Cherry Tree & Associates | May 2018

This edition introduces our Perspective North newsletter which plans to provide business commentary and information of interest to promote discussion and good decision-making.
Slow Population Growth In North Central USA Hurts Labor Availability
According to recent census statistics, the North Central region of the United States has experienced population growth slower than other regions of the country during the current decade. This slower growth is of concern as it directly translates to a limited growth potential in the available labor force in a region that already has labor shortages, low unemployment rates and high labor force participation rates, leading to concern about redirection of business expansion elsewhere. Regional leaders need to consider this reality when setting policies that impact movement of residents and workers into and out of our North Central part of the country.
Growth Weakest in the Great Lakes
The total United States population has grown by 5.5% to reach 325 million during the current decade to date, 2010-2017, while our nine state North Central region grew only 2.2% to 40 million.  As the graphic shows, this slow growth is most pronounced in the more industrial Great Lakes eastern edge of our region and only in the sparsely populated Dakotas was population growth faster than the national average.
Source: United States Census Bureau
Metro Growth Rates Split
The five largest metropolitan areas in our North Central region have a total population of just under 20 million, so comprise just about exactly half of the North Central region's total population. Those largest metropolitan areas as a group grew 2.5% over the past seven years, so just a little faster than the region overall. There was notable over-performance in growth in the Twin Cities at 7% and Kansas City at 6%, counter-balanced by significantly slower growth of only about 1% in the more industrial Chicago, Milwaukee and St. Louis metropolitan areas.
Source: United States Census Bureau
Weak Population Growth Headlined by Domestic Outmigration
Perhaps most telling of all statistics regarding population change in the North Central region this decade has been the significant domestic outmigration to other parts of the United States. Among our five largest metropolitan areas, there was negative domestic migration in all of those cities, totaling 636,000 persons that left those metro areas just in the past seven years. Even in the overall growth leading Twin Cities and Kansas City, there were was net negative domestic migration as workers and retirees headed to other parts of the country.

International immigration into our North Central metropolitan areas did partly compensate for the domestic losses and added 354,000 persons to our region. Although that foreign immigration added important vitality to the labor force, it was insufficient to make up for the domestic losses for our region as a whole. On a per capita basis, the foreign gains were the highest in the Twin Cities where 88,000 net international persons were added this decade and on an aggregate basis the trends were most adverse in Chicago where the domestic losses were significantly higher than the international gains.
Source: United States Census Bureau
Yellow Alert on Labor Force Growth Problem
Like no other time in history, the North Central region needs to work to reverse domestic outmigration and should at the same time be especially open and welcoming to new arrivals from throughout the country and the world. Regional disadvantages including isolated geography, adverse weather and undesirable local taxation are formidable obstacles, but so are our advantages including high concentration of corporate headquarters, strong university systems, high quality workforce and a central location for transportation and logistics. It's time that business leaders consider this labor force issue to be one of the most important challenges in front of the region.

John Bergstrom is a Managing Director of the Cherry Tree & Associates investment bank and has been an advisor to growth businesses over his thirty-year career working as investment banker, venture capitalist, entrepreneur and corporate advisor. Perspective North is a column offered to Cherry Tree clients, contacts, friends and associates to promote discussion and good business decision-making.

Prepared by:
John Bergstrom
Managing Director
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Cherry Tree & Associates is a p rivate investment banking firm based in the Twin Cities focused on representing mid-market companies in their merger & acquisition and financing transactions
Important Disclosures

The information included in this publication has been obtained from public sources, and is not based upon private or confidential Cherry Tree information. Cherry Tree gathers its data from sources it considers reliable. However, it does not guarantee the accuracy or completeness of the information provided within this publication. Any opinions presented reflect the current judgment of the authors and are subject to change. Cherry Tree makes no warranties, expressed or implied, regarding the accuracy of this information or any opinions expressed by the authors. Officers, directors, partners of Cherry Tree and Cherry Tree proprietary investment funds may have positions in the securities of the companies discussed, and certain affiliates of Cherry Tree may recommend to specific clients the purchase and sale of securities discussed in the publication. This publication does not constitute a recommendation with respect to the securities of any company discussed herein, and it should not be construed as such. Cherry Tree or its affiliates may from time to time provide investment banking or related services to these companies. Like all Cherry Tree employees, the authors of this publication receive compensation that is affected by overall firm profitability. We undertake no obligation to update any information in this publication.