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Guy
Generating a realistic Marin County population projection
Introduction:
I am constructing a population forecast for Marin County out to 2040. And, I explore domestic population growth benchmarks (California, US) and international ones (Japan, France, Italy). This is to anchor my forecast with a control represented by another region or country that appears to follow a similar historical demographic population growth.
My data sources for historical and some projected population growth are:
a) For Marin County and California, I use the California Department of Finance Demographic Research Unit (DRU);
b) For the US and other countries I use the UN Population Division as disclosed on the website Our World in Data.
Are we turning Japanese? A perspective on Marin demographics
When referring to Marin County's demographics profile, I have often stated that we have a lot more in common with the Japanese than Americans. We are much older, have a longer life span, and have a lower fertility rate than Americans in general, just like the Japanese do.
As we will soon see, we have not quite yet turned Japanese. But, from a population growth standpoint, we have truly nothing in common with the US or even California.
Comparing demographic growth: Marin County vs, the benchmarks
At a high level, let's examine historical demographic population growth trends and compare Marin with two domestic benchmarks: California and the US; and three international benchmarks: Japan, Italy, and France. Italy is kind of the Western European equivalent of Japan (aging demographics, slow to contracting population growth). France is probably the Western European country with still the most robust population growth, even though its growth is a heck of a lot slower than the US.
The graphs above show you the population growth since 1990 on an index basis (1990 = 100).
The graph on the left shows that the US and California have grown so much faster than Marin County since 1990. Looking at the same data going back to 1970 would confirm the exact same trend divergence.
The graph on the right compares Marin County to the other countries. Since 1990, Marin County's population growth aligns closely with France's.
Now, let's look at the same data since 2000.
Again Marin's growth is so much slower than either the US or California. When looking at other countries, Marin now aligns more closely with Italy. Going forward, when making projections Italy will serve as a reasonable benchmark.
The Department of Finance Demographic Research Unit (DRU) projection
First, let's look at the components of the demographic DRU projections.
As shown in the graphs above, the DRU natural growth rate [(births - deaths)/population] is pretty realistic. It respects existing demographic trends and projects a continuing decline in natural growth. There is nothing questionable here.
The DRU migration projection is problematic. The actual data is up to 2019. The DRU worked on its projection in July 2021, in the midst of COVID. As shown, migration had already plummeted and gone heavily negative by 2019. At the time (July 2021), you would have known that COVID and Work From Home (WFH) would have further exacerbated negative migration out of Marin. But, the DRU projected a wildly unrealistic rapid rebound in positive migration into Marin. And, it projected that such migration would remain robust in positive territory forever at about 0.40% per year.
The DRU forecasted positive migration rebound is unrealistic. All the people who moved out of Marin County to cheaper counties or other States because of the WFH opportunities are not coming back.
The DRU generated some recent population update up to January 2023. The table below compares the DRU population projection for Marin vs, the actual figures from 2021 to 2023.
As shown in the table above, the DRU projections are way off at the onset. The DRU totally missed the COVID and WFH phenomena. By 2023, the DRU is already almost 2 percent off. That is a humongous difference given that it is so early in the projection period. The DRU projections only reach down to the actual 2023 population level in the year 2041. Thus, the DRU projections reflecting the ongoing decline in Marin County's population are 18 years behind actual figures!
Constructing a realistic Marin County demographic projection
I constructed my demographic projections by doing the following:
- I used the actual population figures up to 2023;
- I used DRU's natural growth projections which are reasonable;
- I used a neutral migration rate of 0%. I assumed that going forward the number of individuals migrating into Marin County would equal the numbers migrating out.
Given Marin County's current rapid negative migration due to WFH, my neutral migration assumption can't be considered too pessimistic. If anything the opposite may be true as we shall soon see.
As shown on the graph below, my apparently small adjustments make a pretty big difference when forecasting out to 2040.
By 2040, I forecast that Marin County's population will decrease to 233,412. Meanwhile, DRU forecasts 253,549, much higher than the actual figure in 2023! The DRU does eventually get to my figure, but by 2058, again an 18-year lag. That is the same 18-year lag that DRU incurred at the onset where it takes the DRU until 2041 to get down to Marin County's current actual population in 2023.
The mentioned consistency in DRU's lags suggests that my forecast may be reasonable. But, let's benchmark my projections with the UN projections for Italy. As shown earlier, Italy and Marin County's respective population growth seems fairly well aligned since 2000.
The UN generates three projections for Italy: Low, Medium, and High. I have indexed all projections using 2023 = 100 as the starting point.
As shown on the graph above, my Marin County projections perfectly align with Italy - Medium forecast up to 2031. At the end of my forecast period 2040, my Marin County forecast is between Italy - Medium and Italy - Low forecasts.
If we look at recent trends over the past 7 years from 2016 to 2023. Marin County's population has declined nearly twice as fast as Italy's. Marin County's population shrank over that period by - 3.8%. Meanwhile, Italy's population shrank by - 2.1%. I used Italy - Medium scenario for 2022 and 2023. Marin figures are actuals. Notice that the divergence in population contraction was already pronounced by 2021 (that reflects actual figures for both entities).
Marin County's more rapid population contraction is due to the impact of WFH that caused an acceleration of negative migration out of Marin County into other counties and States. Italy, being a country, is not affected by such WFH migration within a country. And, therefore has experienced a much slower negative migration out of Italy.
In view, of the above my Marin County forecast can't be considered as too pessimistic. Indeed, my forecast aligns with Italy - Medium until 2031. Meanwhile, as shown above, over the past 7 years, Marin County's population contraction has been far more pronounced than Italy's.
Thus, we are not quite turning Japanese yet. But, we have already turned Italian! And, we are completely different than Americans or Californians.
A few takeaways
Even with its wildly optimistic Marin County migration projections, the DRU still forecasts that Marin County's population will steadily decline through the end of its forecast which goes to 2059 (I stopped my time horizon at 2040. The DRU goes out to 2059);
My forecast with a more realistic neutral migration rate and accurate figures through 2023 generates a more rapid decline in Marin County's population;
My forecast corrects for the 18-year lag error in the DRU forecast. And, it aligns well with an external benchmark (UN forecasts for Italy).
The above confirms that Marin County does not need any additional market based rate housing.