Composition 101: Think birth rates, not just immigration

October 25th, 2006

Given that the population is not growing fast (see our October 18 post), historically speaking, the very high levels of immigration we have seen over the past 10 years would represent a significant change in the composition of our population.

Putting a few data points on some obvious issues – Hispanics now constitute the largest minority in the US with 14% – edging out Blacks with 13% of the population. Asians, by comparison represent just fewer than 5% of the population.

In the near term, Hispanics will continue to represent a growing share of the population – their growth rate in 2004 was 3.04, more than 3 times the US average. It is remarkable that Hispanics accounted for 50% of the US population growth from 2003-04.

On a final point about drivers of population growth, while it is true that overall birth rates are at historic lows, that is due to a very low rate for the white population. As with most other trends, minorities in general, and Hispanics in particular are showing much higher than average growth rates.

Putting aside the question of illegal immigration for a moment (which is difficult to do), hard data indicate that there is as large a realignment in the composition of the US population going on now than at any time in the past 100 years. These fundamental shifts in demographic characteristics play out along multiple dimensions: cultural, economic and social being just a few.

The implications of these current trends are many, but from a business point of view, US marketers will increasingly look at the US consumer base and see an increasingly fragmented landscape. Where many markets were able to look at the Baby Boom generation and see, for example, 10 segments of 7 million consumers – today’s marketer will look at the Generations X and Y and see 70 groups of 1 million.

While I find no quick easy takeaways from these current trends, I am encouraged by the idea that the nature of scale economies might be changing, in the US market in particular.

Entry Filed under: Demographics