August 27, 2020

By Isaac Mizrahi - Co-President of ALMA

 

2020 is the year when the majority of all Americans under seventeen years old will be from a minority background, a process that will culminate with a so-called “minority-majority” population by the mid-2040s. These demographic changes will bring about a significant transformation to Corporate America, and during the next few months, I will discuss some of these consequences, in each article targeting one specific area of our business environment.

If you’ve been following my articles this year, you know that most of them have one thing in common — the fact that demographic changes in America and the evolution towards a minority-majority population will have profound and transformational consequences in the business environment for years and decades to come.

Diversity Efforts

While the premise of demographic shifts is not new, one of its less-discussed aspects requires special attention, namely how this demographic trend is reshaping the population and makeup of cities and states, and how this process will create unique challenges and opportunities for marketers.

While most of the previous articles under this series highlighted the impact of America’s demographic changes in one specific industry, this one discusses a broader set of implications across industries.

At a National Level

Let’s start with the basics. Based on the latest data from the U.S. Census America Community Survey (ACS), the country’s population has grown from 2010 to 2019 by approximately 6%. However, the bulk of this growth was driven by the minority population, as the white population grew at the same time at a meager 0.7% rate.

In almost a decade, the country added close to 20 million new minority residents to its population. To better understand this number’s magnitude, consider that Australia, the world’s 14th economy has a total population of 25 million.

Why is this important? Consider the fact that countries without population growth are countries with a higher probability of economic stagnation. Just look at the economic and demographic trends from countries like Japan and Italy over the past decades.

During the past nine years, the Asian-American population has grown at an incredible 30% rate, three times faster than the population growth rate of African Americans, reaching a total of 6% of the country's population, while the African-American population share stayed relatively stable at 13%.

Furthermore, the Hispanic population continued its high growth trajectory with approximately a 20% increase in nine years, adding 10 million new residents to the country and reaching 19% of the country's population share. The three major minority segments together represented close to 40% of the U.S. population by 2019.

Negative Growth Is Pervasive Across the Country

According to the ACS data, four states (Connecticut, Illinois, Vermont, and West Virginia) have experienced a total population decline during the past decade. Moreover, five additional states (Mississippi, New Jersey, New York, Pennsylvania, and Rhode Island) have experienced stagnant growth, with a population growth rate below 1% for almost a decade.

While there are several reasons to explain these declines, one thing they have in common is the fact that their minority population hasn’t grown faster than the white population.

In total, 22 states have experienced a decline in their white population in the past nine years, but some of them, including Alabama, Alaska, California, Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, New Mexico, Ohio, and Wisconsin, still grew their total population thanks to the much faster growth of their minority populations.

The Minority-Majority States & The Path Forward

The U.S. has four states: California, Hawaii, New Mexico, and Texas, plus the District of Columbia, representing 22% of the country’s population that already have a minority-majority population composition.

In the years to come, a few additional states will join them, including Arizona (44% minority-majority in 2019), New Jersey (44%), Florida (45%), Georgia (46%), Maryland (48%) and Nevada (49%).

Other states are also getting close to the threshold, and the question is not really “if” they will become a minority-majority state but rather “when” this will happen. In this group, we have Mississippi (43% minority population in 2019) and New York (43%).

Some Potential Consequences

These changes in population dynamics across the states will be consequential and impact several aspects of our lives, including both the public and private sectors. Below are three of them:

1 - Business Footprint Will Reset

What part of the footprint you ask? All of it. From where to produce and distribute products and services to where their suppliers are located and what kind of physical or virtual experience businesses will offer in the future. It will all be heavily impacted by these population shifts.

Marketers will have to reimagine the way they compete at the local level. For example, from recruiting the right mix of employees to better representing the market you're targeting, to the availability of multi-language capabilities online and in-store, assessing the best merchandise mix offered in specific zip codes. These are just a few decisions organizations will have to rethink over the next few years.

2 - Cities Will Fight to Attract Multicultural Residents

Over the next decades, cities and states will compete for talent and compete for growth, as they try to stay relevant from an economic, social, and political perspective. Some of them will understand that creating an environment that welcomes and promotes multiculturalism values may be the key to their success.

3 - Redefining Political Myths

The traditional concepts of Red State/Blue State may change. Of course, this is not something that will happen over a few election cycles, but if you consider the next ten- to fifteen-year period, we will experience a significant disruption of these old concepts. Look no further than the growth of “Blue” values candidates in typical “Red” states like Texas and Georgia.

As in anything related to the country's shift towards a minority-majority population, the flow of population changes within cities and states will be the equivalent of "reshuffling" the deck of cards for many companies and brands. The time has passed for marketers and business leaders to only monitor or assess the consequences of these changes. Real competitive advantage will be based on the ability to transform your business before it is too late.

 

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