iowa, Louisiana and Arkansas. This diversity is even more evident among the top
50 micropolitan areas and extends to states such as South Dakota, Oklahoma and Illinois.

METROPOLITAN RANKINGS

Top Metros For Millennials - Interactive Map


MICROPOLITAN RANKINGS

Top Micros For Millennials - Interactive Map