Michael Barone, senior writer at U.S. News & World Report, has brilliantly captured the political implications of the current geographical shifts in the U.S. population in his recent article, The Realignment of America (Wall Street Journal, login required). These shifts also have significant implications for work and business. Barone looked at the 50 largest metropolitan areas (where 54% of Americans live), and categorized them into 4 groups based upon the degree of growth or decline in the population and the various sources of population growth or decline.

1. The Coastal Megalopolises

New York, Los Angeles, San Francisco, San Diego, Chicago, Miami, Washington, Boston

These cities exhibit a unique pattern. Americans are moving out and immigrants are moving in, both in very large but in roughly equivalent numbers. Thus, the overall population growth is very low. This is the opposite of 20 years ago when Americans were moving to the coasts. But now, as Barone says, “They’re fleeing hip Boston and San Francisco…” at the rate of 650,000 per year. Why? High housing costs and taxes as well as “a distaste in some cases for the burgeoning immigrant populations.”

“The economic divide in New York and Los Angeles is starting to look like the economic divide in Mexico City and São Paulo.”
— Michael Barone

What remains is increasingly a two tier population with a large affluent population and a large low wage immigrant working class. Again, Barone says “The economic divide in New York and Los Angeles is starting to look like the economic divide in Mexico City and São Paulo.”

The political fallout? These areas have been traditional Democratic powerbases. However, their population is growing at 4% while the rest of the nation grew 8%. This will mean that House seats will be lost in the 2010 Census.

2. The Interior Boomtowns

16 metro areas, none touching the Atlantic or Pacific coasts: Dallas, Houston, the Inland Empire of California, Orlando, Phoenix, Atlanta, Las Vegas.

These areas grew 18% in six years. They had 4% immigrant inflow, but the domestic inflow dwarfed this. This has caused the American center of gravity to shift inland. Dallas is larger than San Francisco, Houston than Detroit, Atlanta than Boston. Cities like Austin and Raleigh are centers of business and technology. These Interior Boomtowns generated 38% of the population growth in the last 6 years.

3. The Old Rust Belt

6 metropolitan areas: Detroit, Pittsburgh, Cleveland, Milwaukee, Buffalo, Rochester.

These have all lost population since 2000. Domestic outflow is 4% and immigration inflow is 1%. Natural increase is 2%. The outflow seems small compared to the 1980’s, but that is because so many of the young people have already left. Their economies are hurting.

4. The Static Cities

18 metropolitan areas such as Philadelphia, Baltimore, Harford, Seattle, Denver, Portland, Minneapolis, Oklahoma City. Their inflow pattern for immigrants and domestic inflow is roughly balanced. Outflow is about 1%. These cities overall had a domestic inflow of 18,000. Their economies are either just holding steady or in danger of falling back.

Barone treats New Orleans (Hurricane Katrina aftermath) as a special case as he does Salt Lake City (the Mormons had the highest rate of births in the nation).

The rest of the nation outside of these areas look very much like the Static Cities – 1% domestic inflow, 1% immigration inflow, 4% population growth.

Implications for your business and career

Barone’s article focuses on the shifts that will occur as measured in House seats and electoral votes. But there are other strategic implications. These shifts will indicate where economic activity will occur and what kind of economic activity will be in play. Think about this in terms of where jobs will go and where companies will locate, where talent will congregate. What are the implications for your business? Even institutions like local churches and schools will feel the effects of these demographic shifts.

As Barone concludes, Demography is destiny.