Paid to Populate: Demographic Disparities and Resident Incentive Programs

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Ian Hutcheson
February 18, 2020

Perhaps the most important asset of any community is its people. In contrast to the fixed nature of land or natural resources, population rates are fickle and often elude government influence. To start exerting some control over their demographic destinies, many state and local governments in the United States have started offering incentives to attract people to make homes in their communities.

These, “Resident incentive programs,” are diverse but are generally conceived of as economic development tools which focus investment on people. Although the potential for these programs to influence demographic and economic trends on a large scale is unlikely, their ability to have targeted effects on a smaller scale is more promising.

Growing Pains

Disguised within the 6.3% growth rate in the United States population from 2010 to 2019 is a substantial amount of variability. During this period, the population of the fastest growing region, the South, increased by 10.3 million more people than that of the slowest growing region, the Northeast. Similar disparities exist within regions in the population rates between cities. Just 70 miles separates Cary and Rocky Mount, N.C., but the gulf between which the former has been growing and the latter shrinking was 30 percentage points between 2010 and 2018. These inequalities have alarmed some civic leaders who are endeavoring to influence trends in their communities through public policies.

These policy instruments which incentivize people to populate specific places will be referred to as, “Resident incentive programs.” What unites these initiatives is their objective to stimulate socio-economic change in a certain area by offering people an additional incentive to reside there.

Universal Uncertainty

Universal basic income (UBI) is one of the most visible types of resident incentives. UBI is the broadest of these variants and is universally granted to anyone meeting some basic criteria. One of the most prominent American UBI programs is Alaska’s Permanent Fund Dividend (PFD). Created in 1976, the PFD is financed through royalties from the sale of state-owned natural resources, predominantly from oil production.

When comparing socio-economic trends before and after the first PFD payments were made in 1982, there is little evidence the program has moved the needle for Alaska. Average annual population growth in America’s Last Frontier from 1945 to 1981 was 4.18%, compared to 1.23% from 1982 to 2018. The average annual change in per capita personal income from 1950 to 1981 was 6.14%, and from 1982 to 2018 was 3.48%. Although there are myriad factors that influence these comprehensive statistics, UBI operates on a similarly broad scale and it is fitting to question its impact along these measures.

Small Employers

More discriminating than UBI are, “Labor incentive programs,” which jurisdictions extend to residents based on their employment. North Platte, Nebraska’s Work NP program offers local employers a match up to $5,000 to cover an employee’s relocation costs. Newer programs such as Vermont’s Remote Worker Grant offers remote workers up to $10,000 to relocate to the state while working for businesses that may lay outside of it.

If the broadness of UBI programs make isolating their impact difficult, resident incentive programs implemented in smaller jurisdictions may have a relatively greater influence. Work NP has enough funding for around 70 applicants. While that comprises a negligible fraction of North Platte’s workforce, in a city of less than 25,000 people it also represents 14% of the construction industry. Vermont’s program has approved 68 applications, a number which mirrors Work NP’s, but applies to a labor force over 28 times larger. If resident incentive programs are implemented on smaller scales and targeted towards a specific goal, their chances of producing a meaningful influence seems to be better.

Constructive Results

The third type of resident incentive program targets an activity that helps to turn people into residents. “Homeowner incentive programs,” encourage new housing in a community by discounting the costs of construction or land acquisition. The Newton Housing Initiative in Newton, Iowa offers homebuyers up to $10,000 for the construction of new single-family homes. Since the inception of Newton’s program in 2014, 42 new homes have been built and about half of the occupants are new to the city.

When resident incentive programs are conceived of in a more targeted manner in smaller jurisdictions, their capacity to have an outsized impact appears greater. The 42 residences built through Newton’s program account for 36% of the growth in single-family homes over that time period. The relative gains that can be realized from these more targeted programs in smaller communities are perhaps the types of resident incentive programs with the best chance of generating demographic and economic change.

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Disparities in growth between communities is not a new phenomenon, but civic leaders are searching for new approaches to this age-old problem. Resident incentive programs are also not new, yet the impact that these initiatives have on population rates and economic indicators are not well studied. This brief analysis suggests that resident incentive programs implemented on smaller scales and targeted towards specific indicators may be best suited towards helping communities take control of their demographic destinies.

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Author: Ian Hutcheson, MPA is a Management & Budget Analyst for the City of Oklahoma City and the President-Elect of the ASPA Oklahoma Chapter. He is a 2018 graduate of the Master of Public Administration program at the University of Kansas. Ian’s professional areas of interest include city management, finance and budget, economic development and urban design. Contact: [email protected]. Twitter: ihutch01

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