Why Buffalo Niagara’s population decline is bad for business

New population estimates from the U.S. Census Bureau show the region’s population fell about 1% between 2020 and 2023. That’s a loss of nearly 11,300 people. At the same time, the US population increased by 1%.

This is a discouraging development after the 2020 census revealed that the region’s decades-long downward trend in population has finally ended, and there has even been a slight increase in the number of people working here.

If you think of the economy as a big pie filled with money, a growing population means the pie is getting bigger, which means there are more and more pieces of that pie to share. That’s a good thing – and that kind of underlying population growth has been a powerful boost to the national economy.

But a shrinking population has the opposite effect. This means that the size of the overall economic pie is shrinking again. For businesses to grow, they must steal customers from their competitors or expand outside the region.

“It’s been worse, but it’s not a picture of dynamism,” said EJ McMahon, a founding senior fellow at the Empire Center, an Albany think tank. “It’s just kind of a flat landscape.”

Until the 2010s, a shrinking population was the norm in the Buffalo Niagara region, and it was one of the main reasons the local economy failed to keep pace with the rest of the country for decades.

So it was quite an event when our population started growing again in the 2010s, with the region adding 31,000 people.

Consumers account for about 70% of total economic activity, economists say. It therefore stands to reason that if there are more people – that is, consumers – there will be more purchases, more sales, more people working and more money circulating in the world. local economy. . More spending means it’s easier for businesses to expand here. And that creates more opportunities for new businesses to open and tap into this expanded customer base.

Today, new population estimates indicate that we are once again heading in the wrong direction. The good news is that the decline highlighted in the new estimates has not erased all of the gains of the 2010s – at least not yet. The region still has around 20,000 more inhabitants than in 2010.

But the trend is going in the wrong direction. And estimates indicate the region continues to face some of the challenges it has faced for decades.

The population here is older, so we are dying faster than we are having children. In the first four years of the decade, it cost the region nearly 6,300 people.

Immigrants, who fueled population growth during the 2010s, continue to be the largest source of new people for the region. We added 5,600 immigrants from 2020 to 2023. But we also lost 11,300 people because they decided to move away from Erie and Niagara counties. Ultimately, this represents a loss of almost 5,700 people.

“We didn’t welcome as many immigrants in 2020 and 2021 and that’s one of the main reasons we didn’t see growth,” said Fred Floss, an economist at SUNY Buffalo State University. “Covid stopped this pipeline.”

Estimates indicate that immigration will resume in 2022 and 2023, but not to the levels of the previous decade.

The population estimates also don’t tell us some important details, including the demographics behind this decline. This will come in future updates.

“Have we lost population because older people are leaving, or have we lost because young people are leaving? » asked Floss.

The younger population is particularly important. They help fill slots at local colleges and universities, and these graduates have the skills and training that make them a sought-after part of the workforce. Currently, the pool of available workers is still about 14,000 people smaller than it was before the pandemic, which has been a constraint on hiring during the recovery.

“The labor force is not growing largely because of the aging population,” McMahon said.

But the news is not all bad. Erie County, for example, still has nearly 3 percent more residents than in 2010, even after the estimated population decline over the past four years. Yet only seven municipalities in Erie County – Amherst, Clarence, Grand Island, Alden, Orchard Park, Brant and Colden – experienced an increase in population between 2020 and 2023. Of these, only Alden, Amherst and Colden experienced growth of more than 1%.

Niagara County, on the other hand, is down 3% from its 2010 level. No community in Niagara County increased its population.

Floss stressed that the latest census data are estimates and should not be taken as gospel, although the downward trend is unmistakable.

To reverse the trend, it seems that the best chance lies with immigrants. The influx of immigrants from countries like Burma and Yemen was a significant factor in the population increase during the 2010s, Floss said. The region’s job growth, which has accelerated over the past year, could also help if it gives young people a reason to stay here, rather than seek better-paying work elsewhere.

“I wouldn’t panic yet, but that doesn’t mean we shouldn’t try to figure out how to bring in immigrants and how to keep our high school and college graduates here,” he said. “We need a strategy and a plan and it won’t happen on its own.”